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by GK Strategy 7th July, 2016
3 min read

Mark Carney and his Perfect PR

When businesses face a crisis, effective communication by leaders is crucial in calming the fears of employees, customers and investors. Communications professionals of all stripes know that effective crisis comms is needed to reassure stakeholders that the leadership team has a plan to prevent long term damage to the brand and safeguard the financial future of the business.

According to a recent report by the Chartered Institute of Public Relations (CIPR), reputation can be worth up to 28% of a firm’s market value, and failure to reassure stakeholders can lead to significant decline in this value. Just think back to the Volkswagen emissions scandal which broke in 2015, and has since wiped £15bn off VW’s market value. The CIPR stresses that “corporate governance and corporate reputation go hand in hand” – meaning leaders must not only have strategies in place to deal with crisis, they also need to communicate to employees, customers and investors that they are prepared to deal with the emerging threats facing the company.

What is true for business is also true for economics. When the UK voted to leave the European Union two weeks ago, investor confidence initially plummeted with politicians taking to the airwaves in an attempt to restore calm.

Yet the public figure who succeeded the most in restoring confidence was not a politician from either the Leave or Remain camps. It was Mark Carney, Governor of the Bank of England.

He proved far more effective at this than either David Cameron or George Osborne in the aftermath of the referendum result. The Prime Minister looked tired and drawn as he promised to do everything he could to ‘steady the ship’ over the next few weeks and months. His words lacked weight, not only because they were so vague, but also because they were overshadowed by the larger message of his resignation.

Similarly, when George Osborne came to make a speech on Tuesday, his flat and almost robotic delivery failed to provide investors with a sense of hope, or give the impression that he really had a serious strategy to deal with the situation. A key lesson can be drawn from this. Even if Osborne had an effective plan, his poor delivery undercut any sense of its credibility.

Not so the case with Carney, who was described by commentators as having the poise and gravitas the politicians lacked. Markets reacted instantaneously to his calm delivery and confident no-nonsense demeanour, with the FTSE 100 rising 144 points to a 10 month high.

Carney trod a careful line between brutal honesty and quiet confidence. He gave clear limits to what he could achieve: “One uncomfortable truth is that there are limits to what the Bank of England can do”. Commentators favoured his simple and open style, comparing it to the less-than inspiring responses from Boris Johnson and Michael Gove.

Carney’s example is useful for highlighting the impact effective communication by a leader can have in a crisis. First he restated his commitment to deal with the issue by saying “It would be irresponsible of me, or any of my other colleagues, to walk away from those obligations” and studiously avoided use of triggering words such as ‘recession’.

Communications in such circumstances are designed to prevent knee jerk reactions by investors and customers causing further damage to the organisation or company. Mark Carney was able to do this to a considerable degree and alleviate panic about the Bank of England’s capability to deal with the UK’s (now serious) economic problems.

It is easy to tell when this is done correctly. Crisis comms is a sign of real and effective leadership for any organisation, and given the current economic outlook, we look forward to more from Mr Carney.

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