Hope for the Best But Prepare for the Worst

Not long ago you probably couldn’t imagine that your institution would ever sign a letter of agreement or, heaven forbid, receive a cease and desist order. But that was then – and now, unfortunately, as the economy has changed and the value of underlying assets has fallen, it isn’t unusual for well respected banking professionals to find themselves in a position that was unthinkable just a short time ago.

We’ve worked with a number of banks who have struggled with this problem and we see one mistake being made over and over again. Instead of taking control of the message being presented to the media and your employees, customers and the community, many bankers dig in and just hope that it all blows over.

We call it the “hope for the best” approach (HFTB) – and it is absolutely the wrong thing to do because it can ultimately make a bad situation much worse.

Under HFTB, bankers hope that the media don’t find out, don’t call for an interview, don’t ask hard questions, and don’t splash the story on TV, radio and newspapers.

Hard fact: Letters of agreement and cease and desist orders are published on media message boards, which are monitored by all news outlets. The odds of keeping it secret? Nil. It will come out.

Bankers who follow HFTB hope their customers and prospects don’t find out, don’t ask questions and don’t decide to take their business elsewhere. They also hope that people don’t think “cease and desist” means the bank will close.

Hard fact: Without facts to the contrary, customers naturally assume the bank is in trouble. Some feel betrayed and think about moving their deposits and business – and they discuss it with their friends and family so they rethink their banking too.

And the effect of HFTB on employees? Well, bankers who follow this philosophy hope they don’t start looking for another job at a competitor and hope they don’t share their fear and lack of confidence in the bank with family, friends and the customers they want to stay close to – especially when they find a job at another bank.

And while they’re hoping, they hope their Board of Directors and shareholders don’t start losing faith – which they may.

So if hoping by itself doesn’t work, what do you do instead?

Wise bankers prepare for the worst. They hope for the best but assume that all these things will happen and are prepared with a consistent message for the media, marketplace, employees, customers, and all their stakeholders.

Under this scenario, they realize that truth is the only antidote for rumor. They know that the situation will be talked about so they move to take control of what is being said. They’re open and honest with employees and build their confidence in the bank and bank management and in their future – which they then communicate to customers.

They define what strategy will work best for the media – and prepare for calls from reporters. And in select cases they actually approach the media and communicate their message about both the facts of what happened and the steps they’re taking to address the issue.

If you find yourself in this situation, remember that hoping for the best is only half the story. The most important part is to prepare for the worst. You can’t control (or hide) the past. You can build your future.

Diets and Deposits
He-Who-Must-Not-Be-Named

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