Wednesday, February 11, 2009

The Nightmare on Wall Street....

Ragan.com offers "news, ideas and conversations for communicators worldwide," and today, one of their stories covers the nightmare on Wall Street. In the Ragan story, given that the audience is communicators, the nightmare is defined as a "PR nightmare."

What can communicators do to help solve this "PR debacle"?

As a communicator myself, I have to point out that this is not really a crisis of communication - this is a crisis of leadership. These companies have been following a business model that brought them to the brink of bankruptcy.

So we're not seeing the result of "bad PR" right now. The actions of the corporate leaders themselves has proven to be indefensible. Recipients of federal funds took off for a $400,000 spa visit, tried to buy a corporate jet, paid out billions in bonuses.

It's rarely easy for communicators to spin straw into gold.

And now, instead of acting prudently, instead of conserving money, Wall Street execs have spent a great deal of energy defending their outmoded compensation strategy - the need to pay bonuses to prevent the "brain drain" they're all obsessed about.

As an example, NY Attorney General today released the information that Merrill Lynch rewarded 700 employees with more than $1 million (each) in bonuses at the end of last year. (So much for argument about the need to use bonuses to support the admin staff...)

When a company's books have more red ink than a Valentine, one wonders about the brains in charge. How did the leaders let their companies get so riddled with debt? How can John Thain of Merrill Lynch - how can ANY TARP-funded company – justify paying billions in bonuses when they require substantial federal assistance to survive?

Today, leaders of eight of these banks are in Washington to chat about TARP with members of Congress. I'm sure that what they have to say will be fascinating.

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