develop a crisis communication plan now
IndyMac Bank wasn’t prepared; are you?

All banks and businesses can learn at least one lesson from IndyMac Bank’s failure — a single voice can put you out of business in two weeks or less. The bank might have been spared if it had previously prepared an effective crisis communications plan.

The Office of Thrift Supervision (OTS) says correspondence from New York Senator Charles Schumer caused the failure of the one time $32 billion, Pasedena, Calif. lender.  OTS Director John Reich admitted IndyMac Bank was already in distress. He said, however, Schumer’s June 26 letters, discussing the possibility IndyMac would fail, caused a “deposit run” that saw depositors withdraw $1.3 billion in less than two weeks. Had IndyMac been prepared to address the media and public, the institution might have remained solvent long enough to put its recovery plan in effect.

“This institution failed today due to a liquidity crisis,” Reich said in a July 11 press release. “IndyMac was actively seeking to arrange a significant capital infusion or find a buyer. The recent release of the senator’s letter undermined the public confidence essential for a financial institution and took away the time IndyMac needed to pursue a recovery,” the release said.

A crisis communications plan should spell out staff and outside vendors’ responsibilities during a crisis, timetables for actions, emergency and media contacts, locations for addressing the public and media, lists of protections and remedies available to customers and other stakeholders and other contingencies. Conduct a series of “what if” exercises and use the resulting information to prepare your plan. What ifs should include fire, accidents, data failures, financial emergencies, robberies, threats, etc. Bring in outside help, if necessary, to conduct the analysis and write the plan. You will win even more trust if you communicate with constituents regularly – not just when crisis strikes.

In any event, make sure you identify who will speak with the press and make certain the media can reach that person 24-hours-a-day. You never want “no comment” or “unavailable for comment” to appear in news items as these suggest you have something to hide. If you need to involve company attorneys, do it before there is a crisis and obtain buy-in for the plan.

Keep your cool. Remember Jimmy Stewart in the 1946 movie, “It’s A Wonderful Life?” He spoke with depositors and urged restraint when they came to the Bailey Brothers Building and Loan for their money – even as the evil Mr. Potter paid 50 cents on the dollar for withdrawals at the other bank. Those who had more than $100,000 at IndyMac must feel Mr. Potter is alive and well at the Federal Deposit Insurance Corporation.

Compare and contrast IndyMac’s actions with those of Johnson & Johnson when someone laced the latter’s Tylenol product with cyanide in 1986. Johnson & Johnson went to great lengths to discuss the problem with the media and public – probably against the advice of its lawyers. Johnson & Johnson won enormous respect and not only survived, but prospered.

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COCO+CO. launches “Red Phone”
24-hour media hotline

Breaking news seldom restricts itself to “business hours” and few reporters go home at 5 p.m., especially when catastrophe strikes. The round-the-clock nature of news requires that business respond to media inquiries anytime – day or night.

To help participating client partners conveniently respond to reporters’ questions, COCO+CO. this month launches its “Red Phone,” 24-hour media hotline. The 17-year-old advertising agency will accept media inquiries around the clock and assist in making connections between journalists and newsmakers.

“Ever more newspapers are turning out early morning editions, and Web and broadcast news sites operate continually. This reality means businesses can’t turn out the light at five and expect all will be well in the morning,” said COCO+CO. President and Chief Executive Officer Tim Coco. “Sometimes a call may simply be a night editor’s effort to verify information contained in a press release. Failing to timely respond may cause a delay in disseminating information the business considers vital, said Coco, a former journalist himself. “Other times, turmoil in overnight financial markets or other emergencies may prompt a reporter’s call. Executives must respond or risk the seemingly suspicious ‘unavailable for comment’ appearing next to their names.”

Participating client partners are providing COCO+CO. with emergency contact and access information. Press releases will also be marked with COCO+CO.’s “Red Phone” insignia and toll-free number to alert the media to program participants.

COCO+CO. provides integrated corporate communications with an emphasis on brand consistency across media. The company was the recipient of the 2007 Small Business of the Year award in the Service for Profit category, presented by the Greater Haverhill Chamber of Commerce. COCO+CO. works with businesses in the financial services, quasi government and energy efficiency sectors. COCO+CO. may be reached at (800) 374-4103 or on the World Wide Web at www.cocoboston.com .

your letters

I read the write-up on Sprint/Nextel (“don’t let the door hit you on the way out”) and I don’t disagree except when it comes to Sprint/Nextel. They are BY FAR the worst carrier of all time. We just recently switched to Verizon. I had my staff call every single day for months to complain about their service. The goal: to have them fire us so we could get out of the contract. Their service was atrocious. If we were to cancel our contract it would cost us $200/phone.  Nonetheless we just did that because it was so bad.

The reason why Sprint/Nextel fired all those people was b/c they were doing exactly what we were trying to do: GET FIRED.

G.W.
East Weymouth, Mass.

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