By Tim Focas, Head of Capital Markets, Aspectus Group
Has there been a financial institution that has gone through the communications mill more so far this year than the London Metals Exchange (LME)? From the 180 degree turn on the planned ring closure post the pandemic, to the exchange’s more recent reputational headache around the nickel-market chaos, it is fair to say there has been plenty to keep the LME press office busy.
But for however hectic a time it has been for their PR team no doubt working overtime trying to take the sting out of every pejorative news mention, the LME’s current situation is a reminder to the wider industry that the comms tail should not be wagging the boardroom dog. In other words, answers to the challenges the LME’s business faces can only be found by the experts from the business, and the role of comms in this period of journalists craving authenticity is to face the stream of negativity head on, as opposed to spin themselves out of the situation.
In the case of the nickel crisis back in March, most of the massive, short bets at the heart of the squeeze were held in deals with banks, so the LME were unable to quickly get a get a handle on the scale and potentially systemic nature of the position. Prices shot up 250% across two days, bringing a bunch of dealers to the brink of failure before the LME suspended the market and subsequently cancelled billions of dollars of trades.
The fallout has consisted of members sending copious numbers of reports on their over the counter (OTC) trading positions and, as a result, LME reassessing how it monitors its market beyond their regulatory obligations. This begs the question – what is the right approach to modern day media management?
It is important not to try and mask over or sugar coat, or worse fail even acknowledge, what has happened. Rather than simply devising a communications plan that centres around nothing but endless promises, why not hold your hands up and issue a mea culpa with the goal of building your credibility in the long-term.
One way of doing this is when a company has positive news. Instead of adopting a “look how great we are” approach, why not say “it is important not to read too much into this. We will have some good months, and some not so good months.” If more established institutions adopted this approach on a good day, they are much more likely to come across as credible when delivering news on a bad day.
This is important as stakeholders will be putting more weight on honesty and integrity. Long established institutions have a choice between hard selling the everything is rosy in the garden approach to comms, or the softer sell where executives are upfront about the deficiencies in their strategy or weaknesses in their product or service, before then talking about the strengths. While the more aggressive hard sell is going to push home the merits of your strategy, the softer sell is perhaps a better way of convincing people to ultimately buy the product or service you are selling. In more cases than most realise, coming across as genuine is a more persuasive way to make a case for your offering, than making the case for your offering strongly.