A little overdue now but a couple of weeks ago PR News asked me to contribute to its 'Advisor' column on the question of Goldman Sach's bonuses. The exact question was:As Goldman Sachs prepares to announce its final compensation pool and bonuses, how well are they reacting to the public sentiment, and what could they do differently?

My answer, published in last week's issue was:

"Thanks to its niche client base, Goldman Sachs has traditionally managed to avoid proactive engagement with the wider world, a strategy that served it well until recently. But times have changed irrevocably and the public can now exert a much greater influence via heavy-handed regulators and even, as reported recently, through direct threats against the firm's employees. Clearly something needs to change. 

Goldman has had 18 months to roll out a holistic PR strategy but teaching an old dog new tricks has been difficult. The steps Goldman has taken recently have been the right ones: trumpeting the firm's philanthropic efforts, engaging in a new $500m small business initiative and converting a greater percentage of its cash bonuses to equity. Unfortunately, not having had an established platform of engagement in place, many of these knee-jerk moves are falling on deaf ears or being dismissed as gimmicks. Goldman is a cautionary tale on the value of building long rather than short-term relationships with the public.

If we are to avoid the kind of populist 50% bonus tax currently being levied in Europe, Goldman and other investment banks are going to need to fundamentally rethink their engagement strategy."

Another private jet story. Seriously? I know it will probably pay for itself but that no longer matters, given the world we live in today (see post below). With this in mind, some friendly advice to financial institutions:

- If you haven't already, now is the time to involve your most trusted communications aides (internal or external it doesn't matter) in major decisions moving forward. 

- Lose the insular, 'emperor's new clothes' attitude and embrace the possibility that these people may tell you some things about your firm or even yourself which will fundamentally challenge your viewpoint. Empower them to disagree with you.

- Undertake a comprehensive (doesn't have to be expensive) communications risk analysis. Task your team with the role of investigative journalists - as senior political candidates do - and ask them to dig through everything (public records, past scandals, even the company trash) in search of potentially embarrassing weak spots. As an example they could find out if you are scheduled to take receipt of any large items in the near future, like a private jet.

Successfully identifying and anticipating potential problems is the first step towards seizing back the communication agenda.

Ten simple words encapsulating so much complexity. John Thain explained today why it was a mistake for him to spend over a million dollars on refurbishing his office after selling Merrill to BofA at a bargain basement price. The ground has shifted seismically he tells us; the new world order will not tolerate a shred of pomp or bombast - (let alone at $1200 trash can). Sadly this epiphany seems to have come too late for the former CEO who has now promised to refund the bank out of his own pocket. As this piece in the IHT points out, John Thain is hardly Gordon Gekko. Understated and professional, Thain was, until recently, lionized as the firm's savior and, before Merrill, as the man who brought the NYSE out of the dark ages. So why this public humiliation?

The answer is in those 10 words. 2009 is a very different place, a dark inhospitable place for bankers, brokers, and bond traders. Basically anyone wearing a suit instead of a sack cloth. Executives, like those genius CEO's who flew to Congress in private jets to lobby for a hand-out, ignore this new political reality at their peril. The angry mob is at the castle gates and their blood-lust will not be sated.  

If, all this time, you were wondering who that little man was, the one who sits at the back of the meetings taking notes, the one who follows you around all the time... he's your corporate communications director. Now might be an excellent time to introduce yourself, take him for a drink and ask him what he thinks you should do next.

Republic Windows and Doors... 

There are hundreds if not thousands of firms in this position across the US today. The challenge for Bank of America is that Republic Windows and Doors has become an emblem. It’s now a focal point for the frustrations of an entire nation.

Unions and politicians and the media are clearly willing this David vs Goliath story in to existence and to a casual observer this makes perfect sense: Banks and fat cats get a bail-out while the little guy gets crushed. Short, simple, powerful. It ‘feels’ right given what we think we know about the laws of natural justice.

The problem with this view of course is that it’s completely wrong. But it’s very hard to refute in 10 words or less.

What killed Republic Windows and Doors is exactly the same thing that killed Lehman Bros and Bear Stearns: lenders losing confidence in the ability of the borrower to repay the loan. With Lehman/Bear it happened at an institutional level so it’s more difficult to spot but the mechanism is exactly the same and the victims are no less real people with families to support and kids to put through school.

Today Main Street is going through what Wall Street went through 6 months ago. From small business bridge loans to mortgages there is a widespread reluctance to lend. The so called Bailout is in fact an effort by the government to specifically pre-empt this deadlock and get banks to lend again – not just to each other but to you and me. It’s designed to solve the Windows and Doors problem not exacerbate it!

Again this is a classic Wall Street communications challenge. Bank of America has to find a way to communicate the points above but more importantly the whole financial industry needs to do a much better job of educating the broader market about how the economy really works.