In today’s 24/7 media environment, with every public utterance potentially hitting the web in real time, there’s no possibility of speaking with one voice to one group and a different voice to another. Whenever we speak, we have to assume that all interested parties are listening closely and what makes one happy can contrast markedly with what the other wants to hear.
So how do leaders make decisions when having to communicate with multiple audiences? As I write a book about the financial crisis, I’ve had the chance to reflect on communications lessons learned from being in the hot seat.
First, recognizing this communications challenge is a vital step. Leaders should be aware of multiple audiences and do some hard thinking about the concerns of each. Don’t try to send different messages to your various audiences. In today’s world of interconnected communications, you will be found out, and your credibility will not recover. You may not be able to please all groups at the same time, but if they can discern an honest attempt to speak to their needs, your chances for success are improved.
Next, use language that your audiences can understand and to which they can relate. Business leaders have for too long communicated in terms that only accountants and analysts use. In the midst of a crisis, business-speak is not comforting or clarifying, it is confusing. The right policies and decisions can sometimes fall short if they are not properly explained. Businesses need to communicate directly and simply about the challenges they face and why their plans to address them will drive growth in the years ahead.
Last fall, the vast majority of Americans did not know what it meant when they heard that “credit markets were frozen.” We had to connect the dots – banks and others were not lending, which left businesses across America unable to finance critical business, and consumers unable to access student loans and consumer credit. It was not good enough to say we needed the financial rescue package to “stabilize markets” – I had to explain repeatedly that we needed it to stem a continuing cascade of bank failures and restore access to credit.
Succeeding in this atmosphere requires consistently communicating your plans – and the reasons they will succeed – before you implement them. There is an old political adage that says “when you are explaining you are losing.” Lay out your strategy before you act, and communicate your actions before you take them. While constant communication is critical during a crisis, it is nearly impossible to educate your audiences about complex subjects in the midst of one. That work has to be done in advance.
Events last fall moved at lightning speed. Investors and taxpayers were demanding transparency and wanted to hear us spell out a single strategy for navigating the turmoil, and then take confidence from watching us implement it consistently. But with the ground shifting beneath us, we had to continuously adapt our strategy to reflect the changed situation. Recognizing there were no words that could calm the waters, I chose to be as transparent as possible about the evolution of our strategy, believing that sharing our thinking, even if it meant taking heat for changing direction, was a better choice than staying silent and not attempting to explain our actions.
Even today, the conflict between political and market audiences continues to manifest itself as policymakers address the needs of our financial system. By communicating as much as we could, laying out our strategies and the reasons for our decisions, we navigated rough waters and charted a course that succeeded in stabilizing the financial system and laying a foundation for economic recovery.
Henry Merritt “Hank” Paulson Jr. served as the 74th US Treasury Secretary and is a member of the International Monetary Fund Board of Governors. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs. His book On the Brink: Inside the Race to Stop the Collapse of the Global Financial System will be published in January 2010.