All too often, most executives and professionals assume a crisis is something that will only affect politicians or high-placed government officials. While most professionals may never face a crisis that ends up making the evening news, chances are they'll face one sooner or later.
Interestingly, even savvy politicians and professionals can sometimes wildly underestimate the impact of actions they make and how these may turn into a crisis of perception. Perhaps nowhere is this on display currently more than in the financial services sector, where politicians are displaying populist-style rage over large bonuses being awarded in the wake of the Troubled Asset Relief Program. Treasury Secretary Tim Geithner, who came into office with some already less than pleased with his actions while president of the New York Fed, has also faced the rage of Congress of late over the administration's programs and their effectiveness.
From a PR perspective, one of the things I've always thought was underestimated during this economic crisis was the impact that a "crisis of perception" can have on our economy. Financial executives have on many occasions displayed a woeful understanding of how their industry differs from those that employ the vast majority of the country. They've never really understood how it's to their advantage to clearly explain to the American people -- even those outside New York and Washington -- why their tax dollars should go to private-sector businesses.
The very fact that the various "tea party" movements caught most mainstream politicians off guard also perfectly illustrates how they and Wall Street are often out of touch with Main Street. It's no coincidence that President Obama now uses almost every opportunity to try and make the point that he understands that Wall Street is different than Main Street.
The first thing politicians and executives should have done in the wake of the financial meltdown is use all the communications channels at their disposal to explain what happened, why it happened and how the steps being taken are necessary. They should also avoid monikers like "systemic risk" that most people who haven't taken economics don't understand. Twenty years ago, students going through journalism schools were always taught to write at roughly a sixth-grade level. While I don't think that rule applies in most markets anymore, the fact that it ever existed in theory and practice showed that many have long known the dangers of sounding aloof and not fully putting situations in terms everyone can easily understand.
Unfortunately, since its very beginning, the financial services industry has been fond of jargon and never really concentrated on making its products and services easy to understand. Hopefully, this crisis will change all that, which would benefit both the industry and consumers.