BREXIT ANALYSIS – PRESENTED BY EDELMAN
EU REFERENDUM
23 JUNE 2016
MMO O N NT HTH S S
DAYS DAYS
How to Leverage Communications Strategy to Build Trust for the Future Following 23 June referendum, the financial services industry faces a new economic shockwave to steady. Though this event is not of its own making, it is an opportunity for financial services companies to take a leadership role not only for the sector, but for the global economy. We can count on the financial services industry to act methodically and cautiously when it comes to internal and external communication strategies. Still, this event begs us to ask: what other global events can take us by surprise? What mechanisms do we have (or don’t we have) in place to use as a catalyst for beneficial change?
With so many unknowns on the horizon, the spirit of community and stability must be managed with sensitivity and a two-way loop to stay on the pulse of key constituents. What is known is that the outcome has been – and, in the short term, will be – bad for the economy. The challenge for companies operating in Europe will be demonstrating they can adapt to this new normal and continue to find opportunities for business growth, starting with the care of their employee base. How the financial services sector responds to this situation will be an important part of improving trust globally.
Lessons for Today from the Edelman Financial Services Trust Barometer According to the 2016 Financial Services Sector cut of the Edelman Trust Barometer, trust in the UK financial services sector in 2016 was up five percentage points, a significant increase from 2015. The UK’s overall trust in financial services, however, topped out at only 41 percent – still firmly entrenched in distruster territory and 10 percentage points lower than the 51 percent global average. Clarity around the referendum vote becomes more apparent when looking at the 12 percentage point divide (52 percent vs. 40 percent) between Informed Public* vs. Mass Population** when asking how trustworthy respondents find the financial services industry in the UK. Despite several public statements by global banks
about the negative impact of the Leave vote on their operations in the UK, the Leave camp prevailed – dismissing any guidance from the financial services sector on jobs and the local economy. While the only clear variable at this juncture is the amount of time and negotiation that must take place before reaching the determined outcome, financial services companies need to take special care of their most valuable assets – their employees. This year’s Financial Services Trust Barometer conveyed that employees of financial services companies trust their employer to “do the right thing” more than any other sector surveyed. In fact, more than 80 percent of employees from financial services companies trust their employer, more than 28 percent above the global average.
Keeping EmployeeS Well Informed and Part of the Solution Leaders should act quickly to reassure their employees that – in the short term, at least – it is business as usual. After the predictions that were made in the run up to the referendum, employees may be concerned that a changing economic situation will have a negative impact on the business. It is critical that employers must, in order to build trust throughout this process, reinforce with their
employees the focus on customers and continue to collaborate with employees to deliver brilliant products and services together.
This ensures that company leadership is on top of developments and steering business to success. It also ensures that employee concerns are addressed individually with an opportunity for feedback and engagement. A deep, personal engagement throughout the process will ensure that sincerity and compassion is getting through and concerns do not become amplified socially in a way that is devoid of
context and sometimes inaccurate. To carefully protect and build upon that trust, it is imperative that the communications function remain focused throughout this long process. Mechanisms to maintain this open dialogue include:
• Clear and regular announcements reassuring
employees that the path ahead will be carefully and thoroughly managed with regular employee communication
• The creation of an online forum to ensure a regular opportunity for communication
• An open-door policy from local management with the global CEO leading on major announcements supported by forums for local dialogue
• Creating a culture of pride by reinforcing company
culture with opportunities to engage personally and together
This level of engagement can serve as a powerful tool for building and growing relationships to sustain beyond the uncertainty.
Thinking Beyond Today Financial services must remember that it is not only today’s employees that are watching, but the employment base of the future. This is not a situation that financial services created, but is certainly one the sector can make easier for key constituents with regular and authentic communication. Happy and content employees are better client service providers and better sources of referrals. Friday’s shocking outcome allows the financial services sector an opportunity to lead the way on the response in the UK. Until more is known about the shape and terms of “Brexit,” precisely mapping a communications program too far in advance is a challenge. However, one overarching principle should permeate external communications for most financial services companies – namely that seismic events result in opportunities as well as threats. The cliché that “markets hate uncertainty” is only true in one sense; it is also valid to argue that markets not only love uncertainty but are fundamentally built upon it. Every trade is based on a conviction that an asset’s value will rise or fall – not the certainty thereof. Fund managers could make a compelling case that
turbulent times are the moments where quality active management should thrive or where the smartness of new smart beta strategies is put to the test; insurers, which largely proved resilient during the last financial crisis, exist to provide protection and reassurance to companies and businesses and therefore play a vital role in a volatile climate; banks, now subject to more stringent capital requirements, are better equipped today to withstand major economic shocks. Another cliché – “keep calm and carry on” – definitely does ring true. Although there is pain ahead and an inevitable slowdown in the capital markets, the natural inclination for financial services is to be as sanguine as possible. Proceeding in a positive and open environment with external and internal communications strategies is paramount.
*Informed Public must meet four criteria: Age 25-64; college educated; in top 25 percent of household income per age group in each country; report significant media consumption and engagement in business news **Mass Population is all population not including Informed Public. It represents 85 percent of the total global population.
FURTHER INFORMATION Financial Services – Overview
Deidre H. Campbell Global Chair Financial Services Sector Edelman New York Deidre.Campbell@edelman.com +1 (212) 738-6076
Andrew WIlde Director UK Financial Smithfield, A Daniel J Edelman Company awilde@smithfieldgroup.com +44 20 7903 0661
Gurpreet Brar Managing Director Public Affairs Edelman UK gurpreet.brar@edelman.com +44 203 047 2466
Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 0203 047 2000 | @edelmanUK