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Rebuilding our banks’ social licence is unlikely
July 18 2017
Having received the memo they failed the public credibility test, Australia’s big banks are faced with the difficult, if not impossible task of rebuilding their social licence.
First, it’s unlikely they will be getting the right counsel from their public reputation advisors. The game played by traditional advisors – public relations, government relations and advertising agencies – is to divide and conquer. To mobilise supporters in government and the community and to defeat their critics. All efforts are on how to arouse, empower and sustain the fight of their supporters as well as convert those who haven’t made their mind up yet. It would be no surprised if a celebrity endorsed ad campaign extolling the great economic and social benefits of our big banks isn’t in the wings right now.
Faced with the prospect of a bank tax in South Australia, the banks have hired the brains behind the 2010 Minerals Council’s “Keep Mining Strong” anti-mining tax campaign. The problem is, these two issues – mining and banking – have different social maturity. Outrage aimed at the banks is borderline a social norm.
To publicly fight it is the very opposite of a social licence approach which acknowledges and validates the genuine concerns of their worst critics and works to resolve these issues openly and in a more accountable way to build trust and credibility.
Second, within the ranks of the senior executives and boards the desire to fight back – just like the mining industry did to defeat their tax – is a far more self-satisfying and therefore attractive proposition. This approach builds internal egos and is favoured even when it isn’t working.
Even if the banks decide to take their first tentative steps to rebuild their social licence – they will need to tread carefully. Rebuilding social license isn’t just about better or clear messages that cut through – it’s so much more.
In fact, convincing the public you’re right and your critics are misguided is at the heart of the problem. The community have lost faith in the banks and are frustrated about the power and control they feel the banks already have over their lives, so showing them you are in control and can solve your social licence failures in isolation doesn’t build trust it erodes it further – a fundamentally different approach is needed.
It’s a mistake big business makes time and time again. Now having been forced to change after years of campaigning by their critics they suddenly attribute their new approach to their own goodness or new found sense of responsibility to their customers. Admitting they were forced to change seriously damages corporate ego, so they now sell the change as part of a long standing commitment to their customers. They now present themselves as ‘the hero’ of the new approach.
Yet being more responsive to pressure is far more believable for most people (who already don’t trust industry) than suddenly becoming more responsible due to big businesses’ essential good nature.
The banks need to acknowledge they are willing to change because the community demanded they do so. They need to become ‘responsive’ not more ‘responsible’. The added strategic benefit of responsiveness is it’s seen as more accountable and helps to build trust – and they desperately need more credibility and trust if they are going to regain their social licence to operate.
But before our banks can give up their ‘hero’ status and become the ‘team player’ everyone wants the banks to become, they need to be prepared to transition through ‘the repentant sinner’ or no one is going to believe them.
Before you can work with the community or your critics on resolving their concerns, you have to be prepared to accept responsibility for what went wrong. It’s counter intuitive, but the more responsibility you accept the less you are blamed – then the community can see you are now willing to make real changes. The more you focus on the problems the more they will recognise the countervailing benefits and important role of the big banks in our society. The very thing the banks want people to believe and embrace in the first place.
The strategies that reduce community concerns and rebuild social licence are profoundly counterintuitive: apologising for your mistakes, acknowledging their grievances and concerns, and giving others credit for your improvements. They are difficult to agree to and difficult to do.
Yet, it’s unlikely the banks will make these strategic changes because the fight strategies are so much more attractive and rarely advised by those who advocate and benefit from fighting back.
What is needed are some brave individuals who are prepared to separate their own negative feelings and internal corporate barriers about these difficult approaches from the fact that they are much more effective.