By Gerard F. Corbett, APR, Fellow PRSA, CEO, Public Relations Society of America
It’s not much of an exaggeration to say that many Americans have no clue what the Federal Reserve is or does. Often employing a public relations strategy recognized more for its infrequency and lack of clarity, up until recently, they wouldn’t be alone in lacking knowledge of the central bank’s actions or purpose.
Therefore, the Fed’s newfound commitment to employing a robust and transparent communications strategy comes across as both a wise and savvy PR move, particularly given this point in time when “digital” has fostered a new age of ubiquitous discourse.
Actually, it’s a brilliant move by an immensely powerful government agency whose actions impact nearly every American and business.
At a time of disastrously low public trust for government in America, the Fed’s latest communications strategy is possibly the PR coup of the year. It is further commendable insofar as it comes at a time of great skepticism among the public and business sector regarding the government’s ability to manage America’s finances
The headline in the Jan. 9 issue of Bloomberg Businessweek sums up the situation: “Bernanke Opens The Black Box.” That would be Federal Reserve Chairman Ben Bernanke, who, unlike his predecessors, has displayed a penchant for demystifying the role of the central bank, rather than restoring to the status quo of dribs and drabs of public statements.
This isn’t Mr. Bernanke’s first attempt at bringing a more sophisticated and robust communications strategy to a legacy institution, according to Businessweek. As a professor and economics researcher at Princeton, Mr. Bernanke developed an appreciation for the benefits of corporate disclosure. Now, he hopes to bring the insights gleaned from that experience to an institution notorious for its lack of public discourse on pressing financial matters.
His efforts will be welcomed in this election year; better late than never.
The Obama administration vowed to be the most transparent of any in history. Employing every modern communications and social media channel available, it would enable all government agencies to engage with the American people in an authentic and trust-building manner. Three years in, its record on this matter has been mixed. But the Fed’s latest commitment to strategic PR and transparent communications is a beginning to what should be standard practice.
In a published letter to the editor of The New York Times last year, we registered our first appreciation for the Fed’s new communications strategy. In that letter, we noted that for far too long, the central bank has operated with less than desired clarity. Given its role as the world’s leading bank, this has set an unfortunate precedent in which governments around the world have been tight-lipped about their planned monetary policy changes. This, naturally, has served to confuse the public and sowed widespread distrust about how global financial policy is being set and implemented.
There are numerous benefits to the Federal Reserve employing a more robust and transparent communications strategy.
Beyond disclosing how and why its decisions are made, the Fed’s revamped public relations strategy should help reduce the wild market swings that occur before and after Fed announcements, as investors try to guess what it will report and the effect of its actions.
Furthermore, it is likely that Mr. Bernanke would garner less criticism of his actions, and begin to restore the Fed’s once-vaunted reputation, if he optimally managed the central bank’s message. This won’t be easy, though. In light of a near institutional collapse in Americans’ trust of the financial sector in the wake of the Great Recession, and findings of the 2011 Edelman Trust Barometer showing that trust in American businesses and the U.S. government has fallen precipitously since 2008, the Fed has quite a challenge before it.
At a certain point, all businesses, government agencies and financial bodies must realize and accept that we are firmly in the digital age. A commitment to greater transparency should not be viewed as a nice-to-have strategy but as a foundational principle for how business and government operate and communicate with the public.
Gerard F. Corbett, APR, Fellow PRSA, is chair and CEO of the Public Relations Society of America.