Northern Rock isn’t a Wonderful Life

There’s a scene in the classic movie, It’s a Wonderful Life, which I’ve used in teaching PR students about persuasive strategies that reminds me of the facing .

In the the film’s main character, George, has just got married, but en route for his honeymoon notices a crowd outside his family’s business, Bailey Bros. Building and Loan Association (ie building society).  Bad guy, local banker, Henry F. Potter, has engineered a crisis that has resulted in customers rushing to the association’s office to reclaim their cash deposits.

The lessons in persuasion come in the form of the strategies George uses.  Firstly he denies there is a problem – only to be drowned out by sirens of police cars driving by.  As denial has failed, he counters with logic, explaining to customers that their money isn’t actually kept at the bank as it is invested in the mortgages of their neighbours.

Customers complain that Potter has offered them 50% of their investment in return for their shares in the association, so they will go to him instead.  Jumping over the counter – a symbolic gesture of aligning himself with the customers – George makes a personal appeal, showing he understands the customers’ personal circumstances.

With the support of his new bride, he then takes their $2,000 honeymoon cash and asks each customer how much money they need to tide them over. The first customer demands his full $242 – which George pays.  But other customers recognise that George is making a personal sacrifice and ask for a few dollars.

After helping all of his customers, George realises he has saved the business – and still has $2 over to place in the safe:

“A toast to ,” he says. “You’d better have a family real quick.”

(BTW, I’ve typed all this from memory showing the quality of the Frank Capra movie).

The facing Northern Rock has similarly seen thousands of customers demanding their cash from the bank.  The message from financial experts to “” has been ignored and billions have been paid back to those fearful for their savings.

Their demands have been cited as evidence of poor communications – and it is hard to credit the organisation’s public relations function when its online doesn’t even mention the crisis. 

However, I feel there is more to this than simply a need for better and clearer communications.  George’s success came through a personal connection, existing trust and making a sacrifice himself.

We rarely have any personal connection with our bank – no longer is the bank manager a person of local standing or even known to the customers.  We have little trust in banks as they treat customers with contempt and seek every opportunity to charge us for the pleasure of putting our hard earned money in their “care”.  The message “don’t panic” is an insult to people who rationally fear they will be victims here.

And, of course, customers don’t feel those responsible for the crisis are making any sacrifice  – although it is possible many employees, including CEO ,  will lose their jobs.

Crisis communication is about more than conveying rational arguments.  Persuasion relies considerably on trust, which is earned through empathy and respect rather than demanded.

I wonder whether, by the time customers have finished with Northern Rock, its cash assets and share price will be worth as much as a single Mummy and Daddy Pound.

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Heather Yaxley

Heather Yaxley is passionate about PR - teaching the CIPR qualifications, lecturing part-time at Bournemouth University and running the Motor Industry Public Affairs Association (MIPAA). I'm undertaking a PhD looking at Career Strategies in PR. I love sharing ideas and knowledge - connecting news and views by blogging on public relations and educational developments, especially relating to accelerated and active learning. I'm also a published author, qualified trainer and experienced consultant.

7 thoughts on “Northern Rock isn’t a Wonderful Life”

  1. It’s also a classic example of the importance of good communications.

    The whole banking and monetary system is based on confidence. We trust that when we go to the bank they’ll still have our money and that shops will exchange goods for bits of paper issued by a central bank.

    So despite the fact that Northern Rock is solvent, that the Bank of England has guaranteed its liquidity we still see lines of people cashing thier savings (and suffereing the early withdrawal penalties).

    The question that gets me is why don’t people trust the guarantees that they’re given? What is it that makes people panic into a run on thier bank?

    L

  2. Not helped, one may add by the first and golden rule for every PR freshman – can our web site cope with a crisis level of demand – if not, the cost to reputation will be dramatic. We have to be able to show that every precaution has been taken to avoid a secondary (if not primary) issue.

    This is not an isolated case. Think back to BAA a year ago when it too could not cope. There are many such examples.

    Its a conversation a PR student should be taught to run through before accepting a third year placement.

    Every PR practitioner who does not ensure this capability is, to my mind, in breech of his/her fiducial duty and should be struck of the CIPR registers of members.

    Consultants, by the same token, are negligent of client interest and can be sued.

    It was a recommendation in the CIPR Internet Commission report in 1999. So there is no excuse in 2007.

  3. David – I couldn’t agree more. Part of where a lack of confidence arises is that the website is not responding. As we’ve lost all physical contact with our money – banks don’t have it in big vaults anymore – we get a bit worried that crashing websites and no up to date news means a problem. The web is our window on many companies these days. As you say, vital that PR people are ensuring it is top priority on the crisis management list.

    Liam – the thing that gets me is that customers are accused of being in a panic, but investors aren’t. I think the fact the cityboys are dumping shares also undermines public confidence. People must be wondering, if this bank is so stable, why is the share price dropping like a stone.

    Being told not to panic also seems insulting – I heard a customer on television say that the passengers on the Titanic were told not to panic.

    It might not be logical to want to take out your money when it has been guaranteed. But I can understand the feeling that doing nothing is a risk. So better to take it out, put it somewhere safe (and lose a couple of hundred quid), than be made a fool of.

    We’ve all discovered the hard way that guarantees are often worthless and we’re the ones who never get a return if a company does go bust.

    Experience and memories of problems with pensions, bank charges, mortgages, house price crashes, etc etc all make us too nervous to be persuaded by politicians, analysts, journalists or bank CEOs.

  4. Every Christmas my family has a tradition of watching It’s a Wonderful Life and we’ve been doing so for as long as I care to remember. It just so happens my mam has her savings in Northern Rock and, last week, she too was debating whether to draw her money out or not. Like you, she also drew similarities between the film and NR’s current status.

    We laughed.

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