Goldman’s next PR Chief

Somewhere inside Goldman Sachs a managing director in human resources is anxiously leafing through a stack of resumes looking for a candidate to replace PR chief Lucas van Praag, who retires at the end of March.  There’s been little news since Lucas’s departure leaked a month ago and a former Treasury staffer was tipped as his likely replacement, suggesting the firm hasn’t yet inked a deal.

So before Goldman writes a big check for his signing bonus and measures his office for new carpet and curtains at 200 West Street, there is time to reflect on just what sort of PR supremo is needed at a top financial firm today.

Because Lucas’s exit marks not only the end of a chapter for Goldman, but the twilight of a style of communication that has dominated financial firms for two decades.

Lucas epitomizes the current style – a strong PR chief who manages access to the firm’s executives, nurses close relationships with editors at big-name news organs and metes out swift retribution to reporters who stray from the preferred line.  Every bank follows this model, though few have been as proficient at it as van Praag.  (See my earlier post for more on why Lucas is a rock star.  Folks who aren’t Lucas fans should have an air-sickness bag at the ready.)

This model works pretty well when a handful of publications – and a cadre of writers and editors within them – dominate news production and distribution.  By managing the media’s access to the firm’s principal assets – its information and senior executives – it is possible to manage the message and win favorable terms over how and when stories appear.

Of course this approach doesn’t always produce the desired results, and a firm still gets slammed when scandal strikes.  It also breaks down when executives leak information or speak to the media without authorization, so enforcing the internal rules is essential.  (Some years ago a Goldman executive found himself quoted in a weekend news feature that lingered on his lifestyle.  Every trace of his existence at Goldman was gone by Monday morning.)

Despite its imperfections, this approach brought some order to an inherently disorderly process.   Above all, it was an effort to manage the channels by which clients, regulators, recruits and others got their information and formed their views about the firm.

But that world has been blown apart.  The march of technology has opened a multitude of channels and weakened the establishment media that Wall Street firms long relied on to carry their message.

So what does this new age require in a PR boss?

I’d suggest the new model is akin to an executive producer.  It’s someone who will oversee a sizable operation that generates content and sends it directly to its audience instead of feeding it into the traditional news machine.   In this way, firms will increasingly resemble media companies, producing content for a variety of channels.  Goldman TV, anyone?  (It’s not far-fetched.  Vanguard and other fund managers have a growing self-produced broadcast presence.)

Of course, the top PR dog at Goldman will still need to be an exceptional strategist, knowledgeable about the firm’s businesses, cool under pressure and able to inspire trust – just like today.  It’s the execution that will change – radically – as the firm starts to generate more of its own content and delivers it directly to its audiences rather than have it channeled through the press.

That’s a far cry from the traditional role of a PR chief at a Wall Street firm.  But just as the boozy press lunch of yesteryear gave way to a more professional (and sober) approach, the era of the executive producer is about to begin.



Defending Goldman Sachs: The 5 reasons its PR has triumphed under Lucas van Praag

Lucas van Praag, the longtime communications chief at Goldman Sachs, is stepping down.  To those of us in the PR trade, this news yesterday was much more significant than Facebook’s IPO filing and the legion of twentysomething millionaires it will spawn.

Van Praag has done a brilliant job of defending Goldman and handling the outsized egos that walk its halls.  Goldman is smart, arrogant, highly successful and envied – qualities that make it a PR challenge, every day.  No one has handled it better.

(Disclosure: I’ve known Lucas for a long time, and sought his help when he was a partner at a UK public relations firm and I led PR for JPMorgan.)

Van Praag’s departure is a clear sign that the image crisis is largely over for Goldman.  Ironically, even though its financial results have been weak lately, its reputation has improved.

Here are five reasons Goldman’s PR has triumphed under van Praag:

1.  It took on the media.  Van Praag was an unashamed advocate for Goldman and he was very effective.  At a time when most spokespersons recite canned statements and ineffective variations of “no comment,” van Praag unleashed sharply worded retorts.  They not only made for lively reading but, more usefully, helped readers recognize that there was more to the story.

A lot of the reporting on the financial crisis was shoddy – badly informed, sloppily written, poorly sourced.  The New York Times still gets basic facts about financial markets wrong, and it’s not alone.  Few aside from van Praag were willing to call them on it.

He also waded into the blogosphere to take on critics – turf most wholesale firms keep away from.  One of van Praag’s more memorable jousts with the media occurred in the Huffington Post, where he used the immediacy of the site to refute a New York Times article, point by point, shortly after it appeared, rather than endure the tedious process of publishing a letter to the editor.  (Notably, ISDA recently began an excellent blog to respond to misreporting on markets and financial instruments, particularly derivatives.)

His muscular defense of Goldman brought van Praag a bit of attention from the media.  It seemed to reach a peak early in 2010, and was summarized neatly by the New York Times (in an unsigned Dealbook item, suggesting the author did not want to endure a call from Van Praag):

“Mr. Van Praag, Goldman’s British-born public relations chief, has taken quite a drubbing in the media of late, being accused of handling the criticism of the investment bank in “ham-fisted” manner and following a “P.R. policy that’s basically a stiffly extended middle finger, waved in the air for all to see.”

Of course, it was far better for Goldman that Van Praag was the focus of the media’s ire instead of the firm.  (Hat tip to Epicurean Dealmaker for his excellent post from February 2010 on this subject.)

2.  It acknowledged mistakes.  In 2009 Goldman CEO Lloyd Blankfein made the unusual step of publicly acknowledging that the firm “participated in things that were clearly wrong and we have reasons to regret and apologize for.”  His admission didn’t go as far as some might like, but no other big-bank CEO has been so candid.  And while critics of the firm quickly dismissed Blankfein’s statement, it surely had a big impact on clients and helped the firm begin to rebuild relationships strained by the crisis.   Settling with the SEC for $550 million was a vivid acknowledgement, too.

3.  It’s doing things differently.  Contrary to popular belief, effective PR is about actions, not words, and Goldman has been willing to act.  It created a business standards committee in 2010, which made 39 recommendations for improving business practices.  Strong institutions learn from trauma.  It’s telling that no other big bank has voluntarily reviewed and revised its standards of conduct.

Goldman also deserves high marks for its efforts to foster economic growth, here in the U.S. and overseas.  It has committed $500 million to support small businesses in the US and the UK, and its 10,000 Women initiative, begun in 2008, is providing access to business education for underserved women in 22 countries.

Sure, $500 million is a fraction of the annual bonus pool, but it’s a sizable sum.  And beyond money, the firm is opening its considerable brainpower to these enterprises, a resource for which big companies gladly pay millions.

4.  It engaged the issues.  It’s often difficult to have a rational discussion in the glare of the media spotlight.  So Goldman has offered its views on a variety of issues – from financial regulation to environmental sustainability, mainly on an extensive section of its website.  And its “Progress is Everyone’s Business” advertising campaign was focused and compelling, putting the issues in the forefront, rather than the firm, which isn’t an easy thing to accomplish for egocentric bankers.  It’s easy to scoff at it these tactics as self-serving, but it’s a serious effort to present important issues, supported by facts.  No shouting, no frenzy.

5.  Because, after all the battering – the acres of bad press, the high wattage Congressional hearings, the protests – Goldman Sachs is still at the top of the heap.  It remains the smartest firm; the most envied, the most copied and the most sought-after among freshly minted MBAs.  For proof, see Fortune’s “Most Admired” list, where it remains the top-ranked financial firm.

Goldman’s not perfect, and some changes, like its compensation practices, are still slow in coming.  But it has shown an ability to listen and adapt, which is crucial for winning the image battle – and creating an enduring, successful business.