Bill Gross’ resignation this morning is the second staffing blow
to the enviable PIMCO brand in 2014. Former
PIMCO CEO Mohamed El-Erian stepped down at the beginning of the year to spend
more time with his daughter; now Gross, who founded the company, has left to
manage the new unconstrained bond fund at Janus Capital. These departures are perhaps
the culmination of the painfully public dispute between El-Erian and Gross,
which has frightened investors and led to more than $4 billion in redemptions
in June alone.
Both the New York Times and Wall Street Journal, along with countless other publications, have published
pieces today effusing on recent behind-the-scenes action at PIMCO. Internal
conflicts over the firm’s business strategy, as well as Gross’ volatile public
persona of late—he delivered an address at the Morningstar Investment Conference
in sunglasses, referring to himself as “a 70 year-old Justin Bieber,” and wrote
a monthly investor newsletter dedicated to the memory of his late cat—had made
Gross’ departure from PIMCO likely. Anonymous sources told the New York Times
that “a decision had been made…for Bill Gross to leave or be forced out.”
Even with that decision in place, though, it appears Gross
may have caught PIMCO off-guard this morning by announcing his resignation
simultaneously with Janus’ announcement of his new position. Janus publicly
announced that Gross was joining their team around 8:30 am EST this morning and
all early media stories surrounding the event focused on Janus. No comment from
PIMCO was made until their press release at 9:37 am EST—a full hour after the
story broke. One would imagine then, that PIMCO was just as surprised to hear
about the departure of their CEO and founder as the rest of the world.
If this is true, then PIMCO put in an impressive display by
developing a statement within an hour of Gross’ announcement and committing to
announcing a successor by the end of the day. However, it still leaves a gaping
question of the PIMCO public relations team: why weren’t they prepared for
this? Bill Gross has been threatening to leave, and the company environment has
been volatile over the last twelve months. At the least, the company should
have had a contingency plan ready to fall back on in case Gross left prior to
being pushed out.
There are several steps the public relations team should be
managing today in order to effectively steer their brand through Grossgate:
- Notify Allianz. As PIMCO’s parent company, Allianz should be the first port of call for the pr team. They need to let their partners know what has happened and prepare to coordinate efforts for the duration of this crisis.
- Make PIMCO the most reliable news source. Investors are going to be searching the internet for information on what has happened at PIMCO and what they can expect to happen next. By putting a statement on the firm’s website and using their digital presence as a key communication tool, PIMCO can control the story their investors hear much more easily. Rather than using Google or Yahoo to find a third party version of events, investors should be able to get an official report directly from PIMCO.
- The website is also a key location to offer support services to investors who may have already been nervous about leaving their money in PIMCO’s care. A call to action inviting investors to contact their advisors, read the firm’s FAQ’s on the situation, or call their hotline for more information would go a long way toward making investors feel secure.
- Inform employees. Investors probably aren’t the only ones feeling insecure about their futures right now—employees and their families have had a major shock, too. PIMCO should prioritize communicating with their employee family, and offer them as much information as possible about what they can expect. This should be done, of course, with the knowledge that any information passed to employees will soon be leaked to the media, and should be vetted as a press release.
- Communicate with key stakeholders. Official conference calls or webinars with advisors and institutions should be arranged to outline what steps PIMCO will be taking in the next weeks to protect assets while transitioning to new leadership. Again, these people will likely be contacted by the media and any information passed to them will be public long before PIMCO addressed the media directly. With that in mind, official communications with advisors and other industry professionals should be loaded with key messages to help steer what the media is hearing from all sources.
- Work with the media. Finally, PIMCO should be proactively reaching out to the media, keeping journalists informed and reinforcing the messages that Douglas Hodge, PIMCO’s chief executive, began distributing this morning: they are grateful for Bill Gross’ contribution to the firm, but have been aware of a rift within the management and are looking forward to restoring investor confidence
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