Boards and management teams planning their corporate recovery after the COVID-19 lock-down know it will continue to be a tough recessionary environment and changes will need to be made to their businesses to safeguard profitability.
Cutting costs, however, can be massively costly if handled the wrong way. Before you damage relationships, trash your corporate reputation or antagonise customers for years to come, think beyond the immediate cost saving. Visualise how your actions will be interpreted and plan your communication accordingly. Here are some likely situations you may face:
1. Cutting advertising, marketing and PR is a no-brainer, right? It’s not so simple. In the last recession companies that held marketing expenditure won market share, to be better placed when recovery came. The best way to get a larger share of a shrinking pie is to maintain more active communication than competitors. The large retailers and banks that have communicated well during the inital stages of the COVID-19 pandemic are an example of how to regain the public’s respect.
2. We simply have to downsize. Downsizing and restructuring announcements may become commonplace, but the way these are communicated to staff, suppliers, customers and public – and anticipates union reaction – will determine the views these groups carry into the future. Plan negative announcements carefully, with the aid of professional communication advice.
3. Fraud rises in tough times. It’s not just small time scammers that look to exploit disrupted businesses, major fraud can can cause considerable embarrassment as well as loss. Be on guard.
4. Beware goodwill deflation. Dumping your sponsorship arrangements, carefully created on-line community initiatives or local community support can create antagonism, if not handled sensitively.
5. Avoid corporate and personal embarrassment. Media is sensitive to the irony of executives inflicting pain with factory closures while continuing to live high on the hog. Bonuses, salary increases and management incentive schemes have to be well justified and reasonable in a recession. Any actions that can be interpreted as racketeering, or unfair to customers or suppliers, will be vociferously called out.
6. Learn to live with tough times. The knock-on effects will go on for several years, as they did with the GFC. The disruption to demand and supply throughout the economy is unprecedented, so don’t expect the world, or your company, to go back to ‘normal’ any time soon.
7. Don’t blame COVID-19. While it’s tempting to blame COVID-19 and the lock-down for every corporate weakness that is exposed, not every piece of bad news can be sheeted home to the virus disruption. Doing so may challenge the company’s credibility.
Each company’s predicament as it emerges from the COVID-19 lock-down to face the global recession will be different, but it is a time where professional communication advice can help you consider all aspects of potential announcements and talk confidently with the world.
For 35 years FCR has helped companies and organisations face disruptions and difficulties. Call Managing Director, Anthony Tregoning or Director Jeremy Kirk on (+612 8264 1000) for a no obligation discussion on how we might help you face the post-COVID-19 world.