TQ Restructuring

By Stephanie Verena Prager 

In order to continue to remain competitive, many companies have started trans­formation and re­struc­turing processes due to changed market conditions and the persistent recession. Professional communi­cations that create trust and clearly convey the strategic direction of the company as well as protect its reputation are vital in order to be success­ful in this context. From many years of experience in advising companies in such periods of change, we can derive the following general points.

1. Be honest 

Even if the persistently weak markets and geo­political risks are at least partially to blame for the current situation in many companies, they should not be used as an excuse for re­struc­turing. Many sectors had already been in a process of radical trans­formation before the current situation emerged, for example the automotive industry. There­fore, it is advisable not to use the continuing crises as a cover-up for re­struc­turing organi­sations, which would have been on the cards in any case.

Instead, external and internal stake­holders should be advised of the reasons and objectives of a planned re­struc­turing process comprehensively and at an early stage. This may be painful at times, because in many cases the problems were due to the company’s own strategy, in­efficiencies, or manage­ment mistakes in the first place. How­ever, honesty and transparency in communi­cations will help to find acceptance for the planned re­struc­turing measures. 

2. Anticipate the interaction between external and internal communi­cations 

Often, companies try to down­play their problems hoping that the public will not notice what is going on. This is under­standable to some extent, since re­struc­turing always causes anxiety and in­securities and critical media coverage could amplify these feelings. It is also legitimate to communi­cate planned re­struc­turing processes internally first, but manage­ment must be aware that infor­mation usually escapes into the public sphere very quickly once a larger number of employees has been notified – and the company risks losing control of communi­cations because the narrative can take on a life of its own. 

Therefore, it is important to prepare specific messages for internal and external target groups extremely well and to define an exact schedule and measure­ment plan for announcing and orchestrating them. 

3. Communicate coherently and take into account how different groups will be affected in different ways 

During restructuring projects companies are often faced with various strategic options and are thus under pressure to make decisions and act. Frequently, decisions need to be reversed or measures adapted during im­ple­mentation, because certain parameters shift un­expectedly.

In those situations the company manage­ment must not come across as being driven along by the crisis. In order to ensure the credibility of the company’s direction internally and out­wardly, figures, facts, and decisions (and any changes to them) should be framed and planned measures conveyed stringently and coherently. 

At the same time, different perspectives of stake­holder groups and ways they will be affected must be taken into account for communi­cations – even though one narrative is being conveyed internally and externally.

4. Do not give rise to false hopes 

During restructuring processes it is vital that investors, employees, and business partners do not lose their trust in the company’s ability to act. It is thus crucial to communicate the vision for the company’s future effectively.

In doing so, it is advisable to stay realistic and not to communicate false expectations in terms of the challenges associated with a re­struc­turing project and the company’s future viability. If the real situation the company finds itself in should become known at a later time, the trust of external and internal stake­holders will quickly be lost, which ultimately could add to the company's woes.

A comprehensive, realistic narrative containing details on opportunities and risks for the company as well as the impact on the stake­holders is thus essential.

5. Facilitate personal dialogue and create regular opportunities for communications

Many employees still spend a sizeable proportion of the week working from home rather than in the office. Communications thus frequently take place via digital channels.

However, in cases where employees are personally affected by the re­struc­turing, for example due to short-time work schemes or job cuts, face-to-face communi­cations and open dialogue between manage­ment, executives and employees are imperative. The same is true for communications with external stake­holders, including business, partners, banks, and investors.

Here, it is essential to brief stake­holders pro­actively, to explain decisions and put them into context, and to be available to answer questions from all stake­holder groups – ideally by establishing regular live communi­cations events to announce milestones reached internally and externally and to gauge the mood among the stake­holders. 

Other important points 

In addition to the points mentioned above, one thing is crucial in all communications, including during re­struc­turing processes: Good preparation is essential in order to make a difference! Once a company is in crisis mode, time and resources are in short supply. Re­spon­sibilities for internal and external stake­holder communi­cations, communi­cations cascades as well as the interfaces to the various depart­ments need to be clearly defined and the contacts within the respective stake­holder groups must be known.

If a company takes all these points into account, communi­cations can make a vital contribution towards the success of the trans­formation or re­struc­turing process. 

Photo: iStock.com/olaser