TQ Restructuring

By Susanne Arndt

Why crisis manage­ment and strategy communi­cations should go hand in hand

If a boat is heading towards a reef, immediate action is called for. It must be steered out of the danger zone as quickly as possible. But often mistakes are made in the rush. The result: The boat runs aground. The same behaviour can be observed in many companies that are facing existential threats due to the current crisis. They do every­thing to reduce costs and secure liquidity as quickly as they can. Sure – if there is no water under the keel, you no longer need to worry about staying on course. However, if a company only focuses on short-term measures in a re­struc­turing process, they do not gain anything in the long term. It is more success­ful in the long run to consistently tackle re­struc­turing and cut costs, but at the same time establish a forward-looking strategy and make the necessary invest­ments. The key word for manage­ment in this context is am­bidex­terity – with corresponding demands on communi­cations.

Balance stake­holder expectations: While creditors and banks primarily want certainty that out­standing loans will be serviced, customers need to be certain that a company will stay in the market in the long term – other­wise they might be reluctant to buy, which would make the situation worse. The employees need to be aware of the challenges their company is facing, but they should also know that their efforts will pay off in the long term. Suppliers and partners need to be kept on board, even if it may be necessary to rene­go­tiate deadlines for pay­ments or purchase volumes. Communi­cations teams need to put the fight against the crisis at the centre of the narrative in order to be credible. At the same time it must be conveyed where the journey is going in order to avoid losing stake­holders’ trust and mobilise internal forces to overcome the liquidity crisis.

Satisfy the increased need for explanation: Crises exacerbate insecurity and anxieties about the future. Alleviating these fears is a key communi­cations task. Since success can no longer be achieved by following the traditional “faster, higher, further” way of thinking, a new, cleverly and care­fully worded narrative is needed to explain that only agility can lead to stability in times of crisis. This narrative can also help explain that cuts and invest­ments in future projects need to be made at the same time. In this context it is important to trans­late these explanations into regular and personal communi­cations. The more agile the course of a company is, the tighter and more frequent communi­cations need to be in order to convey a feeling of security.

Openly address what is unclear: Future concepts are not easy to come by and economic trends are difficult to predict. Therefore it is key to withstand insecurities about the future and allow for calm analysis and strategy develop­ment. The challenge for company management and executives in this context is to communi­cate about the future without having all the answers them­selves or being able to fully flesh out the new roles of both the company as a whole and the individual employees.

Provide a continuous sense of direction: Precisely because the pressure to change and become more efficient has persisted for a long time in many companies and is putting a strain on employees, it is important to explain all the steps of change and to put the overall process into context. The perceived contra­diction between the need to invest in the future and the in­creasing pressure to save costs in the existing business must be resolved. To gain acceptance for such an approach, companies need to explain on an ongoing basis how income and cost savings on the one hand can be reconciled with invest­ments on the other hand.

As always: Communicate actively! However different the expectations of the individual stake­holders may be, what ultimately counts is the success of the re­struc­turing process and the credibility of the new strategy. To achieve these objectives, intensive internal and external communi­cations are needed. To not lose sight of the long-term strategy and to communicate it in times of crisis requires additional energy. But it is crucial to make these efforts and to convey the next steps. In this way it will be possible not only to ward off the immediate danger, but the energy of the storm can be harnessed in order to emerge from the crisis stronger than ever.

Photo: iStock.com/Chilly009