/amo restructuring report

Almost half of the German partici­pants in a survey carried out by the /amo Network in several European countries told us that “after the pandemic, the success of a business will be measured more by resilience than by pure growth”. This is re­mark­able because it dispels the tradi­tional view that the manage­ment’s agenda must focus solely on numbers and efficiency, par­tic­u­larly in a restruc­turing scenario.

But how do you define corpo­rate re­silience? The term appears in many different discourses – from psycho­logy to eco­nomics, and from social sciences to materials manage­ment. Re­silience is not used in the meaning of strength (i.e. one needs to “endure” some­thing), but to describe the agility and speed required to appro­pri­ately react to set­backs. A company is resilient if it can quickly adapt to new condi­tions and demonstrate “stability through flexi­bil­ity”.

This is a bold step beyond the context of numbers-driven manage­ment agendas which are the basis for most restruc­turing operations. Restruc­turing programmes often follow the logic that a joint, time-limited “effort” would bring the company back on track. The language used often reflects this, by naming restruc­turing projects “fit­ness programmes” and rallying employees to achieve a common goal with maximum per­formance.

Immediate crisis management and securing liquidity still have top prio­rity in such an acute crisis. There is also greater recognition of the impor­tance of pre­paring a company to deal with un­fore­see­able events. Economic conditions, as the pan­demic has shown in such dramatic fashion, are more vola­tile than ever. Up­heavals of various dimensions are un­settling the markets at ever shorter inter­vals. Companies are per­manent­ly under pressure to adapt. Hence, it is in­creasing­ly difficult to pro­claim a return to stable conditions as the goal of a restruc­turing process.

Con­sequent­ly, stake­holders’ communi­cation needs are becoming more complex and require more attention. Three aspects should be considered to in­crease resilience through thought­ful communi­cations:

  • Involve communicators at an early stage:
    Communi­cations in companies is still often reduced to informing people about decisions that have already been made. During a restruc­turing process, this is often too late. Communi­cators need to be at the table when decisions are made and assess the best options to­gether with the manage­ment.
  • Communicate uncertainties:
    In un­certain times, no one should ever give the impression that they al­ready have all the answers. Instead, the reasons behind a particular course of action and the under­lying assumptions should be explained and a readi­ness to deal with open questions demon­strated.
  • Don’t hide:
    In un­certain times it would be disastrous to avoid communi­cating. Lack of communi­cation can lead to employees feeling like they are no longer in touch or aware of what is happening inter­nally, especially in a con­text of working from home. So don’t hide! Communi­cating that you are not able to say any­thing (yet) is always better than remaining silent. Continuous up­dates promote trust in the actors and in the restruc­turing plan, thus in­creasing re­silience.

Communi­cation that takes these points into account creates trust – and helps to build a maximum of re­silience.

More on this topic in the /amo report “When will the wave break? Corporate insolvencies & restruc­turing in Europe”.

Photo: Deekeling Arndt/AMO

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