Restructuring

State involvement adds new complexity to Corporate Communi­cations

The German government has activated many levers in this pandemic to alleviate the strain of the historic crisis on companies – from reduced working hours and immediate assistance to at times substantial state involve­ment in private companies. The latter comes into consideration where major corporates with a typically large work­force find them­selves in dire straits solely as a result of the pandemic. Such state inter­vention kicks in where companies are expected to be economically viable again once the crisis has subsided, for instance in the aviation industry or travel sector.

Active preparation is required to secure a rescue package

As crucial and as welcome such state support is, it also places additional demands on Corporate Communications, which typically begin before any, often life-saving, funds have been received. After all, the political decision makers have to be able to justify such intervention to the public as proportional to need and not sufficient to distort competition. That would be the case if, as a result of state intervention, outmoded structures were preserved and, in the process, hand­brakes applied to innovation. As well as the need to provide factual evidence, (which is always thoroughly checked as part of any state inter­vention), the importance of public perception cannot be under­estimated. The question always is: “Why is it us who receive govern­ment aid?” and it must be answered. So it is essential for the Communications team to produce quick, yet detailed, analysis of all stake­holder interests, prepare and sign off a robust narrative and make early, active approaches to political decision makers. Different decision-making scenarios and lines of argument also need to be developed to ensure the company is ready to present its case quickly and articulately.

Heavy lifting for Communications team

Even in “normal” times, it is the job of Corporate Communications to ensure a coherent stance that clearly reflects the various internal and external stake­holders. In the context of any state rescue package, and the associated glare of extra media attention, the task becomes even more important – and comes with great challenges. Take Lufthansa, for instance. While on the one hand it was about receiving state aid and negotiating the extent of govern­ment assistance, it was also a matter of persuading a large single share­holder to agree to the rescue plan. Even with the financial backing of the govern­ment, drastic internal cost-cutting measures had to be communicated. At the same time, there was additional pressure for good external communications, because a large number of customers were demanding rapid refunds for flights cancelled as a result of the pandemic and were even less willing to be patient than usual since the company had just received a massive cash injection funded by “their” taxpayer money. A rapid refund process would have a devastating effect on the liquidity of the company, while a slow repayment process would have a debilitating impact on customer loyalty. Since communications depart­ments are operating in a permanent state of high stress due to the crisis situation, external help in monitoring the various issues and preparing communi­cations materials can be a sensible move.

Pressure of increased scrutiny

The media tends to cast a particularly beady eye on the actions and state­ments of corporate leaders when state inter­vention is involved. Issues like bonuses, redundancy packages and manager salaries but also the way a company deals with suppliers, customers and employees can trigger negative debate at the company’s expense and damage corporate image leading to a loss of reputation more quickly than usual. The increased scrutiny can also raise strong conflicts of interest when, for instance, restructuring within the company seems to run counter to govern­ment support measures aimed at retaining jobs. Planned HR measures, spin-off or out­sourcing of business areas and investment in future projects will need even more detailed explanation than usual, if indeed they can be implemented at all, under these circum­stances. Companies need to keep a closer eye on debates and decision-making as they can have a direct influence on the behaviour of state investors. It is important to show strong evidence that corporate decisions are necessary and indeed advisable as a matter of responsi­bility towards the new financial backers. It must be made particularly clear that no structures are being preserved that would not have been competitive without state inter­vention. On the other hand, any suspicion that the company is using the crisis and state assistance to maximise their profits at the cost of the public must be dispelled. Maintaining this delicate balancing act requires consistent, internal and external messaging on a regular basis.

Never waste a good crisis!

The coronavirus crisis, like all crises, also harbours the potential for positive change. For instance, this pandemic has sped up new digital forms of working and improve­ments in internal processes, and in many places triggered a trans­formation of product range or business model – trends which had begun to emerge before the crisis but have since accelerated. Along the lines of Winston Churchill’s maxim: “Never waste a good crisis”, companies can use the added public attention that comes with govern­ment intervention to present them­selves as responsible social agents while at the same time showing evidence of their own future viability. Of course, that will not work if communications smoke­screens are put up without any factual basis. The other side of the coin, however, is that clever communi­cations in these difficult times can give companies the opportunity to articulate corporate decisions and strategies for sustainable success to government, other financial backers, customers and, no less importantly, their own employees. At every opportunity, all corporate activity must be presented with the clearly expressed goal of making govern­ment assistance obsolete.

With that in mind, and despite all the afore­mentioned limitations associated with government assistance, now is a good time to question past communi­cations principles and reflect on themes that may not have formed part of the Corporate Communications strategy. To be more specific, this could take the form of professionalising the monitoring of social and political debate, as media and political communi­cations become more closely inter­twined and creating pre­requisites for faster, more active communications – by, for instance, implementing newsroom concepts. Particularly in this phase of greater public scrutiny, companies can win back and retain a more positive inter­pretation of their own corporate action by taking a new approach to Corporate Communications.

@ Photo: iStock