Besides being a threat to human health, the corona pandemic has also triggered a serious crisis in the real economy. Across sectors, it is causing declines in revenue and liquidity bottlenecks, while at the same time it is difficult to plan with any certainty. And all of this is happening during a phase of digitalisation, changing market conditions and high cost pressure in which many companies are already in the midst of transformation processes, changing their business models and having to make considerable investments.
The corona crisis has made conditions more challenging for many companies. It has increased pressure in a situation that is already highly complex. The following factors contribute to this complexity:
1. Multiple simultaneous issues: Digitalisation offers companies an opportunity for a turnaround; it is both the reason and key catalyst for strategic adjustments. At the same time, it is also the greatest challenge. Capital is needed to overcome the digital backlog. And that means resorting to radical cost-cutting in certain business areas, while investing and expanding in others. The pivotal task for communications teams is now to convey the good news and the bad news simultaneously.
2. Accommodating individual interests: Restructuring programmes no longer concentrate on a limited number of centres affected by change. In a time of digitalisation and innovation, a more comprehensive readjustment must be made to business models that impacts all business fields and units – both nationally and internationally. However, the rational business approach often clashes with individual interests. In politics and public relations alone, widely diverging demands on multiple different levels and in various regions need to be taken into account.
3. New business solutions: When considering ways of refocusing business activities and managing digitalisation, executives are looking beyond the traditional strategic repertoire. Partnerships and platforms, demergers and new joint ventures, disaffiliations and spin-offs, outsourcing and out-tasking must be explained anew to the stakeholders; the advantages must be spelled out from a variety of viewpoints. Communicating during the restructuring process means managing multiple stakeholder groups. Investors, suppliers, customers, mass media, policymakers, works councils and employees need to be informed and included. In the corona crisis this becomes more challenging, as it is no longer possible to communicate directly and companies are forced to increasingly use digital channels they have little experience with.
4. Added complexity due to corona: Restructuring processes are extremely challenging for companies even at the best of times. In these times of corona, the stress level increases even more: declines in demand, stops in deliveries, halts in production and contact restrictions lead very quickly to a collapse in revenue, the extent and speed of which could not have been predicted. The general economic crisis makes it difficult to procure capital in distressed situations. Extensive state aid is important and very welcome in this situation, but due to the large number of new measures it also increases the complexity of the restructuring process as there are new scenarios for the continuing operation of the company. These need to be considered carefully – also in terms of communications.
5. Additional public pressure: During the corona crisis, the media and society are keeping a particularly close eye on companies’ recovery measures, especially with regard to staff cut-backs. Suspicions (or rumours) quickly spread that a company is using the crisis to take restructuring measures that would not be implementable in “normal” circumstances. In addition, the impression might be created that the seemingly unlimited state aid should be enough to ensure job security. At the same time, the consequences of shorter working hours and cut-backs for those affected are especially severe due to the difficult situation. Families with two people in gainful employment are often hit doubly hard. This situation and the public opinion that goes hand in hand with it have to be taken into account in the communications process.
To put it in a nutshell: During the corona crisis, companies going through restructuring need to deal with additional complexity even faster and under stronger observation than usual. In this situation, three factors are more essential than ever to ensure that communications contribute towards a successful turnaround:
Preparation: The sooner the communications strategy is thoughtfully planned and the materials for various situations are ready to go, the better it is for the company concerned. Fundamental decisions and agreements have to be made before the situation becomes serious. If this is done, communications in the restructuring process can make a decisive contribution towards preventing damage to the company and building trust in its successful future.
A stable process: Restructuring programmes create uncertainty and nervousness. Communications should comply with all legal requirements and guidelines on content and should acknowledge the demands of all affected groups. This minimises speculation and knee-jerk reactions, and ensures that communications are active, not reactive. Moreover, this enables senior management to maintain authority over what is communicated and how it is interpreted.
Real perspectives: In restructuring programmes, facts, figures and data dominate. Communications that draw a convincing picture of the future make it easier for all involved to accept cutbacks; it also makes the company more attractive to customers and the capital market in the long term.
Our experts can help you going through restructuring – as a specialised task force, they make complexity of restructuring processes manageable and ensure that all relevant stakeholder groups are taken into account.
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