Richard Merrin – Managing Director at Spreckley
It seems like a lifetime ago now, but back in the dark days following the collapse of Lehmans, the mood of the media changed. The once sunny uplands of the global economy had turned very dark and the media responded accordingly jumping on anything to darken the mood. The end of 2008 saw the tide pull out in dramatic fashion for the UK High Street and the impact of the downturn hit home in a dramatic day when in the space of less than half an hour I was appointed to handle the media on the collapse of MFI, followed almost immediately by the administration of Woolworths, in which my own partner saw the end of a 15 year career.
The point of referencing this is that while insolvency practitioners need to focus on the business in hand, the communications teams face the very real human cost in terms of the impact on jobs, suppliers, creditors and customers as it plays out in the media.
When you are in involved in a restructuring, capturing the essence of the case and doing so quickly are major hurdles in the road to effectively handling the media. Being at the eye of a media storm can, and is, an uncomfortable place at times, and yet it is a vital part of the insolvency process. Not being able to respond to even the most banal question can and does, undermine the credibility of the insolvency practice.
For communications professionals a keen eye always needs to remain firmly focused on supporting the overall objectives of the restructuring process. However this in turn has a direct impact on employees, suppliers and customers and can create an environment of confusion, anxiety and distraction. So while the core job of rescuing the business, or realising the return for creditors, takes place, the communications teams invariably face a barrage of media and even customer, enquiries.
If the communications are managed poorly, it can damage a brand and productivity, erode employee, stakeholder and customer engagement and delay value creation or realisation. But if managed well, the opposite can occur – increased productivity, improved engagement and accelerated value creation.
Communicating change during insolvency is particularly challenging for several reasons:
- The pace of change: New decisions unfold daily, and the media can become unsettled in this dynamic, fluid environment when their questions cannot be answered immediately and final outcomes are unclear. What looks like an important development one day may be superseded by other events on the next. Since the goals and strategic direction of the restructuring are emerging and evolving, it is impossible to communicate definitively. Without an effective communication process that equips leaders at all levels to converse honestly “in real time” with the media, rumor and innuendo will take over and cynicism will build.
- Issues around communication: The media will demand ongoing communication about what’s transpiring and when more information can be released. If the media feel that information is being arbitrarily withheld, it can create serious trust issues. Furthermore, believe you me, if you do not comment then there is always someone else who will. The press need to fill column inches and they will source comment from other commentators so always ensure you keep them abreast of developments.
- Be wary of the counter-briefer: As experience has taught me, the media can also be used against you in an insolvency case. There are always players in the process who will do their best to talk up – or more often talk down – what is taking place dependent on their own individual objectives. Leaked documents, recorded telephone conversations, on the record briefings – all are what a BBC journalist once described to me as ‘legal journalistic sources’. So be warned!
- Off the record: No such thing! The minute you open your mouth to a journalist it is on the record. As people have become more aware of this a new phrase is being touted – ‘guidance’. In other words, can you Mr PR point me in the right direction for the ‘real’ story? But be wary.
- Delivery: messages and implementation. Understand how the insolvency process will affect and influence each stakeholder group. While every creditor, employee, supplier and customer, regardless of level or role, will be concerned about “What’s in it for me?” each audience will have additional key issues, for example:
- Creditors: how and when do I get my money back?
- Employees: Does this change my employment deal?
- Managers: What should I say to my team? What support tools do I have?
- Unions: How will we save jobs? Protect benefits?
- Customers: how will this impact my contract? Level of service? Existing business relationship? Gift cards?
- Suppliers: How will this impact my business and my relationship with the company? What does the future hold for me?
- Anticipate the key issues for each stakeholder group. Be clear on where resistance is likely to emerge, and plan communication to help address these issues.
Assessment: measure and reinforce
Communication during an insolvency or restructuring process is not a one-time event. It requires constant attention and reinforcement to promote a sense of progression. When stakeholders are anxious, they are less able to absorb initial messages, so repetition is critical.
Also, key messages must change as decisions are made and integration proceeds. An efficient way to evaluate the effectiveness of current communication and assess what more is needed is to conduct regular “pulse checks,” which are short, random interviews or surveys across and beyond the business to monitor progress.