Communicating in a downturn

Managing change and communicating it in times of uncertainty is as important as the transformation itself - even if the news is sometimes unpalatable, argues Bridget Biggar

One of the most surprising features of recent economic recessions has been the general slowness in anticipating the dire consequences that inevitably follow in their wake, whether job losses, plummeting profits or worse.

With at least one full-blown recession dominating UK headlines on average every 10 years or so since 1980, you could be forgiven for thinking that the message might by now have sunk in, but many CEOs still seem to be staring hard into the headlights when it comes to dealing with the fallout. But they’re not the only ones who don’t always read the signs correctly.

Stock markets are supposed to factor in all the bad news up to six months ahead, but in 2002, for example, it was 10 months before investors (and I include professional investors and institutions) woke up to the fact that that particular recession was already over, with stocks only edging up in October that year. Despite the pundits routinely telling us what great indicators of economic sentiment the stockmarkets are, there is another, more recent example of them apparently lagging behind reality. In October 2007, markets peaked just as the credit bubble was bursting - but two months later the worst recession since the 1930s officially started.

This apparent lack of foresight by the markets is equally manifest among CEOs, many of whom are so absorbed by day-to-day operational issues that, when the economic climate worsens, they frequently find themselves having both to announce and implement change from a position of weakness.

Transforming a company’s fortunes from such a position is, unsurprisingly, a much tougher ask of a CEO than of him or her moving the operation from being simply a good one, to a great one.

Research shows that it is relatively rare for transformation programmes to succeed; a recent McKinsey poll of 3,000 executives put the success rate at less than 40 percent. It also found that many companies under pressure do not make use of proven tactics for implementing change. Instead, they tend to become more secretive, when the situation really demands open leadership and skillfully-planned communication.

But with mixed signals over an imminent recovery the order of the day, it is still not too late for CEOs to do some scenario planning of their own, using a range of management tools at their disposal. This simple three-point charter can help CEOs manage and communicate change:

Anticipate

Don’t let a developing difficult situation drift out of control, making the company even more difficult to manage, and run the risk of letting negative news dominate the agenda. Be honest at all times: concealing or spinning potentially bad news always comes back to haunt you and can seriously undermine trust.

Staff will applaud honesty and are more likely to support tough measures if you engage them at the outset and share your plans with them where practicable.

Plan

Start planning how you are going to communicate the change programme simultaneously with developing it. What are the key messages, internally and externally? What headlines do you want? Is there likely to be an impact on your brand? Will you need to test sentiment later, using market research?

Ensure you and your senior managers are consistent. Rehearse. Hire in professional advice, including presentation skills and media training support if you expect media interest.

Communicate

Set out clearly what your plans are. Employees expect leadership and then for that leadership to communicate effectively. Adopt innovative communication tactics that first engage and then invite feedback from staff. Call a town hall meeting if the mood demands it.

Always seek opportunities to put difficult news (such as a redundancy programme) into context: improved financial performance as a result of consolidation, stronger competitive position, well placed to capitalise on opportunities during a recovery etc.

Remind your team why you’re in business and highlight some of the recent successes to which they have contributed. Set clear targets and then communicate what you are expecting from the changed company. The McKinsey survey found that companies that used all of these tactics succeeded more than 80 percent of the time.

For many companies, a sharp reality check now can pay dividends later - in a number of not-so-obvious ways. It is crucial to engage staff early in the change process: you will boost morale, create a sense of inclusiveness and, crucially, consolidate the sense of loyalty many will already feel towards you and the company. If your talent feels part of a happy ship, it is less likely to head for the competition when the good times do return.

Ultimately, though, today’s CEO has to accept that managing change is also about managing reputation. Properly handled (and communicated), the transformation process can positively impact corporate reputation and add real brand value to the bottom line. But the CEO who is unprepared for change - forced or otherwise - can expect much tougher scrutiny from the most unlikely quarters. Just ask Sir Fred Goodwin.

Bridget Biggar is managing director of Management Intelligence, a member company of All About Brands plc, an international marketing services and communications consultancy.

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