The tumultuous domestic automotive market has left a wake of suppliers scrambling to save themselves through reorganization and restructuring – a painful but necessary survival tool. It’s hard to do, and even harder to talk about. Communication is the last thing on their minds. After all, employee buyouts, plant closings, asset sales, contract renegotiations and such are bad news, right? Why call attention to your problems?
The deadly information vacuum
Unfortunately, financially distressed companies too often adopt a bunker mentality as they fight their way through these wrenching changes. There’s no question that restructuring is scary for everyone involved, but leaving your constituents in an information vacuum only compounds the problem. The less news they have, the more likely they are to jump to rash, even irrational, conclusions. You’re perceived internally and externally as a company in trouble; potential customers shy away; suppliers and vendors don’t want to do business with you, or will only do so on a cash basis; essential staff may leave. In an industry that thrives on speculation and rumor, the damage to your image and reputation can be serious and long-lasting if not managed at the onset.
Consider two contrasting examples: Collins & Aikman kept its problems so concealed that even the Board of Directors was not fully aware of its dire situation until it was too late. The CEO was fired and the company filed for Chapter 11 a few days later. The company was not able to recover and was liquidated. However, the result of Tower Automotive’s bankruptcy process was just the opposite. Tower communicated openly and honestly with all stakeholders at every step along the way. Some of the news was painful, but everyone was kept informed and a solution was found that enabled Tower to emerge successfully with a bright outlook.
Sustaining market confidence
You must confront these issues head-on. It’s all about sustaining stakeholder confidence by continually demonstrating that everything is under control and the company can be depended on to deliver. Customers, suppliers, stockholders and employees all must understand what’s happening as well as the reasoning behind it. They need a clear view of the big picture and their place in it.
Difficult steps of the restructuring process such as plant closings and buyouts tend to grab all the attention. Although perceived negatives must be acknowledged honestly and directly, and their importance to the ultimate goal explained, the emphasis must be on the positive – the end result of a healthy and competitive company.
Communicating to all stakeholders
Communication is not that different from restructuring – you have to do it, and you have to have a solid strategy for getting it done. A detailed strategic communications plan helps you tell the right story clearly and succinctly to all stakeholders. It serves as a road map showing when to communicate and what to communicate (and what not to communicate) internally and externally, to ensure that the right messages reach the right audiences throughout the reorganization process. The right communications plan should employ a wide range of tactics that can range from personalized letters, email blasts and town hall meetings to news releases, select media interviews, web casts and video updates. It demonstrates you’re in control, moving in the right direction, and value those who you depend on for success.
Communications specialists are a key component to restructuring success. They should be involved in the process from the beginning to shape the messages, apply the right tactics and time all communications for maximum impact. They’ll help assure that the emphasis stays on the ultimate goal – sustaining stakeholder confidence and presenting a stronger company, well positioned for ongoing and profitable success.