The Credit Crunch: Tough Calls, New Opportunities

When recession starts to bite, does your organisation see communication as an essential or a luxury? In hard times, should you shun the spotlight or stay visible and on message? Are your spokespeople adequately equipped to deliver bad news?

Word from the US in recent months suggests communications budgets may be vulnerable. In Australia, business journalists and industry insiders say that cutting back on communication in the middle of a credit crunch is a mistake.

As the global financial crisis increasingly affects Australia, smart organisations will make unprecedented efforts to maintain the trust and confidence of investors, staff and customers. That means communicating often and effectively. Good media performers will stand out as never before.

STAYING VISIBLE, MAINTAINING TRUST

“I would say to CEOs and their communicators, this is not necessarily a time to keep your head down,” says a senior Australian business journalist. “It’s about confidence. Leaders need to be seen and heard, internally and externally.”

Many other corporate affairs and communications managers interviewed on this topic agree with this business journalist. Their overall feel for this period of financial unrest is to maintain a sturdy company front and continue to provide the public with updates whenever something changes that affects your company. A major listed company’s corporate affairs chief declared that, “We’re in for a bumpy ride but you can’t just shut up shop and say ‘we’re not talking’. It’s probably more important than ever to be out there talking to the investment community and to be in the financial pages of the influential papers.”

Another communications manager from a prominent financial firm concurs with the belief of remaining visible and uses this technique as a key part of her communications strategy, “What’s most important to us is to get our message out. It’s about being proactive.”

An investor and corporate affairs manager in the construction sector  reiterates that it is essential to not only inhabit a presence in the public eye during demanding times but also during successful periods, “You can’t hide (bad news) and you can’t gild the lily,” he says. “If you try to fudge things it becomes a trust issue.”

The senior business journalist also shares this view, “You can’t spin your way out of reality. You have to be honest but investors are very skittish - you have to be careful about how you deliver bad news.

“One of the best examples of leadership we’ve seen recently in Australian corporate life was Marius Kloppers (calling off BHP Billiton’s Rio Tinto bid). In this environment you have to be agile and you have to communicate that agility as a strength. He was able to get the message across that this decision was made in shareholders’ best interests.”

DELIVERING BAD NEWS

For senior corporate spokespeople charged with delivering bad news, the report card from the journalists who observe them is generally good. But they say it’s easy to tell who’s prepared, and who isn’t.

“In the top 50 (companies), they are generally pretty polished and on-message,” says a veteran business commentator. He says those who appear not to have had much media training stand out. “Once you get outside the really big companies, it’s pretty varied. You tend to get more personality – which is good from my point of view in interviews – but they’re more accident-prone.”

The finance communications manager says she has found that when the news is bad it’s crucial to present it to the media at the right time, with the right people, in the right way. Her organisation has recently had to go public on “sticky issues” and has prepared meticulously for these announcements. The spokespeople who face the media are comprehensively briefed and media-trained, are hand-picked for their knowledge of the issue they will be speaking about and for their ability in a given medium (television, radio or print); on occasion, even for individual journalists.

“We don’t put anyone (from our organisation) out there unless we’re confident they have the necessary skill level,” she says. “It is important to find a media training company that understands your long & short term corporate strategy, issues management principles and your company’s needs. It is important they are honest about our spokespeople and advise on whether they’re going to be suited to different media.”

As economic conditions tighten, companies that have never had big media profiles may find themselves scrutinised, not just by the financial press but also by the general news media. “I would say that before the credit crunch – the global financial crisis – 90 per cent of our coverage would have been on the financial pages,” says the financial communications manager. “Now we’ve hit page one of the Tele.”

This can pose problems for communicators who normally talk only with business reporters and who have built relationships. A general news reporter who has no relationship with the communicator will be potentially more aggressive in manner and/or questioning.

Additionally, he or she may not speak the language of your industry, leaving the way open for misunderstandings. In a situation like this, you need to express yourself even more simply than usual.

At Media Manoeuvres, Managing Director, Sam Elam believes the current climate may well be an opportunity to stand out in a positive way, even when delivering bad news.

“ The media is no longer automatically blaming individuals, the executive team or the Board for staff cuts, bad results or other corporate under performance. This provides an opportunity for spokespeople to get out there, deliver the bad news without being crucified for it and then get positive messages out”, she said.

“But only if you have tested the key messages under simulated interviews before doing the real thing and have well honed media skills to make sure the positive angle is reported”.

HARD TIMES, FRESH OPPORTUNITIES

New opportunities for good communicators may emerge as media companies further prune staff numbers.

“Productivity is at an all-time high,” says a senior newspaper writer.  “People are aware that every piece counts, and that they need to keep output up and work to the best of their capabilities.”

The prospect of increased reliance on professional communicators is something of an elephant in the newsroom. Broadly speaking, many journalists are anxious about the increasing volume of work they will have to produce each day or week, yet no individual journalist wants the quality of his or her own reporting to suffer.

Many reporters and editors worry about what British journalist Nick Davies has dubbed “churnalism”, as do corporate communicators who value quality journalism.

The likelihood remains that where newsrooms are under-resourced, reporters will be increasingly reliant on story ideas, briefings and research offered by trusted sources. If you’re one of these sources, and maintain that trust by steering clear of spin and supply accurate material and informed comment, your relationships and opportunities can only get better.

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