Read the original article at the Journal of Corporate Renewal
These are unprecedented times. In a matter of days, the coronavirus pandemic virtually shut down American society, and with it, the wheels of industry came to a standstill. There is not one industry that has not been hit with the repercussions of this virus. In fact, “hit” may be an understatement, as the full extent of the damage is yet to be seen.
To make matters worse, the routines and activities that would normally provide safe harbor are now off-limits. Hunkering down and sheltering in place have replaced social gatherings, concerts, and the ever-popular retail therapy.
As events unfold, the impact on the global economy will become clearer. However, it is likely to be deep and prolonged, with the retail industry sitting at its epicenter. Although demand has grown at mass merchants and grocery stores on essential items, discretionary shopping has decreased substantially. Added to this are the closures of stores and restaurants that were already experiencing extreme challenges before the coronavirus outbreak.
According to Business Insider, as of March 12, 2020, retailers were expected to close more than 2,600 stores; that was on the heels of 9,300 store closings in 2019. Since March 12, Macy’s, Apple, Sephora, and others are closing their doors to help reduce the spread of the virus, likely making the 2,600 stores estimate lower than what is likely to occur.
Relatively few companies outside of the hospitality industry have announced significant job cuts, with many saying they will continue to pay employees. However, as The New York Times pointed out, “most small businesses do not have the financial buffer to pay workers for long if revenue dries up.” It doesn’t take a turnaround professional to know what happens when revenue dries up.
While the retail industry is hunkering down with the rest of the globe, businesses are grappling with reductions in staff, fundamental changes in operations—e.g., eat-in service versus takeout and delivery at restaurants—and keeping their key constituents informed and engaged. Amplifying matters, given the fast-paced and unknown nature of this virulent intruder, it is hard to know what to say, how much to say, and when to say it.
"Communications should stand upon three key pillars: communicate early and often, be open and honest, and express empathy."
Turnaround professionals are experts in crisis situations and are uniquely qualified to assist in these circumstances. However, because there is no benefit of experience to draw from in regard to COVID-19, some communications best practices will be created.
Communications should stand upon three key pillars: communicate early and often, be open and honest, and express empathy. Now more than ever, these pillars should sit at the core of any crisis communications plan. Writing for the Harvard Business Review, Paul A. Argenti, professor of corporate communications at the Tuck School of Business at Dartmouth College, aptly points out, “Put yourself in your constituents’ shoes to understand their anxiety. You will sometimes get it right, and you will often get it wrong, but it is still better to be as transparent as you can.”
This approach does a number of things. It highlights that transparency is more important than having the perceived “right answer.” And, it acknowledges that being wrong is OK. Being wrong is part of the folly of being mortal. That could not be truer, and more necessary, than during this current crisis. Now, more than ever, showing up as a human outweighs the shine of a corporate veneer.
In a crisis, especially one that is very fast-moving, it is critical to assemble a crisis response team immediately. This team should include members of the leadership team, human resources, legal, corporate communications, and other advisors as needed. Ideally, this group comprises 10 or fewer people. The crisis response team represents ground zero and should always have the most up-to-date information about the situation and be the main source of information about the crisis. This team will create the crisis communications plan, strategies, and tactics. It should provide regular updates to key constituents with succinct and quickly digestible information.
Employees. Employees are the foundation of businesses, and communicating with them should be a priority. This is of particular import in the retail industry, as it is the biggest private-sector employer in the United States. Transparency with this group is critical. In 2008 and 2009, the last time the retail industry saw a dramatic downturn, the industry wasn’t in crisis until the recession hit. Even before COVID-19 struck, as previously discussed, the industry was already struggling.
As such, this constituent group has been operating with heightened anxiety and is now faced with the reality that some of these businesses may not return. To that end, it is important when communicating with this group that information is provided timely. A company cannot wait until it has all the answers. In this crisis, things change daily. Explain the impact to the business and result to the employee. Take this opportunity to provide other resources, e.g., unemployment offices, changes in laws, etc., if severance or sick time aren’t feasible economic options. Commit to keeping them apprised of what is happening with the business even after a layoff—you want your best people to return when business resumes. Use social media groups, email, or texts to communicate as often as possible.
Customers. Communicating with customers early and often is essential to keeping them connected during a closure. Describe how this will or will not impact them. Detail ways customers can continue to engage during a closing, such as through e-commerce versus visiting brick-and-mortar locations. Provide incentives via coupons, waiving of fees, etc. This should not be viewed as strictly a selling opportunity. This is another chance to communicate empathy. Feeling understood breeds loyalty.
Shareholders. The market volatility of the past weeks has put publicly traded companies in the position to communicate the potential impact of the virus to shareholders. Transparency is vital for this audience, and they will want to know what a company’s near-term challenges are and how it will respond. While staying within the guidelines of the Securities and Exchange Commission, focus your words on how the shareholder will perceive them, acknowledge their anxiety, and commit to keeping them informed. Given the guidance for travel, special plans may need to be put into place for annual meetings and the like.
No one likes uncertainty, and communicating effectively during change requires commitment. Commitment to sometimes being uncomfortable. Commitment to providing information that the recipient may not like. Commitment to the three key pillars: communicate early and often, be open and honest, and express empathy.