[Editor’s note: This post is quite interesting as it examines a topic that’s not often approached in the public eye. If a company in crisis knows it’s going out of business regardless of how things play out, how should crisis communications be approached? What are your obligations, and what’s actually responsible to do? Please enjoy the following guest post from international strategic corporate and marketing communications expert (and Bernstein Crisis Management team member) Tim Scerba.]
The stated goal of crisis communications is to help ensure the viability and continuity of a company after the crisis has passed. But what if the company, for whatever reason, knows that it has no real chance of staying in business after the crisis? Should it still implement its crisis communications protocols? Should it still worry about keeping customer trust if it won’t be selling anything or be concerned about employee loyalty if they will all shortly be unemployed? Should it plan on keeping its various corporate social responsibility commitments if there is no need to generate further goodwill?
The answer, in my opinion, to each of these questions is yes. And my reason for believing this is that no company – and especially a multinational – operates in a vacuum. What, and how, a company communicates during a crisis situation can, and often does, impact the reputation and the fortunes of their peer set and industry in general. There are in fact, examples, of this “guilt-by-association” in every day’s news cycle with each failure to communicate correctly – or communicate at all – possibly further reinforcing the negative reputation of an industry or sector.
The most recent example of this was the collapse of Thomas Cook, one of the most respected travel companies in the world which offered end-to-end travel solutions including its own airline and resorts. Even though the CEO’s saying that this turn-of-fortune for the 178-year-old company was a “matter of profound regret” while apologizing to the firm’s “millions of customers and thousands of employees,” these words were of little comfort to the hundreds of thousands of travelers left stranded by the collapse. Shuttering the firm also put over 20,000 jobs at risk worldwide.
While Thomas Cook did offer customers instructions on what to do once the company ceased operations, this begs the question of what the company should have or could have been communicating once its collapse seemed all but inevitable. Had it let customers know it was on the verge of closing and they may be stranded, the resulting cancellations would all but guarantee that the company would, indeed, go into bankruptcy. On the other hand, by not alerting clients along the travel supply chain of a potential shuttering of operations, it could keep alive the possibility of an 11th hour government bailout or even the arrival of a white knight. In the case of Thomas Cook, neither happened, and its flagship UK company went into liquidation.
Thomas Cook is not alone in facing this type of communications Catch-22. When Mexicana de Aviación abruptly ceased operations in 2010 a month after filing for bankruptcy, thousands of travelers were stranded around the world and the company’s counters at its hub in Mexico City were reduced to chaos as passengers clamored for information. Other examples include Monarch Airlines in 2017 and Aigle Azul in 2019. In these, and other cases, the closures did not happen from one day to the next – there were ample red flags – and in each case passengers were left stranded leaving repatriation to the government and/or the travel industry itself. And, to add insult to injury, many passengers were never reimbursed for the ticket costs (let alone frequent travelers recouping their reward program points).
In the case of Thomas Cook, both the government and the travel industry got good marks on being prepared to communicate and support travelers in the case of operations ceasing, and then again for doing so once it happened (by some accounts, getting Thomas Cook travelers back to the UK was the largest repatriation since World War II). But while this is laudable, it doesn’t change the reality of stranded travelers, lost jobs and even protests against the government for not bailing the company out. It also does not do much for instilling confidence in the travel industry. I would posit that while the outcome was unavoidable, much of the stress and worry of implementing it could have been reduced with better communications.
For example, the last news release posted on Thomas Cook’s website, for example, is about the “compulsory liquidation” of the company. The issuance of these release coincides with the cessation of operations so, one could argue, that without a communications staff, the company can’t be expected to communicate. Fair enough and also true enough that the government stepped in to communicate about the repatriation of passengers.
But should the message really be, “don’t worry, if your travel company goes belly up, the government will step in?” Or should the message from the travel industry be – as happened with Thomas Cook’s competitors – “we can get you home, but it will cost you” (reports of price gouging become common right after Thomas Cook ceased operations)? Neither option is ideal.
So, how should a company – whether travel-related or not – communicate when doing so could accelerate its demise or not doing so could impact countless individuals? The solution lies, as do many, in finding a balance among a company’s various obligations to shareholders, employees, clients and the larger community. This would require having multiple communications contingency plans so that a company could change its communications activities in real-time to best meet the needs of its various stakeholders as circumstances change and then to continue communicating as much and as long as possible.
Even if a company can’t do anything to save itself, it still has a responsibility to communicate to minimize the impact of an unfavorable turn of events on is clients, employees and industry. It’s just the right thing to do.
Tim Scerba is a recognized international strategic corporate and marketing communications expert with extensive experience in all aspects of crisis and sensitive issues management, including risk audits, team preparation and simulation training, crisis inoculation and active situation management and recovery. His sector work includes aviation, food and beverage, construction, pharmaceuticals and healthcare, financial services, manufacturing and consumer products.