May 18, 2020
One of the most important responsibilities of us, the marketing and corporate communications professionals, is to anticipate trends, plan for the future and make sure our organization is prepared to face answers from stakeholders. Especially in times of crisis, after the first stages of critical first response and stabilizing the communications process we need to focus our attention to rebuilding damaged brands and establish proper communications and positioning for the future.
It has been much said and even more will be analyzed about the effect of COVID-19 on society and consumers in the years to come. Yet, it is not so difficult to anticipate one thing what would be the top of mind of media and other stakeholders – what was the companies’ response during the epidemic. And while investors will focus primarily on operations and financials, other stakeholders will be interested in business sustainability.
Corporate citizenship priorities before the pandemic
Before the pandemic the most significant corporate responsibility priorities were the environment, social and governance issues with different companies adapting specific programs along these three lines with their business strategy and corporate values. For example, in this article the President of the American Express Foundation and faculty member for the Institute for Corporate Social Responsibility at Johns Hopkins University cites corporate transparency, environmental impact, public policy involvement as the focus of corporate social responsibility in 2020.
And Deloitte has identified issues such as diversity and inclusion, gender pay equity, income inequality, immigration, and global warming as important sustainability factors. Another Deloitte study from 2017 reveals that millennials are sensitive to how their organizations address issues such as income inequality, hunger, and the environment. According to same research, eighty-eight percent of millennials believe that employers should play a vital role in alleviating these concerns, and 86 percent say the business success should be measured by more than profitability.
What not to do during crisis?
As it looks, the global pandemic crisis further augments several of these trends: the care for environment and communities as well as corporate governance and transparency. And the way the companies acted in the context of these aspects during the crisis will determine their brands positioning for significant time in the future. Already some industries and companies are scrutinized about their behavior before and during the crisis. For example, the airline industry in USA, significant receiver of $25 billion in government bailouts, was criticized for the extensive stock buybacks and dividends, sometime financed through loans, before the crisis.
And although, like most of cases with Elon Musk, this is quite extreme, here is a snapshot of the blowback to his arguing that his California factory needs to be opened regardless of the health authorities’ recommendations. His approach drew negative editorials and opinion pieces from all major media in USA, including Los Angeles Times. Here is just a short list of them:
Letters to the Editor: Buy a Tesla? Not when Elon Musk flouts coronavirus rules – LA Times, May 15, 2020
Editorial: Don’t cave in to Elon Musk’s coronavirus tantrum – LA Times, May 11, 2020
Elon Musk v public health: a timeline of the Tesla factory standoff – May 13, 2020
Tesla and Elon Musk reopen California facility, defying orders meant to stem coronavirus spread – CNN, May 12, 2020
Elon Musk Unleashed Again – NY Times, May 13, 2020
Elon Musk risks lives by reopening his factory. But he acts like it’s all a game – NBC News, May 12, 2020
Rebuilding corporate reputation
So, which are the post-crisis questions companies will need to answer and issues that will affect their corporate reputation in the mid- and long-term after the global pandemic crisis?
Reaction to COVID-19 and did you do everything possible to preserve jobs
Companies must demonstrate that they have done everything possible to preserve jobs, even while sacrificing profits. Companies must have shown that they cared more for the sustainability of the business than profits and shareholder value.
Executive pay vs. employee layoffs, furlough and pay
Regrettably, I already have information on companies who let go of tens of employees without any reduction on executive pay. And other companies have significantly reduced executive pay to preserve jobs or introduced tiered system where executives have biggest pay reduction with low-pay employee the smallest.
Care about employees and not exposing them unnecessary on COVD-19 risk
Very critical for companies in next months and may be years, is to demonstrate that they have done all possible to preserve employees’ health through different processes and investment.
Care about local community
Many companies are investing in efforts to help their communities. Retailers delivering food to elderly, companies matching employee contributions and many more.
Level of payroll and bonuses reduction between executives and employees
While financial impact will be different from industry to industry, even if a company is profitable, bonuses are not good idea in 2020 and executives must demonstrate that other options were examined before reducing employees’ pay.
Executive statements during the pandemic
Like always, lack of preparedness during crisis or sheer arrogance can come back to haunt you months and years after the crisis. Just ask Musk.
Speed and safeness of business operations reopening
Demonstrate care about employees, community and only then for your business’ operations.
Level of dividends and share buyback during the pandemic and after it
Already toxic topic before COVID-19, share buybacks, dividends and any shareholder pay is anathema during the crisis.
For healthcare companies in particular, availability of medical supplies and work on vaccine
Of course, healthcare companies are at the forefront of society’s focus in ensuring medical supplies for fighting the coronavirus. The response during this healthcare crisis will form the their reputations for years to come.
In conclusion, like in all crises, for some companies this will be an opportunity. Companies that have behaved like trusted corporate citizens and can proudly answer the above question in public, can of course use communications around their COVID-19 response proactively and while enhancing their brand’s corporate reputation, put their competitors on the defensive. Thus, an organization’s response during the pandemic crisis can be a significant asset contributing to not only brand equity but business results of the companies in the near future.
To marketing and corporate professionals – work with management to protect them from brand-ruining mistakes
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