Charlotte Street Partners

VIEW FROM THE STREET

VIEW FROM THE STREET

The decision dilemma

Written by David Gaffney, partner 
18 November 2020

Johnson Service Group, a provider of workwear and textiles to the hospitality industry, yesterday became the latest company to yield to the ravaging effects of Covid-19 on its business, announcing more than 1,500 redundancies as the impact of restrictions continues to hamper the sector and its supply chains.

According to PA, that takes the total number of actual or potential redundancies announced in the UK since the start of the pandemic past the quarter-of-a-million mark.

Of course, to think or talk about the effects of this virus purely in statistics risks obscuring the human stories behind the figures. Each of those 250,185 roles was occupied by a person, many of whom were supporting partners and families, and who will now face an indefinite period of unemployment and uncertainty with the attendant implications for their health and financial security.

Many charged with running a business, or indeed a division of one, will have been forced to make some uncomfortable decisions over the past eight months. The vast majority of those leaders will have understood – and been deeply affected by – the personal ramifications of their actions, the necessity and inevitably of which do nothing to soften their blow. 

The good news we received last week about the efficacy of a coronavirus vaccine is tempered by the knowledge that it will be at least several months before it and other potential solutions are available at scale. With that knowledge comes the reality that many more painful and unwelcome decisions will need to be taken and communicated by business leaders, whether it relates to jobs, strategy, premises, supply chains, or a combination of them all.

We can never expect everyone to agree with every decision taken in a boardroom, but customers, staff, suppliers, investors, media, and other stakeholders will want to be assured that every possible option was exhausted, and that the ultimate outcome was communicated clearly, transparently, and with genuine empathy. Britannia Hotels made itself a poster boy for how not to do it early on in this economic crisis and will feel the reputational damage of this callous blunder for years to come. 

Given the scale of the government and central bank intervention in the economy, and the enduring shadow cast across public life by Covid-19, greater scrutiny will be applied to actions like these than might otherwise have been the case.

Expect politicians and the media to shine bright lights upon those organisations and the people who lead them, especially those that took public money before either falling over or making large numbers of people redundant.

Insolvencies, closures and major redundancy programmes are among the most testing corporate actions any senior executive will face, fraught with emotion and stress layered upon the not inconsiderable practical and logistical challenges that must be overcome. As such, it is imperative that leadership teams have trusted advisers who can share the burden throughout these situations, to ensure they are handled with a level of professionalism and sensitivity that will safeguard reputations even in the most trying circumstances.

No two situations are exactly the same and each has its own unique set of factors. It will be important in these instances for restructuring professionals, advisers and companies themselves to think carefully about their various stakeholders, what is communicated to them, how those messages can be delivered sensitively, and when.

The future is infinitely longer than the present and the long-term sustainability of an organisation may be put at risk by choices made in the eye of a storm, when the pressure of a situation can cause otherwise surefooted professionals to act hastily and without full consideration of the consequences.

This not only requires strong governance and good stewardship through a crisis, but consistency and clarity of communication. Honest, clear and comprehensive explanations of the rationale behind decisions are infinitely more useful than jargon-ridden platitudes and the tone and manner of their delivery is as important as the messages themselves.

None of this is easy – which is why you should pause, reflect, and seek the advice of people who have been there before and have the benefit of distance from which to offer an objective opinion.

Thinking carefully about how difficult decisions are communicated will never entirely neutralise their emotional and reputational impact. However, by failing to do so, companies will guarantee a level of scrutiny and opprobrium they could well do without at an already trying time.

David Gaffney is a partner specialising in crisis communications and reputation management at Charlotte Street Partners. If you are interested in reading more about our restructuring offer, please visit our website or get in touch via info@charlottestpartners.co.uk.

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