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November 06, 2023
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Amid high interest rates and economic uncertainty, it is not surprising that corporate restructurings are on the rise. In fact, restructuring activity in the first half of 2023 more than doubled from the corresponding period in 2022.1
Although most financial restructurings result in an organization that is better equipped to navigate the economic environment, the process can also bring pain for stakeholders. It might involve cost cutting or headcount changes, for instance, or even transitioning ownership or selling off assets of the company. Vendors that have been stretched may apply significant pressure to their company contacts. Employees and customers may receive notices from a bankruptcy court. And even if the company intends to operate as usual during the process, the perception of disruption can itself inhibit business continuity.
Effective communications, however, can mitigate disruption. The right strategy helps facilitate business operations, limit the impact and duration of disruption and ensure that an organization can make the most of the restructuring process.
Messaging Helps Keep Everyone on the Same Page
Corporate restructurings have many moving parts, with different stakeholders often looking out for their own unique interests. In a complex restructuring, getting stakeholder communications right is just as important for extending a company’s runway as implementing financial and operational solutions.
Stakeholders typically include several categories. These can range from internal stakeholders, like rank-and-file employees and corporate leadership, to external ones, like customers, vendors, investors and regulators. Each group is important to varying degrees and helps enable the business to continue operating.
While these stakeholders have different expectations, it is essential to remember that most want to see the restructuring process succeed. With that in mind, here are three key tips that can help you communicate that message effectively.
Show that you have a plan: Communicate that restructuring is a tool you are using rather than something that is happening to you.
An in-court restructuring process may make stakeholders uneasy, but you do not want them to forget that the process is designed to solve specific problems and make the company stronger. No matter the stakeholder audience, you should emphasize that restructuring is part of a plan.
That means your communications strategy should not only give stakeholders a sense of the company’s current direction, but also provide a vision of what the company will look like when the process is over. It should also show how the strengthened company will benefit them.
Keep things familiar: If the restructuring process is “business as usual,” then communicate in the way that you usually do.
Restructuring is not the time to change the way you communicate with stakeholders. People already have plenty of questions about what is going on with the organization. If you are operating as usual, then underscore your core message through the way you communicate.
So, for instance, if you normally communicate with employees about important issues by displaying educational material in the break room or by huddling with them during a shift change meeting, continue using these methods to announce your restructuring and provide updates on the process.
When it comes to employees who regularly interact with customers and vendors, provide them with similarly appropriate toolkits to deploy as they see fit. For example, if employees typically used WhatsApp to communicate via text with stakeholders before the restructuring process began, then make sure you include a WhatsApp template suitable for disseminating announcements about the restructuring.
Enlist and delegate: Empower specific employees to be part of your communication strategy and be thoughtful when determining whom you select.
There are employees in important but often overlooked departments who will need to deploy your communications strategy from the moment the company enters the restructuring process.
Consider employees in areas like accounts payable. They may not have communications training in their day-to-day roles, but they will certainly be interacting with stakeholders and fielding questions about the restructuring on a regular basis. You want to train them to effectively communicate important points about the restructuring process and accounting cutoffs and requirements. This will ensure they do not overpromise or put the company at risk.
Always Keep an Eye on the Future
The goal of any restructuring is to come out of the process as a stronger, more competitive company.
Keeping an eye on that goal involves a communications strategy that shares a vision for the restructuring process and how it will improve the company. Communications that are clear, direct and realistic will go a long way in keeping that vision positive and optimistic and, in turn, keeping the company on track.
Footnotes:
1: Michael C. Eisenband, “The Halftime Report: A High-Scoring First Half – Or Was It?”, FTI Consulting (August 3, 2023)
© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.
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November 06, 2023
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