Financial crises provide lessons learned for corporate communicators
July 27, 2018 • Jonathan McVerry
American philosopher John Dewey said a person learns as much from failure as he or she does from success. For corporate communicators, two of the lowest points in U.S. financial history provide real-world lessons on how to maintain ethical communications through crisis.
Years ago, Yan Jin, professor at the University of Georgia, and Shelley Spector, founder of the Museum of Public Relations, discussed the need to chronicle lessons communicators learn after major crises. They specifically targeted the two events that broadly altered American and global business—the Great Depression and the 2008 financial crisis, also known as the “Great Recession.”
The two experts wanted to compare how communicators reacted to the crises, as well as examine differences and similarities, and identify potential best practices.
At the time, Jin and Spector’s research idea was just that, an idea, until the Page Center announced its 2016 call for research proposals. The call encouraged teams of scholars and practitioners to submit ideas for collaborative research projects.
“We saw the open call and said, ‘Wow, this is perfect,’” Jin said. “Shelley and I had a phone conversation and we put something together.”
Lucinda Austin, assistant professor at University of North Carolina-Chapel Hill; and Bryan Reber, C. Richard Yarbrough professor in crisis communication leadership at the University of Georgia joined the project. The team submitted a proposal and the project was one of six accepted in the Center’s call.
When dealing with crises of this magnitude, there are many ethical dilemmas. The issues are complex, and it can be difficult to communicate to the press and public. Jin said even though most companies had crisis communications plans in 2008, few were ready to adapt to the kind of massive crises that affect hundreds of companies across many sectors.
“It’s like a captain who is great at steering the ship on most days, but when a tsunami hits it takes more effort than just protecting your ship,” Jin said. “It’s a new challenge that goes beyond the textbook. Your ship and all of the other ships are trying to survive.”
The scholars conducted in-depth interviews with 38 chief communications officers and their counselors who were working in 2008. The study, with additional research team members LaShonda Eaddy, assistant professor at Southern Methodist University; and Camila Espina, doctoral candidate at the University of Georgia on board, revealed several interesting findings.
A key response from the nearly 40 interviews targeted employees. During a crisis, corporate communicators respond to a deluge of issues and requests, while at the same time trying to find quick solutions to complicated challenges. The scholars say these leaders must not forget about employees amidst the chaos.
“Textbooks always talk about what to do and what messages need to be communicated to protect the reputation of the company,” Jin said. “We found that most focus on the external audience, and the internal audiences are ignored. It’s important for internal audiences, like employees, to get the fullest, most accurate information so they understand what’s going on” during a crisis.
The takeaway from these recommendations: Add “inform employees” to internal crisis communication plans. Explain to them who is responsible for what action items, what are the next steps and how can they be a part of the response to the crisis.
Another major finding was the company’s communication of fault. Several participants said their strategies depended on whether their organization was perceived as the victim or the perpetrator of the crisis. One respondent said of the experience, “There were a lot of victims from a communications standpoint. I think it’s a little bit unclear who were the villains and what caused the events.”
Jin said whether a company was at fault or not, they are often expected to participate in the recovery. They are expected to help the community and customers, while perpetrating companies need to work hard to refurnish their images. Everyone should chip in post-crisis.
“It sounds like common sense: you don’t want to be seen as a villain,” Jin said. “But it was something that all of the interviewees pointed out, and it was a way they suggested tailoring communication and taking action effectively and ethically.”
The team mainly focused on the 2008 crisis in the current paper. Pulling from the rest of the interview data and insights gained from archival research, future research will focus on the Great Depression. The scholars will continue to examine materials like press releases, photos and statements from that era to further the comparison and unearth lessons learned from the 1930s event.
Jin said her team was surprised how well companies and government entities communicated during the Great Depression. There were a lot of lessons learned, but overall, business and government did a sufficient job connecting with their publics via public relations. “They were way more strategic than we expected,” Jin said.