While many corporate PR departments have crisis communications plans on file, one situation that often leaves them scrambling and unprepared is when a company decides to divest
itself of a unit that doesn't fit into its long-term strategy. Given the onset of economic sluggishness in the U.S. and Canada, downsizing is a scenario many corporate
communicators may be facing in the year ahead.
In fact, a quick peek at the business section of any paper indicates the trend is already in motion. Procter & Gamble ditched its Clearasil brand in October and is now
considering putting its European Wash & Go hair care line on the chopping block. And just last week, General Motors announced plans to pull the plug on its venerable
Oldsmobile division due to erosion in sales.
"All divestitures and acquisitions are very stressful for everyone concerned," says Jim Lukaszewski, head of The Lukaszewski Group, a consulting firm in White Plains, NY. Even
when they're anticipated, "I can't think of any 'successful' acquisition or divestiture story," in terms of communication, he adds. The sale of a business unit is a crisis, no
matter what.
Of course, the best communicators in the field tend to put a more optimistic face on such challenges. Over the past few years, Ryder Systems has divested itself of several
units (including its high-profile "Yellow Truck" business), paring its focus down to just two divisions from eight and cutting its total headcount by a third. Most recently, Ryder
sold its Public Transportation Services unit to U.K.-based First Group PLC in September 1999.
The transition "worked very smoothly," says Scott Mall, Ryder's VP communications. The unit up for sale was, "not a red-headed step-child - it was good and profitable - but
never a major player." First Group, on the other hand, saw its new purchase as a coup. And a messaging strategy coordinated in concert with the British buyer helped employees on
both sides of the sale feel better about the management change.
"First Group wanted to enter the U.S. market and build a presence," Mall says. "There was a sense that the unit was going to be among the core holdings of the company, rather
than just being disenfranchised from Ryder."
Softer Sales
While internal communicators will naturally favor a humane approach in downsizing situations, not all CEOs make this possible. Some executives, "want to be seen as a 'Neutron
Jack' type in order to get a honeymoon on Wall Street," says Mark Estren, president of TransCentury Communications, Inc., a consultancy based in McLean, Va.
But this is a dangerous path to tread in today's environment, in which corporate reputations hinge on factors such as social responsibility and good citizenship. Lukaszewski
adds that while GE's Jack Welch today is lionized as America's most successful CEO, it's easy to forget that he earned the "Neutron Jack" nickname after he laid off 250,000
employees (50% of GE's workforce at the time). "Welch had 14 years to change that perception," said Lukaszewski. "Not everyone has that kind of time."
If layoffs are unavoidable, communicators can smooth the transition by "arranging soft landings for as many people as possible," Estren says. Think about campaigns offering
aggressive outplacement services for displaced employees, or even issue advocacy advertising promoting the skills of your former employees, he advises.
The danger: "This could easily be stereotyped as a publicity stunt so you appear kinder and gentler," he adds. Use discretion, and maximize opportunities to interact with
employees and other key stakeholders "on a personal basis," rather than a public one.
For Estren, this discussion is more than an academic exercise. In 1985, he was hired as general manager of Financial News Network (the forerunner of CNBC) at a time when the
company had less than 60 days of operating cash left and its venture backers had just decided to lay off one-third of the network's 150-member staff.
It was left to Estren to make the announcement - at which time he promised that once the company got back on its feet, everyone who was laid off would be offered a job. "Very
few people returned," he says, "but what was important was that we kept the promise... Nobody believed it at the time, but we did it, and it is something other companies should
do."
Other tips from the trenches of divestiture communications? Lukaszewski offers four guidelines:
1. Make plans public as soon as a decision is made. "As soon as two people know about it, it's out anyway," he says. "The length of time between the decision to divest
and the communication about it," is directly proportional to the level of anger that divested employees will feel. The sooner you can get the transition over with, the better.
2. Be prepared to lose key people, no matter how well you handle the situation. "People don't leave because you did a bad thing, or because they wanted to pursue
another opportunity. They feel they have to go to get control of their life again," Lukaszewski says. "They feel like you've taken their job away without their permission, and
that's never a good thing."
3. Keep messages simple. Employees who are scheduled to leave - and survivors who fear their job security may be in jeopardy - often are so concerned with their future
they aren't receptive to the messages internal communications may be sending. Talk less, stick to the key messages and repeat them often. "Forget about the chest beating and stick
to plain and positive messages."
4. Make it easier on employees who stay. "Make the announcement quickly and promptly and get them [former employees] out of there," he advises. The longer they linger,
the greater the likelihood of contaminated morale. Help those who are going to go as quickly as possible.
-Eric McErlain is a speechwriter and communications consultant living in Northern Virginia.
Big Bleeders
"There are no heroes in a divestiture or acquisition," nor are there amicable break-ups, says crisis guru Jim Lukaszewski, citing the Daimler-Chrysler merger as a poster child
for bad change management. When the two companies announced their deal as a "merger of equals," U.S. talent didn't buy the message and headed for the door, essentially enacting a
"reverse divestiture" of the company's American workforce, he says. Now that Chrysler's sales are slowing, Daimler-Benz is sending its own managers to turn things around, and
Chrysler is hemorrhaging even more talent.
Another bellwether to watch (and learn from), Lukaszewski says, is AT&T, which recently announced tentative plans to split into four separate companies. "They had a hard
time holding onto a culture after the last split," he observes. This is a situation that clearly, "needs to be handled with more finesse and grace."