When a company goes belly up or faces a major crisis, there's no doubt that the press snags a role as a key audience because of its power in disseminating information. But when it comes to reinventing a business, responding to the media alone isn't going to provide the fix.
Resurrecting a corporate culture first requires that your company cherry pick a new management team and restore faith in your company with employees and customers - not strive for glowing press coverage or bank on high-profile campaigns.
Message: satisfied employees are not a luxury, they're a commodity, when you're recreating a business or a brand. A 1998 study by WalkerInformation shows that 42 percent of employees say that a company's integrity influences whether they would work with a specific company. WalkerInformation measures and manages stakeholder relationships.
Ironically, says Goldman Sachs analyst David Fleischer, the press tends to ignore the company once it's out of the crisis trenches and working to re-engineer itself. Fleischer was the sole analyst in 1991 who recommended a buy while Columbia Gas was in the middle of Chapter 11. His recommendation was based on studying how the company was re-inventing itself. And CG had the needed components, including a new management team whose expertise could be communicated.
In this story, we focus on three companies - AirTran (formerly ValuJet), Astra Pharmaceuticals and direct-marketing firm Hooven Midland - rebuilding from financial woes or tainted reputations. Other than Hooven Midland, the companies were reticent about revealing their strategies surrounding the re-engineering of their brands, a finding that underscores our analysis of how badly these businesses want to avoid the limelight.
The Image Medicine for One Co.
A case in business re-invention is the month-old company, Astra Pharmaceutical L.P. The business evolved after Astra Merck Inc., Philadelphia, was officially merged July 1 with Astra USA, Westborough, Mass. Its new headquarters have yet to be determined.
Astra USA is the American subsidiary of Swedish pharmaceutical giant Astra AB that faced one of the most ugly crises a company can: its lead executive Lars Bildman was fired several years ago on embezzlement allegations, and the company also faced sexual harassment claims. The idea of a new beginning tied to new management is stressed in the Astra case: only two out of nine executives on the newly formed Astra Leadership Team are from Astra USA.
"And right now it's most important for us to work with our employees," says Ann Gillespie, director of corporate communications and corporate relations for the new company. In merging the companies, bending to every press request isn't a top priority, according to Gillespie. However, town-hall meetings, internal surveys and focus groups with employees remain key.
Integrating the two monoliths (which will have a combined workforce of 3,800) won't be completed until Nov. 30. Execs are now searching for a new headquarters, most likely in the Philadelphia area.
Flying High
The survival of the former ValuJet company, now AirTran Airlines, Orlando, is another example of how a company is being rebuilt.
It's the idea that you can't force-feed a public to resuscitate marred loyalty, but you can work to change a company's infrastructure, which, in turn, influences your relationships with your key publics.
AirTran execs knew that keeping the airline viable meant rebuilding confidence in the organization, according to Jim O'Donald, a consultant who handles PR for AirTran through its outsourced relationship with Seabrook Marketing, Inc., Galveston, Texas. The company sought substantive and credible change - "not paid campaigns" - when it began operations under the new name, O'Donald adds. That included installing a new leader and reaching customers through product changes, such as adding a business class.
Now, AirTran's executive team doesn't include any high-level execs from the former company. Its president and CEO, D. Joseph Corr, came on board from his own firm; its senior VP of operations/customer service, Thomas Kalil, transitioned from Continental Airlines; and Jeffrey L. Mackinney, senior VP of marketing planning, came from Phoenix Airline Services, Inc.
From the Ashes
Most recently, Hooven Midland Direct Marketing, Gardena, Calif., found itself in disrepair. Midland has been in existence since 1922 and although its laundry list of clients includes deep-pocketed Kaiser Permanente, the business found itself in the throes of crisis and sorely needed an image facelift.
"This company, in three years [1995-1997], changed ownership four times," says Eric Shaw, CEO. "After coming out of assignment for the benefit of creditors last year, lender Coast Business Credit installed me in here. When I took over, the highest-ranking person was the customer relations representative." He immediately brought on an accounts receivable and accounts payable manager, something a business like this can't function well without.
But Shaw did other things to build a corporate community, a foundation for the company's long-term PR. He challenged the company's 110 employees to not accept a job from a peer if the work wasn't acceptable in an employee's eyes. "I told them: 'You've got to work together as a team and if we don't find out where the mistakes are being made, we won't figure out how to fix the problems.' Internally, I referred to them as Team Hooven and gave all of the employees T-shirts to wear so I would know they were part of the team."
To survive, Hooven Midland has already received a $1.3 million infusion through a loan from a finance company. Shaw expects the company to turn the corner toward profitability for the first time in two years in September. It will break even if it reaches $450,000 in sales next month, but Shaw projects Hooven will exceed that by doing about $600,000 in business during September, October and November each. (Astra, 508/366-1100; AirTran, 407/251-5578; Jim O'Donald, 409/765-4399; Eric Shaw, 310/523-9200; Walker, 317/843-8538)