Print Version -- Positioning - Heyman Associates - Communicating in Troubled Times

Economists may dispute the beginning (and end) of this latest recession, but there is no argument about the recession’s effect on corporations. Many companies battled the difficult economic times and an equally important foe: shrinking confidence in their viability and the information they delivered to the press and public. In troubled times especially, communicators are a vital link between vested parties.

This issue explores the last 12 months and asks, “how and what do you communicate in troubled times?” First, two PR pros explain the tact and strategy behind communicating unfavorable news more often and with less resources. Their responses are seconded by a roundtable of PR leaders discussing the economy’s broad impact on their profession. From reading many views to just one, meet a professional who knows and reinforces the value of differentiating her company from industry competitors, and the wisdom behind having a communications team around the world ready to handle any issue.

And finally, in our traditional section dedicated to goings-on in New York, there is a different definition of “troubled times.” Professionals from American Express and Dow Jones in Lower Manhattan share special stories about how their companies continued to manage effective communications after communications operations were drastically affected by 9/11.

The Recession in Confidence: Are questionable economic times having an impact on the way companies communicate? Here’s what two key communicators say.

When Ford Financial announced its new focus last fall, its goal to become a global automotive financial superpower, it brought a lot of attention from the press. Then, just before Christmas 2001, the company’s CEO resigned, and a new chief executive had to be introduced to the media.

These major communications challenges coincided with a time when the company’s communications budget and staffing were both reduced. “We’re certainly doing more with less,” notes Walter H. Jennings, Vice President, Global Communications. “Ford has really adopted a back-to-basics approach, a ‘focus-on-funds’ approach.” Jennings reports that while two years ago he was involved in major events and huge projects such as interactive video, he now finds himself having more work to do and fewer resources to do it with. “We are now taking a fundamentally new approach to each individual communications position. The challenge is how to meet the demanding internal challenges while at the same time lowering budgets.”

For Jennings, the questionable economic times have meant having to pare down some of the services that his department once provided. “We’re having to force choices with our executives,” he says. “We are now far more likely to go to them and say, ‘This is how we’re structured. These are the services we offer.’ We simply no longer have the time or resources to work in some areas. For instance, we’ve given up Intranet development and event planning. Instead, we’re really focusing on five or six things that we not only have to do, but also that we do best. I’m talking about such areas as issues and crisis management and media relations.”

While some major corporations report that they have brought all their PR functions inside, Jennings says that he continues to outsource, but has brought it closer to home. “I changed from a national PR firm to a local Detroit agency that has some national expertise,” he says. “They appreciate our business, they’re right around the corner, and they cost half as much,” he notes.

He has also removed some contract positions, pulling more into the core of corporate communications. There is a side benefit to this, however. “The team members used to be much more codified. More focused. For example, a staff member was an event planner or a media relations coordinator or whatever, period. Today they have a lot more flexibility. We’re turning things around faster because we’re doing it with a lot less pomp and circumstance. We focus on getting it done right, getting out quickly, and then moving on.

For Jennings, it all comes down to a constant process of making do with existing resources. “We are like a dinner host who plans for eight guests and 16 arrive. The challenge then is how to feed them all, when you’ve only got a budget to feed eight. It constantly forces us to be creative.”

Kathleen M. Fitzgerald, Senior Vice President, Public Relations and Advertising at Lucent Technologies, reports that the economic downturn caused a dramatic reduction in the amount of advertising and PR done by Lucent. “We cut our PR staff in half. We eliminated all print ads and went to the Web. We began doing many more conference calls and dramatically cut the amount of business travel. In essence, we began to take Lucent executives to the people, rather than bringing large groups of people to various divisional locations,” she says. “We have also halved the number of trade shows we participate in.”

Fitzgerald is quick to add, however, that some of these changes are driven as much by new technology and by trends in the way other people work as by the economic downturn. “For example, it’s a lot cheaper and more efficient to simply put PR announcements on the web and give people in the press the URL than it is to do mass mailings of press releases, and we probably would have made that switch even if the economy were booming,” she says. She also explains that big press conferences have been abandoned less because of the cost than because of journalist preference. “Serious reporters don’t have time to come out to press events. They want to do individual executive interviews now. We try to give them what they want,” she says.

Fitzgerald echoes Jennings’ statement that the rule today is doing more with less. “The people who remain on staff are all working much harder,” she says. “The key now is to prioritize. Many of the reductions we have made were with people at on-site locations – cutting those numbers from 50 to 10. Now we handle more from the central office, and use technology more to get the news to external locations,” she says.

In terms of working with outside firms, Fitzgerald says that she uses one agency for PR counsel. “We used to have relationships with agencies outside the U.S. to support our efforts, but with things so down in the telecommunications industry in general that is no longer the case,” she explains. She adds, however, that she still might use an additional agency for something like a large product launch, because it typically proves to be cheaper than having an employee on-site year round.

“At Lucent Technologies, we had a good deal of less-than positive news to communicate in 2001. That included Lucent-specific issues: we missed a product technology cycle; the Board ousted its Chairman and CEO; we considered a major merger with Alcatel; reported down earnings; and there was a revenue recognition issue that we went to the SEC with. In addition, our industry was in turmoil with our new customers declaring bankruptcy almost every week and our traditional customers announcing cuts in capital spending in response to a tough economy.

“After a while I think the press just got into the habit of kicking Lucent. Obviously I learned a great deal during this struggle. I learned how to tell the negative news straight and build credibility. Our new Chairman, Henry Schacht, got on the front lines in dealing with the media. We have rebuilt a foundation of respect through him. And our new CEO, Pat Russo, is a credible, very candid executive.

“A changing economy forces communications executives—actually, all executives—to become very accessible and open. You have to make sure that there’s never a question you don’t answer. In bad times, you have to communicate proactively. When the news gets very bad, it can be hard to be so forthcoming, but you must never ever mislead. More than ever, that’s the time that your job becomes being able to stand up and be credible. We have disclosed everything we’ve ever done. At Lucent, we know that if you don’t maintain your credibility you’ve lost the battle.

“What did I learn from this tough period? One thing is that the world out there doesn’t like to hear about layoffs. We didn’t take the pressure from this that some other companies did, but it took a major effort, both in terms of internal and external communications, to create an understanding of how layoffs enabled Lucent to survive. Here again, the key was to communicate, to make sure that everyone from employees to shareholders to members of the business press understood the story.

“I also learned that I would have handled some things differently. When Lucent was constantly receiving negative press, I think I should have come down stronger on making it clear that we were part of an industry trend. While there were Lucent-specific issues, the decline in stock price came as a result of broader industry phenomena. Every telecommunications vendor was saddled with vendor finance issues. It wasn’t just Lucent.

“But ultimately, we got through it. I always remember one industry analyst session when the news was looking somewhat better. It was kind of a ‘We are here; we’ve survived,’ meeting and the analysts were saying, ‘We’re so glad you’re still here.’”

“We did survive. And I need to tell you, it takes a lot to upset me these days. But the key is that I never tried to paint a prettier picture than the picture we had. I wanted to put up a plaque up in my little conference room that said, ‘It is what it is.’ Sometimes that’s what corporate communications is all about.”

The job market has dried up, people fear layoffs, workers are stressed from having to do more with less, CEOs are becoming more involved in the message. It’s abundantly clear that challenging economic times are changing the way companies work. Here’s what a roundtable of corporate communications leaders says about these shifts.

Are you seeing more movement among mid-level PR professionals – or are they hanging on to the jobs they have?

“As immediate Past President of Chicago PRSA, I am used to getting calls from recruiters looking for assistance in finding good candidates. In May or June of 2001 that just died. It was off the map. There’s just not a lot of movement out there now.”

- Donald P. Kirchoffner, Vice President, Corporate Communications, Exelon Corporation

“I used to get two or three phone calls a month from headhunters seeking referrals. I’d have to say that those calls stopped in the middle of last year. Instead I find that I am getting increased calls and resumes from people who are looking for work. There are definitely more people job hunting now.”

- John A. Ford, Vice President, Communications and Media, Blackstone Group, L.P.

“Turnover has been relatively stable during the last six months. Many local businesses and agencies had had layoffs and people are placing a greater value on existing jobs.”

“Detroit is kind of an odd market. There is less job movement here than there might be in other cities. It’s actually a real challenge to recruit to Detroit, so a lot of the talent we have is homegrown. Because this is a city of a small number of big corporations, opportunities to move might be fewer than elsewhere. Plus automobile companies are traditionally places where people stay put over the course of a lifetime. People are staying put.”

What strategies have you found for retaining valued employees during this economic downturn?

“We have low attrition at Dow. We constantly pay attention to retention, not just during the good times. I believe that the key to that is to have a rewarding, stimulating environment. Dow offers its workers both responsibility and accountability. People deliver and then take ownership of the results. That builds employee loyalty. Also, however, we have a heightened awareness and commitment to communicating in a timely, transparent way with the employees and communities where we operate. We use all media in doing this. The more challenging the times, the more important it becomes to be honest and forthright. To eliminate ambiguity.”

- Robert W. Charlton, Global Vice President, Public Affairs,
The Dow Chemical Company

“Hallmark is currently working on a number of initiatives to retain strong performers. Here is an example: Until 2000, a portion of the incentive program for many senior managers was based on multi-year business performance results. In light of the uncertain economy, we are modifying this component of our incentive program to be based on annual results. We want our key performers to earn larger, more immediate incentive rewards if they are successfully contributing to improved business results.”

“Exelon’s vision is to be the most admired and respected utility in the world. We work very hard on that, and employees are compensated accordingly. Even in downsizing, it is very important to this company to take care of the survivors. We are committed to letting people know what is happening. Substance and experience and gray hair are in; that’s my prognostication for the future. In this economy, corporate America will look for seasoned, experienced, professional communicators. The wave of youth has passed. Employers now want somebody who has been in the foxhole.”

“Well, I think our leadership is more visible. We’re utilizing technology – PCs, videoconferencing, computer, satellite broadcasts – we’re really trying to leverage technology in terms of internal communications. From an external perspective, we’re using technology to engage customers, while still recognizing the importance of personal interface. Our overall communications strategy is set by Public Affairs with input and guidance from the Corporate Operating Board. It depends on the magnitude of the announcement. For example, at the end of 2001 we had to announce no year-end bonus to employees. The CEO delivered that message personally and directly, globally via teleconferencing. Plus every employee received an e-mail.”

“I work directly with the Chairman and CEO in setting the message. That’s the way it has always been. We’re a small private investment banking firm, composed mainly of very senior people. It’s kind of a flat organization. In terms of communicating bad news, it’s difficult to use our company as a bellwether. We don’t have to report. It’s not as if I were at [a major investment house], where the minute there is bad news it must be reported to the press.”

“As a privately held corporation, the CEO at Hallmark is intimately involved in shaping key strategic messages about our business. The CEO is traditionally the voice of any major decision impacting our employees or one of our businesses and is our preferred spokesperson. Of course, since we are privately held we infrequently talk publicly about our financial performance.”

“I would honestly have to say that communications strategy is set at the CEO level. It certainly involves the senior management team, key people from the different business units – Energy Delivery, Exelon Nuclear, the Power Trading Team—certainly the CFO and the Investor Relations people are involved. The real answer is that the communications strategy follows the business strategy. I also should add that we benefit from having Co-CEOs. One is always eager to step up to the plate, to answer calls about nuclear safety, for example. He is a long-time nuclear engineer, a former nuclear submarine commander; he’s spoken to such key publications as the Wall Street Journal and the Washington Post. The other CEO is one of the foremost experts on deregulation. He did a number of interviews on the California crisis and on Enron, for example. I handle the routine calls, making sure that I return reporters’ calls immediately.”

Roberta B. Bowman, Senior Vice President, Public Affairs and Chief Communications Officer for the Charlotte, North Carolina-based Duke Energy Corporation, has spent her entire career in the energy field. She joined Duke Power in 1986 as Director, Power Plant Community Relations and held three other posts before reaching her current position. Prior to joining Duke, Bowman worked at Northeast Utilities for eight years. She holds a B.A. from Tufts University.

“Initially I wanted to be lawyer,” Bowman says. “I was always interested in advocating a point of view, and found that communications was another way to do that. In fact, I’ve been in communications for all of my career – except for six months that I spent trying my hand at commodity trading. That was valuable experience, since it taught me the fundamentals of a deregulated energy market, but I found that I wanted to get back to communications.”

Bowman notes that she has never felt stifled by spending her career in a single industry. “The energy industry is so diverse and complex that whenever I felt interested in striking out into new areas, I realized that I could find new challenges right where I was,” she says. In fact, Bowman notes that she has always felt drawn toward working with emotionally charged issues, and that an energy company offers an abundance of those. “I always gravitated toward the big issues, such as nuclear energy, and found that I have a particular talent for handling complex challenges that require good analytic skills. I enjoy understanding the other points of view while advocating my own and my company’s viewpoint.”

As a person drawn to controversy and challenge, to businesses that regularly make the news, Bowman clearly chose the right industry. She points out that when Fortune did its review of the Top Ten Business Stories for 2001, the top four all related to energy. “Obviously, energy is one of the engines that fuels economic growth. Every company was affected by September 11, but energy companies – particularly nuclear plant operators – had special security concerns. And 2001 was a year of dramatic energy shortages. It was an interesting year, and – as tough times always are – it was a good opportunity to focus on communicating a strong message.” The current volatility in the financial markets has also posed challenges for Duke. “Then, of course, there was the collapse of Enron and the ripple effects throughout the energy industry,” she says.

Bowman, whose mandate also includes community relations and corporate philanthropy, notes that Duke’s commitment to giving increases during tough economic times, when many other companies tighten the purse strings. “We try to give a bigger helping hand to non-profits during those times. Sometimes it’s financial. Sometimes it’s volunteerism. It’s part of the whole notion of supporting communities that goes back to our founder, Buck Duke. It’s part of our corporate DNA,” she says.

Slow economic times also offer a great opportunity to place more emphasis on marketing and branding. Bowman – whose responsibilities extend from corporate communications to advertising, marketing communications, brand management, community relations and corporate philanthropy to media relations and employee communications – believes in working hard to present an integrated message. “I learned a long time ago that whether or not we integrate the message, our customers and employees will.”

In terms of her own personal management, she uses weekly teleconferences to keep the public affairs team aligned, but also participates in weekly planning conferences with investor relations, government relations and other Duke Energy groups that communicate to external stakeholders. She writes weekly letters to staff around the world. She lets her employees know who she is, what matters to her, and what Duke Energy’s public relations principles are. “I make it very clear that we do not want to let our PR outrun our business performance,” she says. “We are committed to letting the business results tell our story. We don’t want to outrun our headlights.”

Bowman takes keen pleasure in the breadth of her current job. “I have the chance to work across stakeholders and constituencies; my responsibilities are very focused on integrating messages and audiences,” she says. Duke Energy invests in an in-house public relations team and professionals are located in every business and in corporate. “They’re wonderfully capable folks who do their jobs well, so I get to pick and choose the fun stuff,” she says with a smile.

Sometimes, however, the “fun stuff” can be pretty challenging. In 2001, for example, Duke Energy was one of the electricity generating companies serving the needs of the California market. “We were a relative newcomer in the state and got caught in the cross-hairs when demand outstripped supply,” she explains. “A lot of allegations were directed toward out-of-state generators, none more serious than that we were withholding power from customers.”

The charges came just at the time that people were looking for simple solutions to the California energy crunch, and some people were happy to accept that explanation. “These accusations were very serious, suggesting that Duke Energy had committed what could probably be called the greatest crime in this business – manipulating the market for corporate gain.”

Bowman and her staff swiftly went into crisis communications mode, knowing well that to earn good PR you have to run a good business, and that Duke Energy did just that. A review of the logbooks showed that those who made the allegations had only a small piece of the overall information picture. “They didn’t know that Duke Energy was following orders from the California grid operators,” Bowman explains.

“We knew that we had the facts on our side, so we held a news conference on the Capitol steps in Sacramento, with our head of California Operations. We also opened our logbooks, did advertising, got good coverage from the California media that covered the initial allegations. We took a fact-based approach on every front. We didn’t attempt to blacken the whistleblowers; we took the high road – as we always do when dealing with our customers, stakeholders and employees. And it worked. The media turned around and began to report the story that Duke Energy was only doing what it was instructed to do by the State’s independent operation.”

Bowman notes that Duke Energy’s messages are competing with businesses all over the world. “Every hour of the day, somebody in the news media has a deadline. We’ve rebalanced resources so that we can be more accessible both to the news media and to our employees around the world. The demands for speed and quality work continue to increase,” she says.

When all is said and done, she believes that the foremost criterion for people in corporate communications is the ability to think critically. “Plus it’s important to be both a good listener and a quick study,” she says. She admits a bias toward an educational background rich in the liberal arts, as she had. It teaches people to think and solve problems, she believes. It teaches how to break complex issues down into more simple elements.

Ultimately, Bowman believes she has succeeded at Duke Energy because her personal values are aligned with the company’s. “It is incredibly important as public relations people to trust that your coworkers and executives share a commitment to ‘doing the right thing’ and you agree on what ‘doing the right thing’ looks like. If your values don’t match up with your company’s, you won’t be comfortable or successful.”

As told to Marian Woodworth by
Frank J. Vaccaro
Vice President, Business Unit Communications
American Express Company

After September 11, things at American Express Company would be markedly different for almost nine months. The collapse of the Twin Towers showered debris partially onto the American Express Tower, damaging the façade of the building below the 26^th floor. The damage left their global headquarters building structurally sound but requiring months of repairs, cleaning and temporary office relocation. More devastating to the company, however, were the lives lost: 11 employees who had worked on-site at a World Trade Center (WTC) client’s office died in the attack. Several employees who had been on the street outside the American Express Tower were hospitalized, and the toll of lost family and friends was widespread.

A core group of senior leaders made immediate business continuation decisions, and gathered and shared information with nearly 5,000 displaced employees. CEO Ken Chenault was in constant contact with his direct reports, worldwide business heads and the core business continuation team consisting of leaders from corporate communications, human resources, real estate, security and technology.

In communications and indeed throughout the company, the first priority was to focus on employees and determine their well-being. Employees were displaced from headquarters, and without offices, and phone service in Manhattan and the surrounding area was extremely limited. A communications avenue unique to American Express was their network of customer service representatives. The company set up a special unit, in fact, based in North Carolina, to act as a communications channel with New York employees. The representatives called all employees’ home phone numbers to perform a roll call, asking if employees and family members were safe. The representatives also told each household how to get information and reminded them to call regularly into the emergency employee hotline that had been established. Lastly, the representatives invited New York staff to an all-employee town hall meeting just nine days later at Madison Square Garden, hosted by Chenault and organized by the communications team. The emotional, cathartic meeting was a chance for employees to gather strength from coming together, sharing expressions of loss and remembrance and learning about how the company was helping its affected employees, customers and the New York community to recover.

When American Express leased five temporary locations and started to deposit employees in Connecticut, New Jersey and New York in October, reaching employees became easier, but the communications challenges remained significant. There was a steady stream of communications through e-mail announcements and town hall meetings in each new location, plus frequent business renewal updates from Chenault. The company released a special edition of its internal magazine, focused on September 11, and published it online along with the regular print version. The communications team focused on the nuts and bolts of business continuation, plus the company’s response to the crisis and challenges given the impact of the aftermath of 9/11 on American Express’ business.

The November announcement that American Express would be returning to its corporate headquarters building in Lower Manhattan brought a new set of communications challenges. Most employees were happy to return, feeling it was the right thing to do, and pleased to be part of the area’s renewal. All employees needed to be kept abreast of construction and security issues, plus transportation access and environmental quality. The communications team delivered regular updates by e-mail on the wide range of issues pertaining to the return to corporate headquarters, including news about the World Financial Center (WFC) neighborhood.

Constant, comprehensive communications led to the creation of an intranet site, “On the Move,” which was the central source of information concerning the move. With sections devoted to Q&A, accessible to all employees worldwide, and photographs, the site fostered a clear understanding of the status of repairs, building restoration and the renewal of the WFC neighborhood. The photos were among the highest clicked items and were updated to show progress over time.

A move schedule, introduced by e-mail, became part of another section of the site, “Moving Back.” The section provided information so the first day back wouldn’t feel like the first day on the job. As each group of 400 employees consulted their moving day schedule, they could access information on WFC recovery, pedestrian routes to American Express Tower and amenities inside the building and out, and links to neighborhood services and employee assistance programs and resources.

American Express gathered a panel of top functional leaders, encompassing real estate, security, health & safety, medical, technology, human resources and communications, and held multiple employee information sessions at each metro area site. The panel provided an overview and answered employees’ questions.

Because the environmental impact of the WTC collapse was of concern to many people, the company also set up additional information sessions for employees with independent experts who had conducted extensive testing and clean-up work in and around corporate headquarters. The experts described the work they performed and the test results, which surpassed the most stringent safety guidelines.

With human resources, the communications staff coordinated pre-move visits to ease the transition for the groups of 400 employees just as they were about to move back so employees could see what they had been hearing about—damaged floors were repaired and cleaned, and undamaged floors had been refurbished; most offices and workspaces felt like home. On each move-in day, begun in the spring and now more than halfway completed, senior leaders welcomed employees and the company held orientation sessions in the auditorium.

American Express is proud to be back in Lower Manhattan.

I. Steven Goldstein
Vice President/Chief Communications Officer
Dow Jones & Company

(Editor’s note: Special thanks to Steve for participating in this issue as one of his last official Dow Jones duties.)

So vividly, I remember my trip to work on September 11. I had just finished a spinning class and started my day early at our World Financial Center (WFC) office. It was a beautiful morning and business as usual, but only for a moment.

Once the second plane hit the World Trade Center, and people realized that we were most likely being attacked by terrorists, the security guards at WFC made the decision to play it safe and evacuate the building, which is located just across the street from where the Twin Towers once stood. Luckily, some of our staff had not yet arrived, but a few reporters who had did not want to leave the scene of what would become one of the biggest stories in American history.

The phone circuits were jammed, but Dow Jones senior staff, and the Journal’s top editors, led by Managing Editor Paul Steiger, pulled together using BlackBerry mobile e-mail devices. Within minutes, they had come up with a place to meet to coordinate their efforts. Meanwhile, several other employees made their way Southwest to the Dow Jones campus in South Brunswick, New Jersey—which would become the company’s temporary headquarters for nearly a year.

The internal communications team posted critical information to the Dow Jones public Web site because the intranet was not available to workers that were unable to access the corporate network. Our strategy was to provide as much information as possible to our employees, and this was an effective means of interim communication. We let them know that everyone was safe and accounted for, and where they could work and how to reach colleagues. Within hours, a temporary newsroom was constructed in the South Brunswick facility, and reporters and editors were creating what would be the September 12 Wall Street Journal.

Late that afternoon and the next day we were deluged with media calls from hundreds of media outlets that wanted to hear the story of how The Journal was able to publish after having to evacuate its headquarters. This was especially relevant because it turned out that we were the closest news organization to the site. We told the story of how reporters around the world worked together to coordinate newsgathering and reporting, which gave us a chance to emphasize the global efforts of the company.

Everyone at Dow Jones realized that the most important thing they could do was provide news to the people of the world in a time of crisis and great loss. Looking back, our strategy–which was developed as events unfolded–was three-fold: make sure our employees were safe and find a way to effectively communicate with them; let the public know that we would publish on September 12 and every weekday thereafter; and to emphasize that Dow Jones is a global company with a global newsgathering operation.

The internal communications effort, led by Patti Walsh, was critical because most employees now had to commute more than ninety minutes to work each way. We also provided on-site counseling. In addition, Dow Jones and its brands, including The Journal, Barron’s, Newswires and the Online Journal, went from covering the news to being the news and that took some getting used to. We had to ratchet up the external communications effort in the U.S. and overseas, and our international communications efforts played a large part in getting our message out.

Recently, Dow Jones moved back to the World Financial Center. But most gratifying is the Pulitzer Prize that was awarded to The Journal for the September 12 paper.