From Chaos to Cohesion: Effective Communications Strategies for Organizational Restructurings

A series of economic shocks from the onset of COVID-19 and significant supply chain disruptions to persistent inflation have marked the past few years. To get the latter under control, the Federal Reserve increased its target rate from 0.0%-0.25% in March 2020 to 5.25%-5.50% today. Companies find themselves in a challenging and higher-cost borrowing environment while market liquidity and government support are declining. As a result, we expect a continued increase in financial and operational restructuring activity and bankruptcies as the focus shifts toward capital preservation and cash flow efficiency.

Few processes in the business world are as tumultuous or trigger as much anxiety as corporate restructurings. From mergers and acquisitions to divestitures to even Chapter 11 proceedings for financial or operational restructuring, companies have diverse sets of stakeholders, all with a vested interest in the outcome. Today, news and rumors travel globally in an instant, and navigating the storm successfully requires proactive and thoughtful communication strategies to bring stakeholders along through the process, keep them informed, and cultivate buy-in for an organization's future state.

Why Proactive and Thoughtful Communication Strategies Matter

1. Build Trust and Transparency: At its core, communication is about openness and transparency. By keeping stakeholders informed about changes and the reasons behind them, companies can foster an environment of trust. When stakeholders understand the rationale behind decisions, they are less likely to be caught off guard or harbor misconceptions about the process.
2. Reduce Uncertainty and Speculation: Information vacuums breed speculation, and rumors can spread like wildfire in the age of instant communication. By actively communicating, companies can set the narrative and guide discussions in productive directions.
3. Create Alignment Among Teams: Restructuring can lead to changes in roles and responsibilities, organizational structures, and team objectives. Proactive communication ensures everyone understands their new roles and responsibilities, facilitating a smoother transition. 
4. Drive Stakeholder Buy-in: Whether it is employees, shareholders, or customers, stakeholders are more likely to support the restructuring process if they feel informed and valued. Their buy-in can differentiate between a rocky transition and a successful transformation.
5. Protect Your Reputation: External perceptions matter. Proactive communication can shape the narrative in the public domain and combat misinformation, allowing the company to maintain a positive and resilient reputation.

Best Practices for Effective Communications Strategies

1. Begin Early and Set the Tone: Do not wait for rumors to start. Address the possibility of restructuring early on, even if all the details are not finalized. This early engagement sets an encouraging tone for forthcoming changes.
2. Utilize Multiple Channels: Emails, town hall meetings, internal social networks, and one-on-one discussions are all valuable channels. The goal is to meet your stakeholders where they are and ensure everyone receives the necessary information regardless of their position or location.
3. Engage Leaders at All Levels: It is not just about top-down communication. Engage managers and team leads to relay information, deputize key employees to carry the messaging, address concerns at the team level, and gather feedback to send up the chain.
4. Be Open to Feedback: Restructuring can stir emotions and cause worry. Create avenues for employees and other stakeholders to share their thoughts, ask questions, and voice concerns and incorporate that feedback into your strategy.
5. Update Regularly: As the restructuring progresses, the situation can evolve. Regular updates can reassure stakeholders that they are in the loop even when there is no new information.

Conclusion

While challenging, corporate restructuring offers companies an opportunity to evolve and become stronger. However, the journey is as important as the destination. Proactive communication that reinforces transparency, trust, and engagement enables the company to weather the storm and best position itself to emerge successfully into its next chapter.

^{© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.}