News Analysis: Firms make the best of bad news

In light of recent news of job cutbacks from companies such as Kodak and Jaguar, Richard Cann analyses how firms manage the scaling back of their operations and the lessons to be learnt from such action. Few companies have the opportunity to turn an announcement that they will axe 600 jobs into examinations of an outdated industry, particularly when it involves a product that has played a central role in the lives of millions.

Yet this is what Kodak did last week when it turned its back on film and embraced the digital future, escaping the savage criticism the media tend to dish out over mass job losses.

Staff-shedding firms face a dual PR challenge of placating consumer media by pointing out the necessity of their actions, while stressing that they have a future with clear strategies to move forward in order to avert criticism in the business press.

Voice from the top

For both challenges it is vital for the company's leader to take command as its media face. 'Your message is so much more credible when it comes from the mouth at the very top,' explains Chris Laming, comms director at P&O Ferries, which last month announced plans to reduce its workforce by more than 1,500 to focus on key ferry routes and expand its freight business.

Common knowledge of the problems facing the ferry industry such as the opening of the channel tunnel, the SARS outbreak, the loss of duty-free shopping in 1999 and the emergence of low-cost airlines, softened the blow with wide recognition that P&O had to act. Consequently, Laming says it is debatable how much the P&O brand has suffered because business press reacted positively to the reinvention of a business with an uncertain future - P&O's share price shot up 12 per cent overnight.

He says internal comms has been a bigger factor - it was important to inform staff of cutbacks before the media, and a 15-minute video fronted by P&O group CEO Robert Woods explaining the restructure was screened to staff before the public announcement.

One of the major threats facing firms is disgruntled staff stirring up bad publicity. This media relations challenge, says Laming, has been simplified by a three-month period of consultation with staff and unions, which legally limits its participation in the media, and refocuses comms internally.

'The starting point is internal communications,' says Big Partnership MD Graham Isdale, who has advised firms on handling comms around site closures and job losses. He believes motivation for effective internal comms should come from an acknowledgement of the responsibility a firm has for its staff: 'A firm's reputation always begins with how it is perceived by its staff.'

But the sensitive nature of job cuts makes companies reticent. Because of this, PR is often handled in-house, but Isdale says external agencies drafted in must be aggressive about insisting on access to clients at the highest level.

'You need to trust your client to give you all the information they have available at the time but there are no guarantees that this will happen.

You can't offer advice that deals only with immediate realities and doesn't take into account what might happen next. Communications needs to be at the heart of the decision-making process,' he says.

Jaguar director of corporate and government affairs Don Hume claims the strength of its in-house comms team allowed it to avoid agency support for its 17 September announcement that it would discontinue assembly operations at its Coventry factory, costing 1,150 jobs. The firm only reports on its business as part of Ford's Premier Automotive Group, limiting its ability to forewarn the market, says Hume, adding that chairman and CEO Joe Greenwell did take the 'unusual move' of visiting all its plants to address staff directly without going into details of its plans.

Hume says it is important to 'keep that sort of information contained' in order to handle the matter sensitively, although this secrecy has drawn criticism from the UK's largest manufacturing union, Amicus.

The nature of Jaguar's cost-cutting plans was known only at the last moment, says Amicus director of comms Richard O'Brien, adding that even then Jaguar 'tried to cover up' the extent of the redundancies. O'Brien says the union rarely loses a battle in the consumer media, and uses this influence to encourage firms to engage in comms with staff and union representatives at an earlier stage. The external comms process should start before operational decisions are made, he adds.

O'Brien points to plane manufacturer Airbus, which opened talks with unions at an early stage when suffering from order cancellations in 2001, which he claims saved 1,400 jobs through renegotiating pay deals.

Unilever's announcement last week that 600 jobs would go in Birds Eye's Grimsby factory closure was made more palatable, according to O'Brien, by the remorse with which it delivered the news, and the assurances it gave about the future of its other sites.

People's livelihoods and job cuts are highly emotive and rarely ignored in the media. Engagement and openness is crucial to limiting critical voices - with such a broad range of stakeholders involved, from investors and government to employees, unions and local communities, it can never be swept under the carpet.

RECENT JOB LOSSES ANNOUNCEMENTS

- Unilever 600 jobs, mostly part-time, to go in closure of Birds Eye Frozen Food factory in Grimsby after unsuccessful bid to sell the operation due to overcapacity in the ready-meal market

- Shorts 560 jobs to go at Northern Ireland's biggest manufacturer in 2005 - enforced by parent Bombardier Aerospace due to financial difficulties faced by its airline customers

- Eastman Kodak 600 staff to go with the closure of its film factory and downsizing of paper-manufacturing facility - due to popularity of digital photography

- Jaguar 750 jobs axed plus 400 voluntary redundancies - car assembly at Coventry factory is set to end over the next 12 months following poor UK sales

- P&O Ferries Proposes to cut 1,200 and transfer 350 staff - £100m a year cost-cutting drive will cut its ferry fleet by a third and focus P&O on its freight business.

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