There is no question that this crisis has presented brands with numerous hurdles to overcome -- from hard business decisions involving layoffs and furloughs, to reworking day-to-day operations, to reassessing compensation, and more.
In order to succeed, marketers must strike a delicate balance that allows them to safeguard their reputation among consumers and the marketplace at-large. We spoke with Nevin Reilly, Managing Director of the strategic communications firm Sloane & Co, about what brands should and shouldn't be doing to make the best out of a difficult situation::
COVID-19 has negatively impacted many companies' bottom lines. However, surveys have shown that consumers view brands negatively if they cut costs by laying off workers during a time of crisis. How can brands balance the need to preserve their profitability with their need to preserve their reputations?
The companies that very quickly announced layoffs were met with scrutiny, but as the duration of the economic shutdown expands there is slightly more understanding. That said, it is critical for brands to be more informative about how the financial challenges leave little choice, and the measures that have been taken before getting to the decision to do layoffs. Leadership -- and especially CEO pay--is one of the top criticisms. So are other corporate luxuries like company jets.
Many companies have recently reported earnings, or soon will, which presents an opportunity to elaborate on what efforts have been made to retain employees to the extent possible, and to explain the financial challenges. While earnings often address core metrics being tracked by investment professionals, this quarter begs for more simplicity and more earnest views about uncertainty than companies typically offer. Make it easier for the public to understand the hard decision to lay off workers and the goal of preserving the company so hiring can come back as the economy is turned back on.
Recently, a number of CEOs have stopped taking their paychecks in order to preserve company funds for maintaining operations and paying other employees. In your opinion, does this action have a meaningful impact on how consumers view the brands they're associated with?
Reporting--even in sophisticated publications--seems to have largely overlooked or discounted CEOs' decision to suspend pay. Reading the comments following articles shows that even fewer readers tend to be aware, with many demanding the action even though it has already been taken. While it doesn't seem to have the quick impact that companies would hope for, it is still necessary to have a defensible position when making other difficult choices, like layoffs.
Companies also need to consider decisions around total compensation. Some of the skepticism around CEO's forgoing salaries is associated with increases in other areas of compensation, like equity or option grants. This business school logic of aligning CEO compensation with business performance especially during a challenging time for many consumers is viewed as shuffling pay from salary to stock, with the paycheck pause coming across as a PR stunt. More explanation of the rationale would help mitigate this perception issue, but the only way to totally alleviate is not to do it.
With consumers looking to support their local, neighborhood brick-and-mortar businesses during a time of crisis, national retailers and chain restaurants can sometimes get put on the back burner. What are some ways big brands can show that they, too, are part of the community and deserving of similar engagement from the community?
Consumers find it easier to rally around small businesses because they solely exist in the community and are often viewed as an important element of the local culture. In a time of crisis, they are also known for their limited financial safety net. National brands can serve as a backstop for the economic strain on these communities by subtly demonstrating their resolve to continue keeping employees on the payroll, providing benefits, and in some cases provided limited services in their communities--like meals for health care workers, for example.
Many big-box retailers and restaurant chains already have a playbook for capturing their local impact, typically when negotiating local tax incentives to bring a store or café--and its associated payroll and sales tax--to a particular market. These key selling points are often accompanied with enthusiastic new employees and managers that are glad to have a way to make a living or some additional income with the stability a chain can provide. For chains that franchise, presenting the owners as local entrepreneurs and the in-market face of the company can also help humanize and localize a brand. With government responses coming from the state and often more local levels, it's important for national brands' local management and employees to be front and center, with the strength of the corporate balance sheet a builder of consumer confidence in the backdrop.
In order to succeed, marketers must strike a delicate balance that allows them to safeguard their reputation among consumers and the marketplace at-large. We spoke with Nevin Reilly, Managing Director of the strategic communications firm Sloane & Co, about what brands should and shouldn't be doing to make the best out of a difficult situation::
COVID-19 has negatively impacted many companies' bottom lines. However, surveys have shown that consumers view brands negatively if they cut costs by laying off workers during a time of crisis. How can brands balance the need to preserve their profitability with their need to preserve their reputations?
The companies that very quickly announced layoffs were met with scrutiny, but as the duration of the economic shutdown expands there is slightly more understanding. That said, it is critical for brands to be more informative about how the financial challenges leave little choice, and the measures that have been taken before getting to the decision to do layoffs. Leadership -- and especially CEO pay--is one of the top criticisms. So are other corporate luxuries like company jets.
Many companies have recently reported earnings, or soon will, which presents an opportunity to elaborate on what efforts have been made to retain employees to the extent possible, and to explain the financial challenges. While earnings often address core metrics being tracked by investment professionals, this quarter begs for more simplicity and more earnest views about uncertainty than companies typically offer. Make it easier for the public to understand the hard decision to lay off workers and the goal of preserving the company so hiring can come back as the economy is turned back on.
Recently, a number of CEOs have stopped taking their paychecks in order to preserve company funds for maintaining operations and paying other employees. In your opinion, does this action have a meaningful impact on how consumers view the brands they're associated with?
Reporting--even in sophisticated publications--seems to have largely overlooked or discounted CEOs' decision to suspend pay. Reading the comments following articles shows that even fewer readers tend to be aware, with many demanding the action even though it has already been taken. While it doesn't seem to have the quick impact that companies would hope for, it is still necessary to have a defensible position when making other difficult choices, like layoffs.
Companies also need to consider decisions around total compensation. Some of the skepticism around CEO's forgoing salaries is associated with increases in other areas of compensation, like equity or option grants. This business school logic of aligning CEO compensation with business performance especially during a challenging time for many consumers is viewed as shuffling pay from salary to stock, with the paycheck pause coming across as a PR stunt. More explanation of the rationale would help mitigate this perception issue, but the only way to totally alleviate is not to do it.
With consumers looking to support their local, neighborhood brick-and-mortar businesses during a time of crisis, national retailers and chain restaurants can sometimes get put on the back burner. What are some ways big brands can show that they, too, are part of the community and deserving of similar engagement from the community?
Consumers find it easier to rally around small businesses because they solely exist in the community and are often viewed as an important element of the local culture. In a time of crisis, they are also known for their limited financial safety net. National brands can serve as a backstop for the economic strain on these communities by subtly demonstrating their resolve to continue keeping employees on the payroll, providing benefits, and in some cases provided limited services in their communities--like meals for health care workers, for example.
Many big-box retailers and restaurant chains already have a playbook for capturing their local impact, typically when negotiating local tax incentives to bring a store or café--and its associated payroll and sales tax--to a particular market. These key selling points are often accompanied with enthusiastic new employees and managers that are glad to have a way to make a living or some additional income with the stability a chain can provide. For chains that franchise, presenting the owners as local entrepreneurs and the in-market face of the company can also help humanize and localize a brand. With government responses coming from the state and often more local levels, it's important for national brands' local management and employees to be front and center, with the strength of the corporate balance sheet a builder of consumer confidence in the backdrop.
