The macroeconomic picture has become increasingly gloomy in recent months as key economic indicators point to significant economic disruption and recession fears mount. Inflation hit a new four-decade high in May, rising at an annual rate of 8.6 percent. Oil and gas commodity prices continue to fall sharply. The IPO market has almost come to a standstill, with more than 300 companies waiting to launch a new issue. And sell-offs in the crypto and tech sectors bring back memories of the dot-com crash.
Given this economic backdrop, financial brands might feel a natural inclination to back away from proactive communications – whether due to weaker financial/portfolio valuations, the loss of a key deal, or general market uncertainty – with no clear end in sight – and take it adopt a more cautious, wait-and-see approach to communication as events unfold.
This is the wrong bias for a number of reasons, the main one being that your stakeholders still want to hear from you. Whether investors, business partners, customers or employees, it is important to keep your key audiences informed in times of uncertainty. No one expects you to have a crystal ball or to predict what will happen tomorrow, but they will continue to look to you for perspective. Economic uncertainty not only offers unique insights, but also provides an opportunity to reaffirm your company’s long-term vision, underscore your core values and strategy, and communicate how they will carry your company through uncertain times.
On the other hand, burying your head in the sand and not communicating during uncertain times could be interpreted as a sign that your company is struggling or has not prepared a plan to deal with business challenges. For investors and advisors, silence can also indicate that you, like your clients, don’t know how to respond when they need you most. Failure to communicate can lead to a variety of other negative consequences, including creating a perceived lack of transparency, providing negative fodder for the rumor mill, fueling speculation or misinformation, or exacerbating uncertainty.
What’s more, your competitors are likely to speak up even when you don’t. If you don’t communicate, your competitors will fill the gap, potentially attracting new business and providing thought leadership. They are viewed as thoughtful, informed advisors and trusted partners when the dust clears.
So what should financial brands consider when deciding how to communicate in this uncertain environment? The right approach depends on many factors, including previous practices, company personality, resources, and business strategy, but there are some general principles that can guide your response:
Establish a steady communication rhythm. Make sure your communication is consistent in tone and cadence. When communication is sporadic, it is often less successful. Establish a regular communication schedule—and stick to it—so people know they can count on you to provide reliable updates.
Impart strength from experience. It’s important to emphasize how you’ve successfully navigated uncertain times in the past. This can be done by sharing stories, examples and anecdotes of successes or achievements from previous economic cycles or financial downturns.
There is no substitute for direct communication. Whether you are delivering your message to stakeholders via email, memo/letter, conference call, or in a face-to-face setting, there are many benefits to direct communication. It allows you to deliver a clear message, reducing the possibility of misunderstanding or confusion and increasing levels of trust and transparency.
talk less about yourself Bankers and private investment firms may be reluctant to engage with the media when the market or recent fund performance is down. However, both are well placed to provide commentary on the broader investment environment and key trends affecting the economic landscape, and present their organizations as knowledgeable experts.
Choose the right medium. Communicators have more media choices than ever before. The challenge is matching the medium with the right content. For example, deep macroeconomic analysis is probably not appropriate for social channels. By choosing where and how your content appears, you can deliver a nuanced communications program that appeals to a variety of audiences.
Excessive communication with employees. Employees are your company’s most valuable asset. Communicating early and often is important to effectively address any concerns they may have about the company’s financial strength and their long-term job security. Uncertainty can also be an opportunity to celebrate the company’s achievements or milestones. When you win a new customer or launch a new service offering, consider promoting it internally and recognizing the team members who have played a key role.
what not to do
It would be wrong to say that active communication during a downturn doesn’t have its own pitfalls. Businesses still need to be strategic and thoughtful about what gets communicated and when. Here are three things you shouldn’t do:
Make empty statements. In challenging times there is a natural tendency to soothe and offer comfort and you should respect that. However, avoid blanket statements like “everything is fine” that lack detail and rarely inspire confidence.
Complicate the message. Even if you’re an economist, delving deeply into the intricacies of capital markets and the fiscal policies that create volatility is probably not the best option. Use this knowledge strategically and selectively. Focusing on an important snack for your audience will serve you better than diving deep into the weeds.
Suffer from paralysis by analysis. It’s understandable that you take the time to consider your communication options, but you may find yourself bogged down in possibilities and bogged down by indecisiveness. Remember, in uncertain times, your key audiences want to hear from you in a timely and transparent manner. You may not have all the answers, and saying less is often better than waiting for a perfect solution that may never come.
Whether the economy enters a recession later in 2022 or later, the impact of a downturn will likely remain a major concern for your investors, business partners, customers and employees for the foreseeable future. Using proactive, strategic communications will allay the concerns of your key audiences and help them better understand how your business can weather a challenging business environment and thrive.
Scott Lessne is senior vice president at Stanton.