Employee comms during bankruptcies and restructures

Hold the cheddar bay biscuits — Red Lobster has filed for bankruptcy. The popular seafood restaurant chain’s bankruptcy filing announcement earlier this week wasn’t unexpected. However, according to a report from NPR, the closure of dozens of Red Lobster locations, sell-offs of equipment from the buildings, and job losses took place just before the filing. While there’s been speculation that missteps like the chain’s unlimited shrimp deal were to blame, the reality is more complicated, with sale-leasebacks of the land restaurants sat on, poor business decisions, and bad management.

In a court filing obtained by CNBC, new Red Lobster CEO Jonathan Tibus pinned blame for the bankruptcy on a “difficult macroeconomic environment, a bloated and underperforming restaurant footprint, failed or ill-advised strategic initiatives, and increased competition within the restaurant industry.”

The reality here is that bankruptcies happen. But how can we communicate about them to employees and stakeholders? No matter the company or specialization, there are a few core concepts that comms pros need to hold on to during bankruptcy proceedings to keep things moving along in a smooth and orderly fashion.

Humanizing business news

When bankruptcies cause a major shift in business priorities, this will affect employees in many different ways. Some might see their jobs evaporate, others may see their scope of work expand, while the lucky ones might not be affected much at all.

Megan Weekes, chief marketing officer and partner at Speekes, emphasized the importance of leading with humanity and being present with your workforce when delivering any post-bankruptcy employee comms.

“Employees should always be told in person to the extent possible,” Weekes said. “This not only shows a human touch, but it builds trust between employers and their workforce. Employees are the lifeblood of any business, and they deserve to be treated as such.”

No matter how dispersed or international your workforce is, it’s crucial to give managers and leaders the tools and training to talk about events like bankruptcies transparently.

“If the workforce is large and spread out geographically, hold a company-wide call that allows for questions and answers,” she said. “Have direct managers equipped to hold discussions and answer additional questions following the all-staff meeting.“

Anticipating the rumor mill

Anyone who hears that their employer has gone bankrupt is bound to have questions about what it means for them and their role.

This is why comms should partner with senior leaders early and often. Get ahead of any speculation as part of your organization’s larger crisis preparedness and scenario planning, anticipating the potential questions you’ll receive to address relevant audiences quickly and directly.

“There is nothing worse than the distraction of the rumor mill during turmoil, not to mention the terrible impact that lack of transparency has on the trust between leadership and employees,” said Weekes.

“The likelihood that big news will leak is also very high, particularly when there are multiple parties involved. Get to them before the media does whenever possible. Own the truth, tell them face to face, and share it gently.”

Proper education is a big part of the transparency equation. Communicators should work to educate employees about what bankruptcies mean for the business, helping them stay informed and empowering them to speak about the purpose of the decision to others who will inevitably ask questions outside of work. These tumultuous times provide chances for comms to offer assurances and a path forward to employees without explicitly overpromising.

“Educate your audience as to why the bankruptcy occurred and why it’s the best decision for the company now,” Weekes said. “Take the opportunity to share the future vision and get your workforce looking ahead.”

Effective leadership and deepened trust

In times of major change, leaders need to be leaned upon to assure everyone of the path forward. These are the moments in which effective leaders are made. Those whose responses are best received consistently get in front of the right people, speak clearly and honestly and show their humanity.

“If the future is uncertain, say that,” Weekes said. “What you can underpin is your commitment as a leadership team and the values of the business. Assure employees as best you can of your dedication to them as your workforce and align them with your mission as a business during this time.”

While no one desires a bankruptcy, sometimes these fires can forge ironclad trust among employees, stakeholders and leaders.

“Remember that well-managed turmoil can lead to deepened trust, with both internal and external stakeholders,” Weekes said. “Use the opportunity wisely.”

Sean Devlin is an editor at Ragan Communications. In his spare time he enjoys Philly sports and hosting trivia.