Good communication is no substitute for sound management – the possibilities and limits of corporate communication

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Good communication is no substitute for sound management – the possibilities and limits of corporate communication

Good corporate communication can make well-managed companies shine and accompany them through a crisis without major damage to their reputations. When poor management is in place, the limits will be reached.

The other day, I received an interesting email enquiry from a communications student who had come across my (German) blog post “Wirecard – lessons for crisis communication” from February 6, 2019. She wanted to shed some light on the Wirecard scandal for a term paper on corporate communications. I found one question particularly notable: Could the scandal have been mitigated, if not avoided, through different in-house and external communication measures?

My initial spontaneous thought was: “How naïve! Of course not!” Even the best communication cannot whitewash a company perpetrating fraud and malfeasance of such magnitude. Communication is able to mitigate the fall-out of a crisis and credibly convey that the company is serious about making a fresh start. But preventing such a scandal? Nevertheless, the question continued to stick with me because it touches on the self-image of corporate communication.

I wrote my post at a time when I still assumed that Wirecard probably had a compliance problem with a value adjustment potential in the low double-digit million range, but that it was fundamentally a sound and reputable company. Adhering to a few crisis communication rules could certainly have assisted in getting the issues off the table more quickly and, if necessary, sustainably. As we all know today, however, it was only the tip of an iceberg of tremendous size. It may be possible to circumvent an ice floe by communication, but with an iceberg of this size, corporate communication is no more than the band fiddling on the Titanic.

Communicating the facts

Good corporate communications – and good investor relations, by the way – communicate the facts. In good times and in bad times. Transparent, continuously and comprehensibly. This is the only way to build trust – and trust is the foundation of every relationship. No exaggerated laudations, but also no self-bashing. However, the “in bad times” is all too often gladly overheard, and not only on the upper management echelons. Our field has a reputation for whitewashing. And it has only itself to blame. Many PR people are actually producing pure and undiluted propaganda and thereby disqualify themselves as a reliable and reputable source of information. Of course, they would much rather communicate corporate successes and great new products. But where do you draw the line? Certainly not with the “alternative facts” of Trump advisor Kellyanne Conway.

I remember very well – at the outset of my PR career – the jovial statement a product manager made to a journalist: “No, no, you can just take my word for it. I have my PR agency for the lies.” This is precisely the red line that must never be crossed, and that’s why this sentence still outrages me today. But is the line, this red line, drawn so clearly? Are you just putting the figures from a statistic into the right perspective or are you already misleading the public? Are you rounding up generously or are you already deceiving? Every communicator should ask himself/herself these questions very critically. It is a question of one’s own professional self-image and one’s own integrity.

Vicarious agent or sparring partner?

Ideally, corporate communicators are very close to management. It is therefore an active decision whether one does one’s job as a vicarious agent or as a sparring partner to management. How does one react to management’s wishes for announcements? Do you just find some pleasantly sounding phrasings or will you ask some critical questions? Good communicators are uncomfortable – something that only good company leaders appreciate. With everyone else, you’ll be risking your job. Criticism or probing questions are not welcome. I can understand that there may be situations in which a fledgling parent with a high mortgage and a fancy company car thinks twice in corporate communications about whether he or she should really ask tough questions or just shut up and get on with things.

By the way, the same applies to external communicators, whether freelancers or agencies. Risking the account and perhaps jobs because you regard yourself as the Joan of Arc for what you perceive as the incontrovertible truth? Very difficult. Things are never as simple as plain black and white in everyday working life. Both the personalities of all the protagonists involved and the general company culture will play a decisive role. Nevertheless, the plea: open, transparent communication in-house and externally may not be able to prevent fraud, but it will certainly provide a worse breeding ground for such activities than the esprit de corps in upper management reported at Wirecard.

As a complete outsider, I cannot allow myself to judge as to whether corporate communications and investor relations at Wirecard were deceived and instrumentalised by management, knew about the fraudulent dealings or perhaps suspected them. In general, however, communicators – whether internal or external – should be extremely alert if critical enquiries are repeatedly sidestepped or if requested management statements do not match the facts gathered within the company. In such cases there is a high risk that communicators allow themselves to be instrumentalised, and their own integrity will be at stake.

Corporate communication as a seismograph for undesirable developments in companies

Communicators hear nuances and subtleties like hardly anyone else in the company. They sense when something is not being addressed openly (Paul Watzlawick comes to mind), they perceive contradictions between appearances (what management wants to communicate) and reality (what is actually going on in the company). Information from all company departments converges in corporate communications. In this respect, corporate communication is a genuine seismograph,  perceiving profound shocks in companies at an early juncture.

As a committed sparring partner, communicators can give management important pointers that might help in getting the company back on track. But that is where their influence ends. Communication alone cannot turn the tide – that has to be done by the acting protagonists in the company and ultimately by the responsible management. It is management’s task to keep the company on course or, after a crisis, to ensure that mistakes are not repeated by putting new corporate processes, additional auditing instances or other structures in place.

Good communication is no substitute for sound management 

If management cheats, is resistant to advice, does not want to acknowledge undesirable developments in the company and sees corporate communication only as a vicarious agent for announcements, even the best communicators will not be able to prevent the company from veering off in the wrong direction, resulting in lackluster business results and a damaged reputation.

High gloss, polished communication does not compensate for bad management, but at the most will extend the time span until mismanagement becomes clearly apparent or fraud is exposed. Neither journalists nor shareholders or other stakeholders will allow themselves to be dazzled or deceived in the long run – even though the time span was astonishingly long before the malodorous Wirecard misdemeanors finally came to light. Creative accounting usually catches up with companies at the latest when the next audited annual financial statements are prepared, or when they are confronted with deviating, publicly documented statements. Sooner or later, unkept promises with regard to product launches, supply capabilities or functionalities will be ruthlessly punished by the markets.

Good corporate communication can make well-managed companies shine and accompany them through a crisis without major damage to their reputations. When poor management is in place, the limits will be reached.

Integrity and credibility are the most crucial assets for corporate communicators. Which is why they should basically communicate the facts and nothing but the facts. Or as Theodor Heuss once said: “People who always tell the truth can afford to have a bad memory”.

By Jutta Lorberg – BSK Becker+Schreiner Kommunikation GmbH