COVID Impact: Lessons From the Great Recession
by Chris Lundquist
on April 03, 2020
by Chris Lundquist
on April 03, 2020
The COVID-19 pandemic has put financial markets in a slump and dealt a significant blow to U.S. consumer confidence. Countless businesses have been shuttered and millions of Americans are now out of work thanks to increasingly strict social distancing mandates. An economic recession seems imminent, with some financial forecasters and elected officials declaring that it has already arrived.
This ultimately means that coronavirus is not the only issue organizations have to ensure they’re communicating clearly and compassionately about. They also need to prepare to respond to the economic turmoil that has upended so many lives. To understand why this is so critical, we need to go back in time a decade to the Great Recession.
As the biggest economic crisis the nation had faced since the Great Depression nearly 80 years earlier, the Great Recession had a profoundly disruptive effect on virtually every American. Just as we’re seeing today, millions found themselves out of work and in dire financial straits as bills began to pile up—not to mention frustrated and angry at circumstances that were out of their control. Businesses didn’t fare much better, with mass layoffs and bankruptcies common, and larger firms beseeching the federal government for support to stay afloat.
It was a time for carefully-crafted communication and painstaking reputation management. Some industries and businesses apparently missed the memo, but their mistakes left us with some key lessons for communicating in today’s economic climate.
Lesson 1: Never Stop Thinking About Optics
In 2008, policymakers in the White House and Congress rushed to address what was quickly becoming a watershed economic crisis, spending hundreds of billions of taxpayer dollars to bail out struggling corporate giants. While it’s unlikely that these bailouts were ever going to be wildly popular with the American public, some of the recipients suffered unnecessary reputational damage by not considering how their approach would be perceived.
Case in point—the nation’s largest automakers (Ford, General Motors, and Chrysler, or the “Big Three”) found themselves buried in an avalanche of criticism after their CEOs flew in private jets from Detroit to Washington to ask to be included. These bailouts were no doubt a necessity to save countless jobs in the auto industry, but the CEOs didn’t do their companies any favors by making such an extravagant display of wealth and privilege in the process. Appearing so callously out of touch at a time of great economic suffering—when millions were being asked to sacrifice or go without—was a black eye the automakers could’ve done without. Companies today would do well to take note.
Lesson 2: Consumers Have a Long Memory
Every year since 1979, Gallup has conducted an annual survey of Americans’ confidence in various institutions. Banks have never been one of the top performers in this index, but in 2004 they reached their highest level in decades, with a majority of Americans (53 percent) saying they had either a “great deal” or “quite a lot” of confidence in them. Fast forward to 2012, as the nation struggled to climb out of the Great Recession, and that number had sunk to a dismal 21 percent—the lowest Gallup has ever recorded. More than a third (35 percent) confessed that they had “very little” confidence or even none at all in banks.
On its face, this isn’t surprising. Financial institutions were at the center of the subprime mortgage crisis which heavily contributed to the economic recession and were an obvious target for public ire. What’s interesting is that even today, more than a decade after the “official” end of the recession, the confidence rates for banks have barely eked their way back up to 30 percent in Gallup’s surveys. The recession—coupled with financial institutions’ seeming indifference to their role in it—have left a deep, lasting scar on the psyche of most Americans.
The coming months may be some of the hardest that many of us will face in our lives. Organizations that make missteps must realize that stakeholders will remember it—quite possibly forever, as the millions of Millennials who graduated into the Great Recession or saw parents out of work for years can attest. Those that suffer irreparable PR damage need to be prepared to embark on an aggressive reputational repair campaign to win back consumers before they’re gone for good.
Lesson 3: Don’t Give Up on PR Efforts Altogether
In a recession, businesses tend to become risk-averse and shift toward making sure their core offerings and services are as strong as possible. This is understandable, but it’s worth noting that there’s an important role for PR to play in supporting this shift as well.
A rough economic climate is a critical time for businesses to shore up relationships with existing stakeholders and, wherever possible, build relationships with new ones. This is difficult to manage without an integrated public relations approach tuned to the local and national mood, and as the examples above demonstrate, the margin for error can be razor thin. It only takes one mistake to undo years of goodwill, and it often takes a sustained, focused campaign to convince new customers that you’re different from the other partners at the dance. Every business has to make the financial choices it feels are best, but as Bill Gates once put it, “If I was down to my last dollar, I’d spend it on public relations.”
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