Communicating Through the Crunch
The current economic woes are great news for one group of people: economic journalists. I’ve been reporting on economics for UK TV and newspapers since the 1970s. For some of that time, being an economics journalist was almost a guarantee of front-page exposure, such was the dire state of the economy. But for the past 12 years or so it has been much harder, because the economy has largely behaved itself. Now that has all changed again, and the past 12 months have provided us with the first real economic story since John Major was prime minister and Norman Lamont was singing in his bath when the pound was expelled from Europe’s embryo single currency. The voters, of course, were not as laid back about all this as Mr Lamont and the Conservatives have been out of power ever since.
By real story, I mean a story strong enough to lead the news agenda. We have witnessed a series of these, a cumulative sequence of events: credit crunch – Northern Rock – house price falls – stock market falls – soaring oil prices – rising inflation – industrial unrest – and now rising unemployment which, when combined, mean that economics journalists no longer have to beg their news editors for column inches or air time for their stories.
When news editors start consulting with their economics correspondents it’s usually a signal that there is something big going on. It reveals an immense public appetite for economics and business news.
But where does this leave the businesses caught up in the economic turbulence along with their PR professionals and advisors? Clearly their thoughts and experiences are in demand, and they are being presented with huge opportunities to get their key messages across. If they have good spokespeople, and make them available to a highly receptive media audience, they are almost guaranteed to get coverage. For many of them, however, this media appetite is not seen as an opportunity, but a threat.
So why do so many businesses shy away from the media at these times? Their natural inclination seems to be to keep their heads down. They become defensive, evasive and unhelpful. At the same time they scrutinise their budgets for PR, marketing, media training and try to see where they can save money. So just at a time when their opinions are of most use to the media, they deliberately make themselves scarce.
Of course, during a downturn organisations will want to examine budgets and cut spending where possible. However, drastically trimming the PR/communications budgets can be detrimental. Remember, the consumer is cutting spending too and organisations therefore need to be cleverer in their communications with potential audiences. Firms that effectively employ their media relations resources are more likely to stay ahead during uncertain economic times.
Making yourself scarce is not only unwise from a public relations perspective – it has a wider economic implication. The news gets skewed as coverage concentrates on the bad tidings that are emerging. The bad news gets written up, while companies that may have something hopeful to say, keep quiet.
There is a lot in economics and business that is about psychology, confidence and behaviour. Businesses that choose to adopt the low profile approach need to be aware what the implications are.
Consumers react in a very predictable way to the one sided nature of the economic news coverage. They take fright. They stop spending, tighten the purse strings – and lo and behold we get the recession we were told was coming. It’s a self-fulfilling prophecy. The organisations that finish up getting hit are the very same ones that decided it was best to keep their heads down and avoid the media. They suddenly become part of the bad news themselves.
I have encountered a number of organisations recently who when asked privately how badly they are being hit by the economic climate reply: “actually, we are doing alright.” So why are they not taking that step to make this news public?
As an example, talking to construction industry experts recently, I mused that it must be tough for them with the housing market slump. But the reply was that there is far more to construction than housing. Most big commercial and public sector projects – roads, hospitals, schools, the 2012 Olympics, CrossRail – are long-term projects. They can’t simply be turned off. In fact, those people losing their jobs in housing could very easily be used in this wider construction sector – where only a year ago there was a shortfall of 50,000 skilled people. But we don’t hear much of this more encouraging news. The bad news carries the day and it mounts.
Wearing my economics hat let’s try and put what is happening now in perspective. According to the IMF the US economy and the UK economy will both grow this year, albeit quite slowly. No mainstream economic forecaster is predicting much more than a mild recession – if that. If you really want to know what bad times are, consider this: In the three years 1929 to 1932, the national output of the American economy fell by over 30%, Wall Street lost 80% of its value and world trade fell by two-thirds. It is not that long ago that unemployment in the UK was above three million. Currently, using the same measure, it is below one million.
So my message to business is to get out there and, if the situation is not as bad as people are making it out to be, say so. Unless you do, you will be consigning everyone, including yourselves, to an unnecessary period of hardship.