In the weeks immediately following Russia’s invasion of Ukraine, hundreds of companies announced plans to pause operations and, in some cases, completely withdraw from Russia. Some did so immediately, while others responded after being listed on Yale professor Jeffrey Sonnenfeld’s “naughty or nice” list.
Sonnenfeld and his team later recognized the question of withdrawal is complex and modified the initial list by assigning letter grades. Although there is a wide variety of opinion on whether companies should withdraw or stay (we think Cargill’s statement that “food is a basic right and should never be used as a weapon” was particularly compelling), there are corollary matters all businesses must consider regardless of whether they operate in Russia:
Companies are increasingly scrutinized for their actions — and it won’t end when the Ukrainian conflict does.
Sonnenfeld’s Chief Executive Leadership Institute isn’t the only organization paying attention and applying pressure. Calls for boycotts are nothing new, but the widespread pressure put on companies this time represents a pivotal shift in corporate social responsibility. It’s no longer enough for a company to list its community involvement or environmental initiatives on a website; they must be prepared to address a wide variety of issues.
Some may be tempted to think they are fine because they don’t operate in Russia or conduct business with Russian companies, but that approach is short-sighted. The next maelstrom could be something that does directly affect them, and they need to be prepared to act swiftly and decisively.
Having a crisis plan that identifies a wide variety of possibilities is imperative, but even if your company has one, odds are it didn’t include a war on the other side of the world. If you haven’t dusted off your plan in a few years, the world has changed considerably and it’s time to reassess what your company might encounter.
Reputational harm has widespread — and often long-lasting — effects.
No doubt many of the companies that modified their operations in Russia did so because they felt it was the right thing to do…but they also understood how much reputation damage impacts the bottom line. 86% of the executives Willis Towers Watson interviewed in its 2021 Global Reputational Risk Management Survey cited loss of income and reduced customer base as a negative business outcome they felt their companies could face, with loss of talent and being less attractive to potential employees coming in second and third at 61.5% and 56.5%, respectively.
Conglomerates with operations in many countries can absorb a loss in revenue more easily than smaller businesses, but regardless of size, organizations must weigh a short-term loss in sales against the cost of rebuilding trust when deciding which side to take on many issues.
Following a crisis plan helps companies avoid being frozen with indecision at key moments, as does avoiding five other missteps in responding to crises and other events with potential to cause reputational harm.
Public relations helps companies weather crises and should be increased.
Looking at Sonnenfeld’s list, it’s interesting to see some companies continue to operate in Russia but halted all marketing efforts in country. It’s not an uncommon approach — companies often cut back when in trouble — but it is misguided. In this instance scaling back comes across as a half measure or empty gesture at best.
However, in most crises, public relations helps control or influence the narrative. Absent accurate information from your company, others will happily supply conjecture or capitalize on your silence. Communicating to employees, customers, vendors is imperative; they need to understand what your decision and actions mean for them. Monitoring coverage and discussion related to your brand will also help you combat misinformation.
Content marketing is another important component of your PR efforts; ramping it up not only keeps your audiences informed and engaged during tumultuous times, but can also fortify trust and thought leadership.
Err on the side of sensitivity in communications.
Although no one knows how long the conflict will continue, it’s important to keep it in mind when planning social media posts or email marketing campaigns — particularly for companies doing business in the region or whose customers have connections there.
Although we’ve previously addressed what companies should do before making social statements, this is different. Lighthearted posts may come across as tone deaf when appearing on a day when there have been casualties or when juxtaposed with suffering some are currently enduring, so it’s important to monitor developments and adjust accordingly — including being prepared to pause or change direction completely.
If the last two years have taught us anything, it’s to expect the unexpected. Aker Ink can help your company prepare for and navigate a variety of crises, as well as evaluate next steps for emerging even stronger.