UPDATE 1: CultFit founders write an open letter to employees to ‘set the record straight’ – on YourStory.
UPDATE 2: Airbnb too announced massive layoffs recently – 25% of its workforce! The company’s CEO, Brian Chesky wrote about it in the company blog and it clearly looks like he, and his communications team, has thought-through the communication and framing more keenly.
UPDATE 3: The Wall Street Journal has a really good opinion piece on Airbnb’s communication against the predicament they are in.
ORIGINAL POST:
CureFit’s announcement on May 4th (The Force Abandons?) about downsizing and layoffs doesn’t seem to be planned adequately or thought-through.
It is factual and hits all the right notes with the founders taking a 100% pay cut and so on, but it misses to take into account what would come to people’s minds as an immediate reaction.
And what is that?
That is CureFit’s recent, much-touted donation to PM-CARES.
The official line earlier was is that they donated Rs.1 crore.
But right inside the announcement of layoffs, they add that they have donated over Rs.5 crores!
That figure stands in stark contrast to the other figure they have noted – Rs.2 crores to support affected employees! And it is so darn obvious that everyone’s first reaction is precisely that!
Beyond social media, most media outlets too made a mention of that contrast – donating Rs.5 crores to PM-CARES and now laying off employees in large numbers.
Now, CureFit is not the first brand to not consider the reputation damage and perception arising out of such a contrast.
Most recently, McDonald’s was slammed for showboating its socially-distanced logo in Brazil which was in contrast to how they treated their own employees (in terms of paid sick leave, living wages etc.).
The brand was in doldrums for the same reason for one of their Women’s Day gimmick too where they turned their M to a W.
At least in the case of McDonald’s, one could argue that not treating employees well in terms of pay is a policy matter that needs a lot of coordinated thinking… for sheer argument’s sake. For CureFit, it’s far simpler and linear – they donated X and now they are laying off Y number of employees! And the most obvious question in everyone’s mind when they register this contrast – “Errr, they didn’t consider saving their employees’ jobs first before donating to PM-CARES? How?”.
There is a famous Tamil proverb: “Thanakku minji dhaan dhaanamum dharmamum”. Meaning: “You start thinking of charity after you have sorted your necessities first”.
In English too, there’s a very familiar phrase related to this. Most of you would have heard this in in-flight safety announcements: “If needed, oxygen masks will be released overhead. Be sure to secure your own mask before assisting others.”
Given the short span of time between CureFit’s donation and layoff, it is apparent that people are connecting the two and this is becoming a reputational crisis for the brand.
Such contrasts are quite common in political circles – a political personality or party says something one day and does something diagonally opposite another day. Isn’t there reputational damage for that? Of course, because media could point out to that contrast and it could become a minor crisis for that day.
For example, Narendra Modi’s famous speech before Delhi elections where he uttered, “Those who protest could be identified by their clothes itself” comes and adds itself to any and every statesman-like utterances he makes.
But 3 things keep politicians in better stead than corporate brands:
1- the presence of an army of supporters who exist only to defend their political superheroes against the cynical, skeptical and truthful.
2- politicians are made with thicker skin and are completely at ease with such contrasts… for a living!
3- the news cycle in politics erases and washes away such contrasts in very short time periods. Today’s contrast being highlighted would be washed away by another utterance tomorrow.
Corporate brands aren’t so lucky. Unless they pitch themselves like an Apple, they have only paying customers, not fawning fans who come to its support during such times. And brand leaders are not made of that thick skin which impacts the brand’s reputation too. Brand news cycles are also very, very long because they do not make news as often as politicians do. So, the reputational damage sticks like stinking dirt till a sufficient time has passed or the brand does something incredible to overcome this as a time-bound crisis.
So, what could CureFit have done if it had to announce those layoffs?
First, why even proclaim that Rs.5 crore donation in a communication primarily meant to announce business downsizing and layoffs?! This is baffling and utterly confounding, almost like CureFit is voluntarily inviting people to poke it with the most obvious stick. What did they imagine would be the purpose of mentioning that they have responsibilities beyond employees and shareholders, to the society at large… while announcing downsizing? Corporate Social Responsibility starts with employees as if that needs to be stated!
Two, fully anticipate that people and media are going to link the donation and layoffs, and point out the glaring contrast.
Three, if you did anticipate, imagine a top journalist asking you that question in your face. What would the CEO’s response be? Plan for a sane, believable response proactively. Now, I don’t know the inner workings of CultFit organization so I cannot even make an appropriate suggestion.
But some starting points on a thought process:
- can you talk about which accounting head the donation came from? And frame it as being very different from salaries as an accounting bucket?
- what were the business gains from the donation, besides merely PR/publicity gains? Are there are tax savings that occurred (under what section?) because of which at that time it was prudent to commit to that donation?
- how big is the corpus for employee severance pay? If that is bigger than, or at least commensurately similar to the amount donated, there’s a semblance of an argument to be made.
As I mentioned, I do not have the full details so, I’m unable to think of more scenarios. But the simple point here is that a communications team should proactively ask this question to the management, however uncomfortable it may seem, and seek answers. Not just seek answers, but also gather as many surrounding details and try to form sensible answers for the leaders. And articulate those answers with genuine empathy.
This IS the role of a communications team, besides questioning the need to mention the Rs.5 crores donation in this announcement.
And this is a significant challenge + learning experience to go through in how to anticipate and deal with potential reputational damage.
Unlike certain kinds of reputational crisis that sneak up without any warning, this one was staring at CureFit right in the face. They were on top of the announcement for layoffs and they had full knowledge of how contrasting it was going to be with their own donation publicity mentioned helpfully for people to point out. So, not thinking through a response was a serious miss.