7.1: Corporate Communications

On Dec. 19, 2022, as the Christmas holiday week began, officials in Buffalo appeared ready for another storm. Two, even three, feet of snow are not uncommon for Buffalo. But on the morning of Dec. 23, it took just minutes for winds to accelerate from 10 miles an hour to 70. Thirty-six out of 52 inches of snow recorded in the Buffalo region fell Friday into Saturday morning.

The storm created a disaster, and not just for local emergency management officials who days later reported at least 40 people were dead. The storm covered a vast swath of the United States. Southwest Airlines cancelled more than 2500 of its flights for several days, its passengers unable to get to their destinations, sleeping in airports and a vast amount of lost baggage.

While its competitors bounced back quickly from the severe winter weather, the low-cost carrier cancelled thousands of holiday flights while its competitors bounced back quickly. Five days after the massive winter storm wreaked havoc on holiday air travel across the U.S., Delta Air Lines, American Airlines and United Airlines each cancelled fewer than 40 flights. Southwest that day cancelled more than 2,500 flights, or 62% of its flight schedule. What happened? And what publics did it need to address and why?

To answer the second question first, there were four publics that Southwest needed to communicate with. Overall, it failed. The first public, of course, was its customers, the people who were stranded. The second was internal – the airline’s employees. The third was the general media, and the fourth was the regulators and Congress. We’ll use Southwest as a case study as we review corporate communications.

But first, let’s understand why Southwest, usually ranked as one of the best airlines in terms of customer service, had this experience, We’ll examine two elements: the impact of extreme weather on Southwest’s flying model and where corporate communications ranked on the organization chart.

First, Southwest’s “point-to-point” model failed. The point-to-point route model used by Southwest often lets passengers fly directly from smaller cities and regions without having to go through a central hub such as Dallas, Atlanta, Denver, or New York. Point-to-point is normally a source of competitive advantage for Southwest, but it appeared that the other airlines’ hub-and-spoke model worked better this time.

For an airline, the advantage of hub-and-spoke is there’s a pool of crew members and pilots who can report to work at a major airport. Planes are also kept closer to their home airports, rather than being spread across the country. It’s harder to have a reserve of crew members and planes when an airline serves many smaller markets, as does Southwest.

Its crew scheduling software was outdated and couldn’t keep track of where crews were after so many flights were cancelled. Finally, it didn’t have agreements with other airlines allowing passengers to fly on competitors planes when there is a cancellation or significant delay.

The airline’s communications with its passengers were a disaster. Here’s what it did:

• It posted this statement on its website, then didn’t update it:

“Due to adverse weather events and their resulting effects, we are currently experiencing operational disruptions and are working diligently and safely to restore normal flight schedules as quickly as possible.”

Notice that the statement gave no direction to customers at all.

• On Facebook, only one post (at 11:09 a.m. EST Monday, Dec. 26) with no updates:

“We continue to experience high call and social inquiry volumes. Please check your flight status and explore self-service options”

• Same on Twitter.

Now, it is highly likely that Southwest executives didn’t know when the situation would start to resolve. At the very least, they should have apologized and said they didn’t know. It would have been even better if they also explained that the point-to-point system, “which normally saves our customers time and money compared to other carriers that use the hub-and-spoke system” was overwhelmed but they were working as hard as possible to resolve the situation.

The irony is that Southwest actually posted daily updates the week of December 26. The updates were excellent in terms of tone and message. But customers couldn’t find them. The updates were posted on its news release page. They should have been posted on the home page.

What happened to Southwest was a dramatic illustration of why every business of any size should have a corporate communications executive reporting to the CEO, just as it has a general counsel, a finance department, a marketing department, a production department whose leaders all report to the CEO. When things go really wrong – and at some point, things always go wrong – operating executives don’t need to be trying to think how to deal with customers.

The heads of most public relations or corporate communications departments do not have responsibilities outside the communications area. But at Southwest, communications was just one of the functions of the vice president for administration and communication. Her biography said she “provides executive leadership for Communication & Outreach, Culture & Engagement, Diversity, Equity & Inclusion, Internal Audit, People (Human Resources), Talent and Leadership Development, Total Rewards, Technology, and the Southwest Airlines University” (Southwest 2022). With responsibilities ranging across nine unrelated areas from human resources to internal audit to communications to technology, it may not be a surprise that Southwest stumbled badly in communicating with customers during the Blizzard of 2022.

Corporate Communications covers a number of areas – public relations, internal relations, investor relations, media relations, crisis communication, reputation management, marketing communication, corporate donations and brand communication. In some organizations it also includes government affairs. It is the one department in an organization whose job it is to “win friends and influence people.”

It has the task of creating and sustaining a favorable view of the company’s brand. That brand is important to the company. If customers have good feelings about the brand, they will be loyal. Think about Apple. People are incredibly loyal to its products because they have positive feelings about the Apple brand. They believe Apple produces innovative cellphones, tables and desktop computers.

Apple’s vice president for worldwide communications reports directly to the CEO. She’s responsible for the company’s global communications strategy, leading the public relations team as well as employee communications – and nothing else..

In a well-run corporation, the information corporate communications produces is segmented because generic information doesn’t meet anyone’s needs. In normal times, a corporate communications department might have people responsible for each of the following areas:

Media relations

• Corporate charitable giving
• Social media
• Investor relations
• Employee relations
• Government relations
• Corporate history

Corporate communications don’t “just happen.” It has predetermined goals. For example, the University of Maryland recently issued a press release that one of its business professors has developed a new machine-learning model that takes into account the specific attributes of products a consumer likes. It then uses those attributes to predict what other sorts of products consumers will want in the future.

Who would Maryland hope see the release, and what is the objective?

• Retail executives, who might provide grants to further the project.
• Potential graduate business students, who Maryland hopes to attract
• Potential faculty members, especially those interested in the use of machine learning in a business context, who might consider applying to join the faculty.
• Alumni of the business school and Maryland faculty and staff members, whose in the school and university would be increased.

Corporate communications need to be accurate. It should be accurate in terms of content, grammar and explanation.

It should be timely, frequent and multi-channel. Why should corporate communication be timely? The Southwest experience gives the answer: Customers wanted to know what were the odds they would get to their destination? When would the planes fly again? Would Southwest cover expenses they incurred booking a ticket on another airline, a hotel room, a rental car? It may well have been that Friday night and Saturday, as the blizzard raged and its impact started to become clear, Southwest executives may not have known when the stranded planes would fly again. Had they said that, customers would have been able to plan their next steps.

Why should corporate communications be multi-channel? Again, Southwest gives the answer. In the midst of a business emergency, not everyone thinks to check the website, not everyone thinks to check Facebook, not everyone thinks to check Twitter. But customers will check one social media platform or another, and if they don’t find the answer to their question, they will voice their displeasure on the platform.

Corporate communication uses a number of channels. It puts out press releases for traditional and online press. It also releases those on Twitter, Facebook and other social media outlets. This helps insure the message is received by different stakeholders the way they prefer to receive messages. The repetition helps insure the message is implanted in the customer’s mind. If you’re in corporate communications, you want your message to be the first thing the customer thinks of when he thinks about you line of business.

It's likely that when you get your first public relations job it will be in corporate communications (including nonprofit and government) or an agency working for several companies. You’ll be writing press releases, brochures, articles for the organization’s magazine or website. You’ll be putting to use the skills we’re teaching in this course.

In today’s corporation – in reality, in any large organization – corporate communication is far more than simply people who “pitch” products and seek to “spin” the company out of trouble. They seek to create the sort of environment that, when trouble does emerge, people will be willing to give the organization the benefit of the doubt.

References

Southwest Airlines, (2022, January 2, 2023). Linda Rutherford, Chief administration & communications officer. https://swamedia.com/pages/linda-rutherford