The ongoing damage caused by COVID is not showing any signs of slowing as quickly as was initially hoped, and many organisations around the world are struggling to deal with its consequences.
This poses particular problems for brands, because it’s not always smooth sailing when well-thought out brand platforms developed over decades meet the harsh economic realities of a global pandemic.
There are two worlds colliding here, and living up to your brand promise while under unprecedented financial pressure is challenging. Organisations who do it wrong are likely to incur a stain on their reputation for some time to come.
Take recent events at Arsenal, the well-known football club in the UK. For those unfamiliar, Arsenal is one of the leading names in English football, established in 1886 and a bastion of tradition and doing the right thing – the marble halls of its old Highbury ground speaking to years of integrity and old-school class in a sport increasingly dominated by mega-money influxes from foreign billionaires and nation states.
Arsenal ended up becoming part of this trend, with a US billionaire investing and then taking full control in 2018. After a period of decline, arguably abetted by the overseas owner, a new manager was appointed mid-way through the 2019-20 season, bringing hope in the midst of a chaotic season. This was realised via a strong finish and victory in a COVID-delayed FA Cup final on 1 August, sparking general optimism for the future.
Then, four days later, the club announced 55 redundancies, or about 10% of the workforce. In a statement, the leadership explained: “Over recent years we have consistently invested in additional staff to take the club forward but with the expected reduction of income in mind, it is now clear that we must reduce our costs further to ensure we are operating in a sustainable and responsible way, and to enable us to continue to invest in the team.”
The redundancies were expected to create savings of £2.5 million a year – but a major problem was that these redundancies came after the majority of the well-remunerated playing and coaching staff agreed to a 12.5 percent pay-cut in April, with the expectation these savings would be used to preserve jobs.
And then there was the matter of the FA Cup victory, which delivered £3.6 million in winnings.
Beyond that, the £2.5 million projected savings simply pales into insignificance when you have a troubled star who rarely plays on the books, earning a whopping £18 million a year, and a total player wage spend of £200 million. There were also new signings of seemingly average players on high wages, and a lucrative signing-on bonus for another player who, while talented, at 32 years old is hardly one for the future.
On top of this, you have Arsenal owner Stan Kroenke, whose wealth has grown by £300m during 2020 and is apparently worth around £8.1 billion.
In short, the numbers didn’t add up, and the backlash from fans and media was immediate.
The UK Independent put it most succinctly: “There is simply no reasonable way that can be spun. There is simply no reasonable way anyone can justify such expenditure on the playing squad – and especially such inefficient expenditure – with making cuts that don’t make much of a difference in the grand scheme of things; that will involve the kind of figures that are dismissively thrown back and forth in player purchase negotiations.”
Arsenal found themselves in the position of making an announcement that tied in with some of the deepest fault lines ruining through society at this time – haves and have-nots, rich and poor, winners and losers. These contrasts were stark and painful, and the decision played right into them. While no doubt inadvertent, it was almost as if the announcement was designed to enter a wider debate of very sensitive and serous issues, and then exacerbate them – which is exactly what you never want to do.
The damage to the brand will be long-lasting, and while there’s no doubt that bad news and job losses in the current climate are inevitable, there are ways to handle tough calls that are much better than this.
For a club like Arsenal, the decision and dubious rationalisations for it undermined their core brand values of time-honoured tradition and a certain classiness. It essentially went against everything the club has stood for in over a century of existence, and alienated a global fanbase who expressed enormous sympathy for those who lost their jobs – ordinary people on ordinary wages – and open hostility to the corporate decision-makers and billionaire owner.
The lesson from this is when delivering bad news, organisations need to think very carefully about how they do this in the context of their own brand values and reputation, and do as much as possible to be consistent with their heritage and purpose. Otherwise, like Arsenal, you’ll end up scoring an own goal that will not be easily forgotten.