Philip Morris commissioned a study in the Czech Republic, and it didn’t go over well. The commissioned study found that premature deaths due to smoking were good for the Czech Republic’s finances through savings on health care and pensions. Although the cigarette brand clarified it was not in any way stating the social cost of smoking is beneficial, the damage to the company’s reputation had been done.

Interestingly enough, Philip Morris had plans of similar studies in other countries, like Poland and Hungary. It canceled those plans after the initial research received some bad press.

Failure to Communicate

Communication failures are damaging to your brand, profitability, and future in the market.

A mistake similar to what Philip Morris did could see your business spending millions to recover its reputation. If that campaign to improve your public image doesn’t come out successful, you can be looking at shuttering your organization.

A breakdown in your communications can occur in any situation. Expect a negative impact, whether the problem is internal or external.

How It Happens

An internal communications problem could take place between a supervisor and a staff or among employees. Their effects would depend on the nature of the issue and the frequency it occurs.

For example, management once again implements a new process without informing the employees through a memo. Because this may have happened more than twice, management may start to see a drop in productivity and a rise in absenteeism.

These seemingly minor problems are likely to balloon when an organization fails to recognize problems in its internal communications.

Another example could be an ineffective way to inform employees about the company’s continuity management plan. Failure to communicate such a critical part of a business may lead to confusion and mistakes that will likely defeat the purpose of a continuity plan.

External communications may have a more considerable impact in that it tends to cast any company in a bad light, driving down their value proposition. Consider Yahoo’s handling of a 2014 data breach and Wells Fargo’s approach to a 2016 fraud case. Both are still in business, but their standing in the market is no longer the same.

Getting It Right

So communication is a crucial business strategy as any. When your company can manage the flow of information within and outside the organization, you promote a dialogue. You engage your employees and inspire your consumers to trust your brand. And a big part of that starts from the top; strong, effective leaders recognize the value of communication management.

What Wells Fargo failed to do was admit its failings and it downplayed the fraud. Its leaders then turned around and blamed the problem on employees. The bank fired thousands of low-level workers. The government later on fined Wells Fargo $185 million for the fraud. The domino effect led to a damaged reputation for the once second-largest (now fourth) bank in America.

Your business can take a lesson from the ill-conceived playbooks of big brands. If something goes wrong, act before they spin out of your control. Plan how you’re going to promote products or services and craft your messaging. Make sure your communication efforts are in agreement with your organizational strategy.