Corporate spinoffs can present the ultimate communications challenge.

Why it matters: Failing to clearly state why a business will be better off as a separate entity from its parent company risks losing support from employees, customers, investors and the media — and could threaten the performance of the new spinoff.

• Yes, but: At the same time, in making the spinoff sound good, you don't want to make the parent company look bad.

The big picture: Most parent companies of spinoffs are over 100 years old, which means much of the communication challenge is anticipating the inherent resistance to change and helping people understand the reason for it.

• Communications teams must make sure that by shaping and uplifting the new brand, they aren't taking away from the preexisting — and often beloved — parent brand.
• Hitting hard on the parent company's ability to focus better on its core business goes a long way in addressing that concern.
• For spinoffs, explaining to stakeholders that the simplicity and efficiency that comes with being a spun out, pure-play business is what will set it on a path to thrive.

State of play: Last year saw the second highest level of spinoff activity on record, according to a recent Goldman Sachs report.

• Some of those 2022 spins included Mobileye from Intel, Kenvue from Johnson & Johnson and RXO from XPO Logistics.
• Kellanova also recently split from WK Kellogg Co, and GE is in the process of a three-way spin resulting in GE Health Care, GE Aerospace and GE Vernova.

Be smart: Communicating a spinoff successfully means creating a sense of stability for analysts and investors, predictability for employees, and zero disruption for customers, says Dana Bolden, former chief corporate affairs of Haleon and comms lead for two corporate spinoffs.

• "The first rule is do no harm because most of these companies have great product portfolios and a corporate brand name that employees and customers care about."

Zoom in: It's an exercise in smart storytelling and airtight tactics.

• "Spinoffs enable both new [and] independent companies to flourish in ways that they couldn't together, which sometimes isn't terribly intuitive to people — so you really have to unpack that," says Kris Bahner, chief global corporate affairs officer at Kellanova.
• "We're thinking through every stakeholder group and really mapping out the drumbeat of communications each audience needs from the launch through spin Day 1."

The bottom line: "This is a once-in-career opportunity for communicators," says Tara DiJulio, chief corporate affairs officer at GE Aerospace. "You've got this unique opportunity to shape a company with rich history and legacy and shape it in an entirely new way."

• "It's a tremendous amount of work, responsibility and complexity. There are so many work streams, and you can't miss on any of them — you've got to pitch a perfect game."

Here's how… 👇🏻

Communication pros who have worked on spinoffs offered the following tips:

• Prime your people and take their feedback.
• "You can't take lightly changing [the brand or company] that employees hold so dearly and view as part of their personal identity," says Bahner. "We involved employees from the start and said, 'Look, we're gonna change the names and here's why, but we want you to be involved,' and we actually solicited name ideas from employees around the world. We got 4,000 submissions."
• "For employees, the company's new purpose is the anchor. They must understand how their role ladders up to the purpose," says Bolden.
• Nail the narrative, then promote the hell out of it.
• Earlier this year, GE bought every ad in the print edition of the New York Times to push the corporate narrative of "focus."
• "A big part of our early messaging that we were shaping for the separation was the 'why' behind it, and it was all about driving more focus with these businesses," says DiJulio.
• "The ability to focus was the thread we wanted to pull across for all of our audiences. … The 'why' was really about this focus and how the prioritization that these companies will have will make them stronger, versus being one of many."
• Establish a central knowledge hub where people can find updates, FAQs and talking points.
• Kellogg created a "single source of truth for all the stakeholders, … [which] was one of the key ways to we kept people focused on the facts," says Bahner.
• "And, more importantly, it was an effective way to arm leaders and people managers with accurate, up-to-date information."
• Prepare employees for the street's reaction.
• Many employees are shareholders themselves, so it's important to hold regular education sessions or office hours to help them understand how the spin could impact their personal compensation.
• Stay focused on key business.
• Tiger teams are often formed to manage the spin, while the rest of the team stays focused on driving the business forward.
• "The last thing you want to do is spin and then have had the business slow down because people were working on spin readiness versus driving the business," says Bahner.
• Ignore the name bashers.
• "When it comes to that name, your employees are the only ones that matter," says Bolden. "Wall Street analysts don't care — they just want to know what your ticker symbol is, and they want you to deliver value. Customers may criticize a little bit, and you're going to see a lot of media critics, but don't worry about it."
• "Just make sure you spend the majority of your time educating your employees on what that name means and how it ties to your purpose. If your employees love it, that's your barometer."

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The Israel-Hamas war is stirring up divisive conversations within American workplaces, creating stress for both workers and those in charge, writes Axios Markets author Emily Peck.

Why it matters: The situation is adding another layer of complexity to office conversations around diversity, equity and inclusion (DEI) that have become commonplace in recent years — driving apart colleagues who typically land on the same (often progressive) side of most issues.

Zoom in: At some companies, leadership teams are turning off the comments function on various platform to discourage heated conversations.

• Apple is reportedly moderating internal discussion about the war by deleting specific Slack posts and pausing its Muslim and Jewish employee Slack channels.
• At one human rights nonprofit in New York, a group chat about the Israel-Hamas war grew so heated the CEO had to send an email encouraging civility.
• "It's creating a lot of stress," said one 31-year-old employee who asked for anonymity due to the sensitivity of the subject. The chat got tense, as colleagues — all working on the issue of human rights — argued over who truly understood the region's history.

What they're saying: "I've never seen the level of extreme tension and pain and hurt between employees in the same organizations as I'm seeing right now," said Joelle Emerson, co-founder and CEO of Paradigm, a consulting company that works with companies on DEI.

Zoom out: Employees have been particularly sensitive to the different statements companies are putting out on the conflict — and they're voicing their displeasure to HR and other executives.

• Workers at Procter & Gamble, Nike and Instacart all expressed displeasure, in Slack messages or emails to executives, with the way their company has handled the response to the conflict, according to Bloomberg.

"Virtually every organization that I've encountered — or heard about through friends — has had to put out two statements because no one knew how to respond to this," said Farah Salam-Hottle, the founder of a DEI consulting group called Origins.

• The core of the issue: Arab and Muslim workers are feeling like their pain isn't being acknowledged, and they fear retaliation at work. Meanwhile, Jewish staff is feeling concerns over antisemitism.

The bottom line: The conflict in the Middle East has ripped through college campuses and social media sites; it was perhaps inevitable that it come to workplaces as well.

Go deeper

How a company treats its employees impacts corporate reputation more than its stance on social or political issues, according to a new Narrative Strategies report shared first with Axios.

• 🧠 Why it matters for communicators: As the protectors of brand reputation and the keepers of employee communications, corporate affairs teams can play a major role in driving market value.

State of play: Narrative Strategies surveyed 1,200 registered voters between Sept. 18–21 and found that factors like trust, product quality, affordability and treatment of employees all influence a company's reputation more than corporate stances on social or political issues.

• 63% of those surveyed are willing to pay more for goods and services, so long as the company they're buying from has a good reputation.
• 71% say that how a company treats and pays its employees is "very important" when gauging reputation.
• 48% of consumers say they're likely to pay more for a product based solely on how employees are treated.

Zoom in: There is continued and growing support for labor unions, and consumers increasingly care about what happens within a company, per the survey.

• Republicans are evenly split, with 35% siding with a company and 34% siding with a labor union in a dispute.

What they're saying: "People have a fundamental interest in how a company treats its employees — and they view that as core to the business and core to its reputation," says Ken Spain, partner at Narrative Strategies.

• "Oftentimes communications professionals have a hard time making the case for why corporate reputation adds value, but the data clearly shows that a strong reputation leads to a customer's willingness to pay more for a certain product."

The bottom line: Communications and corporate reputation are inextricably linked.

View the the 2023 Axios Harris Poll 100 reputation rankings

As chief communications officer at Colgate-Palmolive, Paula Davis is responsible for managing the reputation of its 30-plus brands, which are found in more homes than any other brand in the world.

🗣 What she's saying: "I help explain what Colgate-Palmolive does and why we do it," Davis told Axios.

🏗 How it's structured: Davis reports into the office of the CEO and oversees a team of 20 who manage external communications, corporate social responsibility, employee communications, digital communications and social media, executive communications and issues management.

• "I've always been attracted to companies that are in various stages of transformation and change. I got a call about the opportunity at Colgate and was so excited because they were about to go through a CEO transition and wanted to become more visible and understood by their many stakeholders [after] having been more quiet for many years. It was a great opportunity to come and transform corporate communications and show what it could do for the company."

📈 Trend spot: Reaching audiences through visual storytelling.

• "The rise of digital design has become more important — and we're experimenting with that through Canva, AI and other tools because we recognize that to be more effective and efficient with our communications, our design has to work harder across all channels."

🔍 Who she's watching: Mondelēz International for its digital presence and Madhappy for its culturally relevant and purpose-driven communication strategies.

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