Saturday, 24 March 2012

Communications Strategy - Paving The Way To A Healthy Corporate Image








  
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A few months ago, I was invited to an interview with a reputable multinational. I was given the option of choosing a topic to discuss and I chose one about corporate social responsibility for two reasons. Firstly, I was thrilled about linking an effective communications strategy to a healthy corporate image. Secondly, it was an opportunity to unravel just how effective a tool communications could be in swaying public opinion to one’s advantage.

 

Components of a Communications Strategy


A communications strategy could loosely be defined as a standardised system of information flow easily disseminated to relevant stakeholders. 


Now I am no expert. However, it strikes me as common sense to "invest" in a good organisation-wide communications strategy, alongside the corporate goals, aspirations and targets at the beginning of the financial year or at a specific timeline. A good communications strategy should be the sum of six key components which comprise:


I)  The "What",

This refers to the  key project that the  organisation seeks to highlight throughout the year, the 'desired good'. For instance, the company may decide to launch new innovations towards becoming "greener" by cutting greenhouse emissions by 75%.


It could also refer to the key message that the organisation wants to convey or the change initiative that it wishes to implement.



II) The "Why",

This refers to the rationale, reason or justification for the implementation of the ‘desired good’.


III) The "Who",

These are the key people who are responsible for the success of the 'desired good'.



IV) The "How",

This refers to the actions, both strategic and operational, that are to be undertaken towards achieving the 'desired good'.


V) The "When/How Long",

This outlines the proposed timeline from inception to completion.


VI) The "Crisis-Mode Plan",

 
This refers to the contingency plan - for instance, the steps/alternative routes to be undertaken - in the event of unforeseen circumstances which sabotage or negatively impact 'the desired good’.





Given that the Communications Strategy would be circulated throughout the entire organisation and in order for it to be considered as both effective and relevant, it must be lucid, devoid of technical/linguistic jargon and written in plain English. It should also be readily available on the organisation's intranet and via external platforms. For this reason, it becomes crucial to explore the impact of a good communications strategy inside and outside the organisation.

 


The impact of  the Communications Strategy inside the organisation


The impact of  the Communications Strategy inside an organisation could be "felt" in two ways:


1) As a predictor of attitudes and behaviours of employees inside the organisation.

2) As a precautionary action against unfulfilled goals.




 
As a predictor of attitudes and behaviours of employees inside the organisation




























Internally, the key  components of the Strategy, (the "What", "Why”, “Who", etc.), should be periodically publicised. In this way, employees  would not only become informed about whatever 'desired good' is to be achieved, but would also become emotionally connected to the organisation and develop attitudes and behaviours which would have implications on the organisation's bottom line.


A good communications strategy could influence the attitudes of employees via commitment levels, which in turn trigger organisational citizenship behaviours or extra-role behaviours. Organisational behavioural science literature states that an employee's psychological contract is formed during the hiring and socialisation process.



The psychological contract is defined as "an individual's beliefs regarding the terms and conditions of a reciprocal exchange agreement between the focal person and another party", (Rousseau, 1989). The psychological contract is perceptual, unwritten and subjective. It emerges when an employee believes that his contributions oblige the organisation to reciprocate in some similar fashion. Now supposing accurate and consistent information, (elements of procedural justice as will be explained below), are inherent in an employee's psychological contract and are perceived to be consistently fulfilled, an interesting outcome would be noted. Affective commitment indicators, (the emotional attachment to, identification with and involvement in the organisation), would become activated. The employee would feel "part of the family";  he would perceive the organisation as being committed to him and as a result, he would engage in positive behaviours like organisation-directed  citizenship behaviours, (Eisenberger et al, 1990). Such extra-role behaviours, (which are voluntary and not part of the employee's job description), may include:


-      Presenting the organisation as favourable to outsiders;
-      Assisting colleagues in job-related problems;
 Keeping well informed where opinions might benefit the organisation;
-     Widely sharing ideas for new projects or improvements;   
-  Actively promoting the company's products and services;
-     Defending the organisation against outside threats etc.



There is also research to support that the behaviours of employees can be influenced by a good communication strategy. For example, organisational behavioural science, in various literature, (e.g. Levanthal, 1980), suggests that in order for procedures in an organisation to be perceived as fair, six criteria including - "accuracy of information", "consistency" and "bias suppression" - promote positive procedural justice levels.



Other researchers, (Cropanzano & Folger, 1996), proved that organisational procedures determined the direction the behaviours of employees would travel. They would travel either favourably (or negatively) towards their immediate supervisors or towards the organisation as a whole.




Procedural justice indicators, which are concerned with the fairness of the processes by which a decision is made, were found to be an important predictor of the following:


-   Commitment to the organisation;
-  Efforts the employees put into required duties;
-  The acceptance of and compliance with organisational rules etc.


Thus a summary of the literature, often backed by empirical proof, states that when the organisation provides the employees with accurate and consistent information (among other criteria), they perceive that the procedures taken regarding decisions are fair, (even if the outcome is negative e.g. downsizing), and are likely to engage in positive behaviours, either directed at their immediate bosses or at the organisation. This development in turn raises productivity levels.


Such commitment levels and extra-role behaviours would then fuel a healthy corporate image.



 

As a precautionary action against unfulfilled goals



Let us reaffirm in this scenario that the 'desired good' is the reduction of greenhouse emissions by 75%. Inside the organisation, it becomes irrelevant to employees in the long run, whether or not the 'desired good' is achieved. What might be deemed more important would be the fact that they are reliably informed about unravelling developments. As the "Crisis-Mode Plan" component of the Communications Strategy makes allowances for the unforeseen circumstances which threaten the outcome of the 'desired good', the employees would actually continue to show their support despite the 'failure' of the organisation.



 
The impact of the Communications Strategy outside the organisation


The impact of  the Communications Strategy outside the organisation has more serious implications for the company in two ways:


A)  As an avenue to galvanise the 'desired good' and avoid backlash.


B)  As a drive for effective corporate social responsibility.





As an avenue to galvanise the 'desired good' and avoid backlash


Externally, (on the organisation's website, in formal communications to its shareholders, via media reports/press releases etc.), visual representations such as line graphs, scattergrams, etc. should be set up with a timeline and periodically updated. The selected visual representation should measure two variables:


-   The indices of the 'desired good' in progress, (that is the "What", for example the innovations used to reduce the greenhouse emissions);


Against


-    The 'outcome', (that is the desired result, which is the state of being 75% greener).



The chosen visual representation should ideally show causation, or at the very least,  correlation, as the 'desired good' becomes a reality. Periodic updates of the Communications Strategy in fact helps to galvanise the 'desired good' towards completion. Nevertheless, the "Crisis-Mode Plan" component should be activated if it becomes apparent as time elapses, for whatsoever reason, that the 'desired good' would in fact not be attained. This should be done in order to shield the organisation from possible backlash from its Board, investors, regulatory authorities and the public, particularly if the 'desired good' has far-reaching benefits to the community and is not restricted to the organisation's profit margins.



As a drive for effective corporate social responsibility


In today's cut-throat world of business, it is not sufficient for a company to merely adopt measures to become more competitive or to increase productivity. Since it rarely operates in isolation, ('no company is an island'), it is required to demonstrate elements of its corporate responsibility to reflect facets of the following:




-  A respect for the environment in which it operates, by reducing pollution and taking initiatives to preserve natural resources where applicable;


-   Concern for the local population, who either own the natural resources or provide cheap labour and/or specific expertise required for smooth operations,


-        Adherence to the laws of the land.




Corporate social responsibility becomes even more crucial for foreign multinationals, particularly those operating abroad in the manufacturing, chemical and oil industries. These are often considered opportunistic entities whose main interest is to strip away the riches of the land with little or no responsibility for the devastation often left in their wake.


In order thus to present themselves as good corporate citizens, organisations routinely launch initiatives to strengthen their reputations and communicate their respect/concern for the environment, the local populace and the host governments. The more ambitious the initiatives, the bigger the dividends in public opinion.




























So for example, a reputable multinational oil company operating in Nigeria, admirably committing  to a  7-year plan to  eliminate gas flaring, (at great cost to itself), and to monetise the gas being flared, would signal a respect for the environment and would provide support to the host government's initiatives to attain a zero percentage gas flare rate nationwide. This is especially relevant given the linkage of gas flaring to environmental degradation and health problems. The gas routinely flared, called associated gas, is extracted alongside the oil during oil production. It could however be conditioned  to certain gas specifications to be used to power gas turbines that generate electricity for the host community. The conditioned gas could also be utilised as feed gas in fertiliser and cement industries, thereby supporting those secondary industries



However, due to the fact that it is very labour-and-capital intensive to condition the associated gas, (which would involve the building of a very complex associated gas plant), virtually all the large foreign oil producing companies in the country, probably due to the number of oil fields they operate and their high production levels, tend to flare their associated gas to a larger extent than the smaller, local companies. Still, the desirable target for both local and foreign oil producing companies is to achieve a zero percentage flare rate. This target is  pertinent considering the fact that the Nigerian Government's penalty for flaring gas in 2009 stood at $3.50 per 1,000 standard cubic feet of gas flared,  (according to a report  supplied by Reuters). Moreover, the country's Senate in 2010 passed a bill stating that firms which flared gas from January 1, 2011, will be required to pay the prevailing international market price of gas for the amount flared. Interestingly, routine gas flaring, according to other reports, has technically been illegal in the country since 1984.




Another notable point to observe is this: should the multinational oil company then choose to transport its conditioned gas to its customers in the secondary industries, it would also  be required to  establish a gas pipeline distribution network between itself and its customers. Therefore, by committing to such a great feat of ending its gas flaring, the oil company would immediately get a boost to its corporate image, as well as the support of the host government and goodwill of the community, all which pave the way for uninterrupted operations and higher productivity.




Similarly, providing scholarships and technical/vocational training for community youths in order to employ them in the future, (thereby reducing the employment rate in often poverty-stricken areas), could display both concern for the community and  support for the host government's initiatives for youth empowerment and poverty eradication. Other worthwhile initiatives organisations could undertake include:


-   Plating trees to combat deforestation;

-  Building boreholes/wells to provide portable water in developing countries;

-   Building schools;

-   Establishing power stations to connect local communities to the national electricity grid;

-  Equipping community health facilities and other development projects.




Although launching corporate social responsibility initiatives is key to a healthy corporate image, it is even more important that a good communications strategy is adopted. A first step for the multinational oil company would be to set up a meeting with the leaders of the host community in which it operates, to ascertain its development needs, which could range from promptly cleaning up oil spills in the riverine areas (responsible for polluting rivers and destroying the source of livelihood of locals), to funding relevant research.



Next, the company should choose the  initiative to adopt before seeking financial approval from its Board. Given that the budget for the 'desired good', (in this case, the building of a power station which would connect the entire host community to the national electricity grid for the first time), would need to be incorporated into the company's financial endeavours for the year, an organisation-wide communications strategy should be drawn up.



 
The six components of the Communications Strategy, (the "What", "Why", "Who”, “How”, "When/How Long" and the "Crisis-Mode Plan"), should be well activated and revised as the need arises. The key people responsible for achieving the 'desired good' must be perceived by the community to be visible, transparent in their management of the project and professional.



For execution of corporate social responsibility initiatives, the "Crisis-Mode Plan" component of the Communications Strategy plays an extremely important role in fostering peaceful public relations between the organisation and the community in which it operates. This is particularly crucial when, due to circumstances beyond its control, (sabotage to/theft from its facilities, general industrial strikes, civil unrest or security concerns such as abductions), the company is unable, at the stipulated time, to deliver on the 'desired good'. In such cases, the "Crisis-Mode Plan" component would have been activated beforehand and clear explanations/options given to mitigate the situation. This move would ease tensions and could even foster a spirit of co-operation and understanding, (the 'we-are-all-in-this-together' attitude), between the organisation and the community, since it is not always possible for people to get what they want during a crisis.  The corporate image would remain unscathed and the organisation would continue to enjoy the goodwill of the community.



On the other hand, hastily-formulated responses from the company during a crisis, poor communication and a lack of feedback, would result in feelings of betrayal. This would be because the organisation would gradually be perceived to have reneged on its promises, consequences of which would be retaliatory acts such as theft, vandalism and riots. Public outcry could lead to government interventions levelled against the organisation such as higher fines, loss of perks, (tax holidays, duty-free imports, preferred bidder status in highly-lucrative public tenders etc.); a scorned corporate image and ultimately,  reduced confidence in the company.



Thus, having a good communications strategy boosts the organisation's corporate image and is vital to the success of its social responsibility programmes.



The importance of feedback in the Communications Strategy 


In general terms, once the lucid Communications Strategy is disseminated internally and externally, it becomes important, (whether requested for or not), that an element which is often overlooked or delayed, be supplied on a continual basis. That element is feedback.



For the Communications Strategy to be effective, it has to be "living", not just a formulated, (albeit well-articulated), set of desirables to be conceptualised and shelved, but one which could be pruned, edited or revised regularly as circumstances change. That is why feedback is vital. As with most things, one would not know for certain how good an idea, a project or an innovation could be until it is tested and/or critiqued. So if internal stakeholders, the media or the public are asking questions or voicing their concerns, timely feedback must be given and no later than twenty four hours. Prompt (and factual) feedback, whether favourable or not, is appreciated and communicates a high level of professionalism. The organisation will be deemed to be ethically sound, which in turn boosts its corporate image and investors' confidence.


What must be avoided at all costs is secrecy: before, during and following a crisis. Secrecy - or lack of  ‘an official position’ - breeds speculation, rumours and slander. Indeed what is often the case is that even when the facts eventually emerge and the organisation is generally ‘vindicated’, (even if some of its top executives may be implicated in unethical actions), its reputation would  already have taken a serious blow, leading to reduced shareholders' trust and in serious cases, to a plummeting share price. Case in point: the ENRON scandal which unravelled in October 2001.




The ENRON Scandal

































According to the Finance.Laws.Com website, ENRON was a multinational energy corporation that was founded in 1985 in Omaha, Nebraska, with its headquarters in Houston, Texas, USA.




Despite ENRON's vast successes in the natural  gas industry - within which it was considered to be one of the foremost natural gas conglomerate companies - in current times, the name "ENRON" is commonly associated with a financial scandal involving the company. This scandal, also known as the 'ENRON Scandal', gained a vast amount of media coverage on both domestic and international levels, resulted in the bankruptcy of the company, the criminal prosecution of a number of executives, and billions of dollars in losses with regards to investors, employees and clients.



A summary of the scandal, (as supplied by the website mentioned above), stated that executives misrepresented earnings reports, while continuing to enjoy the revenue provided by the investors not privy to the true financial condition of the corporation. The executives also embezzled funds received from investments, which eventually led to the bankruptcy of the company, a loss sustained by investors exceeding $70 billion and the prosecution of a number of ENRON executives.  Sadly, the dubious actions of a handful of executives brought down an extremely-respected multinational energy corporation.





Although the Wikipedia website listed a combination of issues - non-transparent financial statements not clearly depicting its operations and finances with shareholders and analysts; the company's complex business model; and unethical practices - as causes of  ENRON's bankruptcy and subsequent demise, an additional trigger should be noted. In my opinion, the absence of an effective communications strategy, as an integral part of the company policy to guide transparency in all dealings in its operations, (considering the sector in which it operated), began  ENRON's  downward spiral, while the non-existent accountability from its executives, accelerated its downfall. Moreover, due to a completely shattered corporate image, the corporation could not 'rise from the ashes', like Phoenix, (the mythical fire bird in ancient Greek mythology), despite its financial woes.




Practical suggestions for organisations

 
Unfortunately, communications strategies are either non-existent in large organisations, (which ironically are the ones most vulnerable to crises that erode their profit margins), or hurriedly formulated in press releases as a reaction to a dilemma. By that time, it is already too late to reverse the negative impact of the scandal.


A rational approach I would imagine, would be for an organisation to have two different types of communications strategies:


1)  A smaller, internal strategy to be adopted by departments handling sensitive projects, a type of 'extended feedback', to be regularly communicated to Management.

 
2) An organisation-wide strategy which would have internal and external platforms and which would also address serious issues such as mismanagement/corruption, fraud, tax invasion, harassment, etc. or others involving the company's top executives or relating to its image/reputation and operations. This broader communications strategy (somewhat similar to 'damage control' actions  before the 'damage'), should comprise inputs from relevant segments of the organisation such as finance, operations, legal and human resources.



Conclusion

Like I said earlier, I am no expert but I do believe that a good communications strategy could be an important tool, useful not only in the corporate world but also in politics, entertainment, public relations or in any field whereby sustaining a good public image is essential for a competitive edge.



As for that interview - well it was an experience!





*This article  was published in BusinessDay Nigeria, online and in print media.




Property of  the Rethinking Business Communications Blog




N.B - Images courtesy of Google. Second image courtesy of freedigitalphotos.net. Screenshot of article on Businessdayonline, provided by author.