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Corporate Communication

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This document was prepared by Corporate Excellence – Centre for Reputation Leadership, and among other sources, contains references to the 6th edition of Corporate Communication, a book written by Professor Paul A. Argenti from the Tuck Business School of Dartmouth University, New Hampshire (USA) and published by McGraw Hill in 2013.

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Corporate Communication

  1. 1. In the age of constant intensive changes, communication is key to restoring trust. In order to achieve this, communication should play a major role in organizations, helping to establish dialogue with the society and stakeholders. Professor Paul A. Argenti from the Tuck Business School of the Dartmouth University (USA) points out in his book Corporate Communication that it is equally important to reconnect an organization to its vision and corporate goal and to show that a company is both an economic and social entity. Today citizens expect companies to behave in an ethical, responsible and coherent manner more than ever before, striking balance between self-interest and common good. In this context, communication can and should contribute to creating the meaning of business activity in the society. This meaning is created by the vision and mission, the idea and the awareness of one’s role as a company. Four Key Attitudes This first step for companies who want to be successful in this context is instead of adapting to this context, become flexibleorganizationsreadyforongoingchange.Inorderto achieve it, companies and their leaders should assume the followingfourattitudesinthecourseofcompetition: 1. Beawareofthecontext:understandthatshort-term orientationnotonlydamageseconomicresults,but alsopreventsleadersfromseeingthewholepictureand takingcorrectstrategicdecisionsbasedontruereality. 2. Adjusttothecontext:becommittedtothecorevalues andprinciplesoftheproject,learnfromeveryoneand everything–anessentialconditionforadaptation. 3. Worktoresolveproblems.Problemswillnot justdisappear.Itisimportanttocreateamedia andcommunicationenvironmentwhichwill favour the viewpoint of the company. The business context today is very different from what it was like just a few years ago: challenges are more and more global and integrated, and vision has to keep up with these changes. Vision, mission and goals have to be realigned with the organization. L13/2015 Corporate communication today, in a much more complex, changing and global context Communication Book Reviews This document was prepared by Corporate Excellence– Centre for Reputation Leadership, and among other sources, contains references to the 6th edition of Corporate Communication, a book written by Professor Paul A. Argenti from the Tuck Business School of Dartmouth University, New Hampshire (USA) and published by McGraw Hill in 2013.
  2. 2. Book Reviews 2 Corporate communication today, in a much more complex, changing and global context 4. Link communication to strategy. The best way of doing this is to base the communication function represented by the Communications Director on the strategic function, always associated with the CEO. The Paradigmatic Case of Johnson & Johnson The degree to which an organization may be affected byexternaleventslargelydependsonthesectorwhere it operates, on its behaviour after the event, and on how public and visible its activity is. That’s why perception of a company does not depend solely on its behaviour, results or competitiveness, but also on how it impacts public opinion and whether it is able to relate its activity to its vision and its statements. Such is the case of the North American consumer goods giant Johnson & Johnson: despite multiple productwithdrawalsthecompanymaintainsspotless reputation in the sector thanks to firm commitment to its values and vision and a transparent, sincere and open dialogue with its stakeholders. The company’s credo is expressed in a code 308 words long, written in 1935, at the peak of the Great Depression in the USA and carved in stone in the company’s headquarters in New Jersey: “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services”. These principles are not just part of the building, they are present in all company actions in the way that in moments of crisis, such as product withdrawal in the autumn of 1982 when seven patients died after taking Tylenol capsules or the recent case of 2013, when baby soap, J&J managed to preserve and even increase its market share in all its product categories. Reputation Should Match Identity If an organization does not live by its principles, stakeholders will notice this mismatch sooner or later and will stop trusting this company: identity should manifest reality, transmitted and communicated through these elements and at the same time experienced through sincere behaviour of the company’s managers and employees. The sum of all images held by different groups of stakeholders results in overall reputation. This idea is easy to say and at times difficult to specify. It is the axis of effective communications policy which aims, firstly, to align all these images as much as possible, and secondly, to use overall reputation to improve individual perceptions of the company. Strengthening the company’s vision and using it as the basis for differentiating corporate brand is the key task for communications departments. When identity and image are aligned and this alignment is maintained over a long period of time, the result is a strong reputation. Well-structured Function Corporate communication still suffers from lack of organizational recognition in companies despite the fact that most of Board members’ time is equally divided between strategy and communication (according to the study held by the Tuck Business School), or the fact that reputation has an increasingly strong impact on business (according to the studies of Weber Shandwick and rankings published by Fortune). However, communication (certainly, understood as an important task of aligning what is said by the company with what is done and maintaining open and active dialogue channels with stakeholders, rather than just sending out messages) is still not viewed by many CEOs as a strategic function. What’s the ideal structure that a Communications Director needs in order to influence strategic decisions of a company, be it in a normal market situation (proactive management, reputation building) or a crisis reputation (reactive management, defense or reconstruction of reputation)? “In order to be successful in this context, companies should be flexible and ready for ongoing changes” Source: Corporate Communication, Paul A. Argenti, pp. 72, 2013 Graph 1: Reputation Framework is perceived by... The sum of their perceptions equals Corporate Identity Names, Brands, Symbols, Self-presentations Corporate Reputation Customer Image Community Image Investor Image Employee Image
  3. 3. Book Reviews 3 Corporate communication today, in a much more complex, changing and global context For Professor Argenti, the ideal structure starts with placing Corporate Communication at the same level as Marketing, Human Resources, Finance or any other function traditionally reporting directly to the CEO of the company, who frequently personifies and drives corporate brand, its principles and behaviours. According to a survey carried out by PRWeek and Hill & Knowlton in 2010 in the United States, only 51 % of Communications Directors reported directly to the Executive Chairman and/or the CEO of the company. The rest of communications directors reported to the Directors of Marketing, HR, Finance and other functions that had a seat in the Board of the firm. Paul A. Argenti believes that it is vital for a Communications Director to have access to top executives of the business and, especially, to the CEO. It is equally important to ensure that these executives believe in the ability of corporate reputation to impact business results in all areas of the company’s activity. Conclusion: Four Key Points for Communications Directors In order to establish and maintain the said connection between communication and strategy, Corporate Communication Director should have the following elements in place: 1. Establish the strategy of this connection: this includes setting out corresponding objectives, obtaining and managing human, time and financial resources and measuring the reputation regularly. 2. Listen to stakeholders on an ongoing basis: identify and correctly prioratize those groups that impact the reputation more than others, find out their attitudes to the company. 3. Ensure that the company’s messages are understood: choose adequate communication channels in each case, structure the messages coherently and consistently. 4. Integrate responses into the strategy: review both communications and actions that the company undertakes. “It is vital to ensure that top executives and the CEO believe in the ability of corporate reputation to impact total business results and result by different business lines” Source: Corporate Communication, Paul A. Argenti, pp. 54, 2013 Graph 2: Optimal Organizational Structure of Corporate Communication’s role in Big Companies Vice President Marketing Vice President Production Vice President Finance (CFO) Vice President Corporate Communication Vice President Human Resources General Cunsel Director Corporate Responsibility Director Investor Relations Director Media Relations Director Internal Communications Chair/Chief Executive Officer (CEO)
  4. 4. Leading by reputation ©2015, Corporate Excellence – Centre for Reputation Leadership A foundation established by major companies aiming to excel in the management of intangible assets and facilitate promotion of strong brands with a good reputation and a capacity to compete on the global markets. Our objective is to become the driving force, which would lead and consolidate professional reputation management as a strategic asset, fundamental for building value of companies around the world. Disclaimer This document is a property of Corporate Excellence – Centre for Reputation Leadership developed with an objective to share business knowledge about management of reputation, brand, communication and public affairs. Corporate Excellence – Centre for Reputation Leadership is the owner of all rights to the intellectual property related to images, texts, drawings or any other content or elements of this product. Corporate Excellence – Centre for Reputation Leadership is the holder of all necessary permissions for the use of the document and therefore any reproduction, distribution, publishing or modification of the document without its express permission is prohibited.

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