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Communication with stakeholders: An integrated approach
Communication with Stakeholders: An Integrated Approach Eileen Scholes and David Clutterbuck
TODAY, THE QUESTION FOR THE Board and for those who advise them in the area of strategy and communication planning, is not whether they should be communicating with this or that stakeholder group but h o w to manage communication across stakeholder groups. Academics and commentators may still be arguing about what constitutes a stakeholder. Or whether it is best (or indeed feasible) to take a "stakeholder approach", or only a "shareholder return", approach to business (Andrew Campbell and John Argenti's recent exchange in Vol 30 of Long Range Planning illustrates graphically this divergence of views). On the front-line, managers are confronting the need to deal with the growing power of individual stakeholder groups and the increasingly complex links between them, often with mixed success. In the search for possible redeeming strategies, it is important that we first revisit the factors that lie behind the power and the links.
• Globalisation. More organisations are fighting their battles on a world-wide stage--not only for custom but for capital, for employees with the right skills and attitudes and even for their licence to operate in local communities. At the same time, industries w h i c h are being forced to consolidate internationally (even Defence, for example) are seeing the distinction between competitor, customer and supplier become blurred, making each player more influential on the other. • The rise of the professional investor. The overall proportion of funds in private hands has declined dramatically: fund managers' interests in how the company is and will be performing goes way deeper than the annual P&L statement, nor will they wait for the annual meeting to make their views heard. • The rise of the sophisticated customer. On every Pergamon PII: S0024-6301(98)00007-7
aspect of the " v a l u e " mix--from price and product to convenience and service, today's customer is increasingly aware of new possibilities and therefore more demanding, a trend only intensified by the consolidation of consumer product and retail chain branding. • The rise of the e m p o w e r e d employee. With old managerial structures being dismantled and a reduction in the power of trade unions, individuals are taking more responsibility for improved performance--their own and the organisation'swand in turn, demanding more of a say in what happens around them. • The information revolution. Inside and outside organisations, the number of people who may now see, hear and start reacting within minutes to news of a take-over, a strike or a chemical spill, for example, is increasing at a phenomenal rate, thanks to the spread of electronic communication. • Rising awareness of the influence of business on society (for good and ill). Ethics and corporate Long RangePlanning, Vol. 31, No. 2, pp. 227 to 238, 1998 © 1998 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0024-6301/98 $19.00+0.00
integrity are high on society's agenda, from environmental and social impact to individuals' pensions. • Organisations' own wish to influence society. More companies are seeing the benefits of providing a suitable environment for continuing business (e.g. retailers' sponsorship of crime prevention initiatives; social and educational initiatives to provide good employment pools etc.) and of building credibility with specific audiences against the day w h e n disaster may strike. To this end, business is adopting models with a stakeholder component, such as the European Foundation for Quality Management framework. • Government support. Even in the U.K., often seen to be more in tune with the U.S.A. model of "individualistic" capitalism than the "stakeholder approach" of continental Europe, we are seeing the spread of more "socially aware" regulation: insistence on environmental standards, support for citizens' charters, the strengthening of consumer protection law, the promotion of employee consultation rights through Works Councils or their equivalents.
STRATEGY
VALUES
MANAGEMENT PROCESSES • Listening • Informing/educating • Influencing • Involving • Learning together • Managing disagreement • Setting priorities
In light of such factors, the era is clearly long gone w h e n the interests or activities of any one stakeholder group could be conveniently overlooked. The flow through from company strategy, values and structure/ processes all affects key stakeholders: and all of them have an influence on the key outcomes the company is looking for (see Figure 1). Commenting on its report What Price Reputation? published in November 1997, 7 the magazine Management Today expressed it well: "The days when companies could do as they pleased, fly in the face of public opinion, turn a deaf ear to the cries of staff, routinely give 'no comment' to the press and speak to the City only via their profit margins are long gone.., in the 1990s corporate reputation has become more important and more vulnerable than ever before". Even more striking than the growing power of particular groups, is their ability to act in combination on the organisation. A good proportion of the "reputation disasters" explored later in this article, we are n o w seeing as examples of one stakeholder group influencing another--which is w h y being a "good corporate citizen" is rapidly becoming a matter of sur-
,.Alignment Performance Loyalty
s~ppliers
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Robust reputation
Commitment Ambassador ~;!~:~;~!~Loyalty Ambassador
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Sustained high profits
STRUCTURE INFLUENCERS • Media • Analysts • Agents • Brokers • Advisors • Third party resellers
Shareholders
Community
Understanding Loyalty Decision support Confidence
Rising share price
Understanding
Rising
Aail nce°perateLciento ce
Communication with Stakeholders: An Integrated Approach
I
asset base
vival rather than a choice, or an opportunity to "gain an edge" over less sensitive competitors.
Prominent Casualties The dispute between British Airways and its cabin crew in 1997 set the company back m u c h more than the £125 million cost of the strike itself. First, it clashed with the multi-million p o u n d launch of a new corporate identity designed to change the passengers' impression of it as being "inflexible" and "monolithic" to "genuinely caring" and " w a r m and friendly". Far from taking on board these new messages, some customers were moved to side with the cabin crew and switched to other airlines in protest. City disapproval of the Chief Executive's handling of the incident saw some shareholders off-loading stock. The Media's role in accelerating both trends was self-evident and there were clear long-term implications for manager-employee relationships--not least w h e n it comes to persuading other internal groups to get behind the company's business efficiency programme. Disney's image, so m u c h to do with good triu m p h i n g over evil, took a similar knocking recently w h e n the pressure group World Development Movem e n t accused it of boasting to shareholders about the huge profits it will make from its new film Hercules, while, the charity alleges, using Third World sweatshops to make the clothing associated with the merchandising of the film. Protesters paraded their accusations at the premieres in various cities. The issue, not the film, took the headlines. Shell, in the wake of environmental and h u m a n rights controversies, is another casualty of crossstakeholder problems. The Financial Times survey of Europe's most respected companies remarked that the most striking reversal in reputation had been that between BP and Shell. BP had risen to equal second in the eyes of European chief executives and investment analysts, while Shell, w h i c h had hitherto been in the top three, slid to eleventh. The run of bad publicity on Shell's part was at least partly to blame, according to the Financial Times. 2 By contrast, BP was described as having achieved a global operation while steering through the minefields of ethics and the environment. All these companies will doubtless, over time, recover any cash losses involved, but they may never fully regain aspects of their "general" r e p u t a t i o n - and this could prove the greater loss.
The Message is Beginning to Get Through These companies join a growing list of organisations now facing the reality that each of their audiences
will get to know what is being said or done to the others and will simply no longer tolerate the telling of different stories or inconsistent behaviour patterns. Here we come to the nub of the matter: the need to h a v e - - a n d deserve--a corporate reputation that can act as a buffer when things go wrong. It is the spectre of a damaged r e p u t a t i o n - - o f having to make costly reversals in policies or practices as a result of stakeholder pressure, or, worse, as a consequence of a selfinflicted w o u n d - - t h a t overhangs the urgency with which integrated stakeholder management now needs to be treated. Many individuals and certain companies have long recognised the " c o m m o n sense" dynamic behind this situation. In relation to a particular organisation, any single individual can be an employee, a pension trustee, a customer, a shareholder, an influential representative of the c o m m u n i t y or a member of one or more local, national or international pressure groups. And even where an individual has no existing relationship to the organisation, they may well have close links with people who do, which could influence their potential to react positively in one or other capacity w h e n the time comes. MORI studies, among others, have long shown that knowing an employee who speaks positively about their company is a bigger influence on would-be purchasers than any other factor, including advertising. Thus not only does news of the h a r m - - o r g o o d - done to one group quickly spread to others, but the swirl of opinion surrounding an enterprise continues to feed and reinforce itself as time goes on. There is some evidence that senior managers are beginning to get their minds around the need to better integrate their communication (and therefore their policies) across a range of stakeholder groups. But the situation seems to be a far from comfortable one for them. Many who are in favour of an integrated approach from a business perspective, prefer to portray it in terms of ethics, social responsibility and moral leadership. CEOs of successful companies profiled in The Winning Streak Mark 111 a book by Walter Goldsmith and David Clutterbuck, say they embrace "integrity" as an essential part of their culture. They also say they spend a good deal of their time in "transferring" this belief to others. Indeed there are examples of senior executives "going public" with policy reversals in deference to emerging concerns. When more than a decade ago conservation groups pressed the shoe company C&J Clark to renounce the use of leather cured with sperm whale oil, its first response was that it could not expect to change practices in the world-wide supply market. But sensing that here was an important issue of social responsibility, the Chairman, Daniel Clark, stepped in to lay new ground rules for the company. He stated that the company would accept the conseLong Range Planning Vol. 31
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quences of buying only leather cured without sperm whale oil and it w o u l d invest in equipment to check that supplies conformed to the n e w specifications. Each such decision has to be carefully balanced against the likely response of other shareholders-such as employees, customers and shareholders-w h o may not be best pleased at the potential extra cost involved. The anticipatory approach taken by Marks & Spencer comes close to getting it right. Announcing that it was to become the first high street retailer to stop selling eggs laid by battery hens, it made it clear that its n e w policy was a direct result of animal welfare campaigning. Thus it showed its social conscience and its sensitivity to public opinion while gaining a marketing advantage. Further evidence of CEOs' changing mindsets was found in a Financial Times survey of Europe's most respected companies. The CEOs interviewed judged that one of the marks of a good c o m p a n y was its ability to balance the interests of shareholders, customers, employees and the community. In the same survey, share analysts placed this characteristic even higher--more important, for example, than making the most of new technology, the pursuit of quality and satisfying customer needs. The MORI Captains of Industry Survey 1997 bears this out. Nearly three-quarters of chief executives questioned said that a business best serves its shareholders by also catering for the needs of its employees, customers, suppliers and the wider community. Both these are surely significant pointers to the future. A "balanced stakeholder" concept rapidly making ground is that of inclusion. It stems from the influential Tomorrow's Company report, published by the RSA (Royal Society for the encouragement of Arts Manufactures and Commerce) in 1996. 3 The report, w h i c h followed two years of intense research among nearly 8000 business leaders and opinion formers, is the shared vision of 25 senior executives from leading U.K. companies. According to them, the key feature of the successful c o m p a n y of tomorrow will be its "inclusive" approach to business--actively communicating with and being involved with a wide range of stakeholder groups. "On any issue, a c o m p a n y has to have all its relationships right, not just its relationship with shareholders," says Mark Goyder, Director of The Centre for Tomorrow's Company, the organisation created to build on the Inquiry's work. "You don't solve the problems of complex organisations by focusing on their ownership. The real task is first to understand and second to improve, the relationships b e t w e e n organisations and those who influence their successful operation." "The inclusive approach," says Goyder, "recognises that companies need to understand and meet the needs of their key relationships in order to sustain the long-term profitability of the business. If your Communication with Stakeholders: An Integrated Approach
employees don't work effectively you'll never get anything done. If you abuse your relationship with your local community it can make life very difficult for you and the inconvenience if a supplier goes bust because you didn't pay on time is obvious. But we believe that all these things are essential in order to build and sustain shareholder value, not at the expense of it," says Goyder. Promotion of the inclusive approach has been taken up by others. One of the most influential of management gurus, Charles Handy, urges organisations to turn themselves into citizen companies. In his n e w book, The Hungry Spirit, 4 he too says that the idea of the organisation as solely shareholders' property is out of date. The President of the International Public Relations Association, Roger Hayes, has recently concluded a year talking with senior managers around the world about the need for an all-stakeholder approach. Reporting his findings at a European Centre for Public Affairs conference in September, Hayes said he had found few best practice global communication strategies or models which embraced a holistic approach to planning and true integration between in-house functions and external advisors. "Corporations still lack the sense of creativity and immediacy demonstrated by Greenpeace and others in campaign management. Time and again the power of public perception and the emotional dynamics that drive perception override science, logic and reason. ''6 However, CEOs were becoming more aware of the relevance of an integrated approach to sustaining business success over time. "Corporations, particularly in high visibility sectors such as energy, chemicals, healthcare, transport and consumer goods, are beginning to react," he said. And he had seen, "everywhere at least an intent to align 'internal' and 'external' communication, based on a greater understanding that employees, particularly the younger, more e m p o w e r e d ones with newer value systems, can make or break an organisation's strategy in an increasingly competitive world". Examples of companies benefiting from an integrated approach to stakeholder communication are also growing. Indeed evidence reported by The Centre for Tomorrow's Company suggests companies that proactively move with stakeholders, rather than against them, out-perform others.
Planning More Integrated Strategies There are then equally acceptable defensive and offensive reasons w h y a c o m p a n y should plan its relations with stakeholders. The question then arises, how? Who should be responsible for what, what structures and processes are required, which are the priorities and h o w should the output be measured?
In preparing to lead companies into the stakeholder era, Boards and all those working with them in this arena, need to review their approach to communication as a whole. They need to begin with the three principal areas in which their own decision making has the most impact: strategy, values and structure.
Strategy Stakeholder groups can be assessed against strategic aims according to three equal sets of criteria--influence, impact and alignment (see Figure 2). For example: • To what extent will the strategy affect them, positively or negatively? • H o w far does the strategy align with their existing beliefs about our values and purpose? • H o w far do they share our values and purpose in this area? • What potential do they have to influence the business directly or indirectly (via other shareholders), positively or negatively? • H o w robust is our existing reputation with them? • H o w likely is it that the effects of our action in regard to this group will act as a prompt for action by other groups? What should emerge from this discussion is a view of h o w the various groups' needs stack up against each other, where they might clash and where they might reinforce each other. Each of the elements in Fig. 2 is measurable, to a greater or lesser degree. Clearly, the higher the poten-
tial to influence the business fortunes and the higher the business impact on stakeholder group, the more important it is to maintain a constructive dialogue. That dialogue becomes easier, the greater the alignment of values between the c o m p a n y and the stakeholder group. (But there is another side to the argument--the influence of society itself). It is important to bear in mind that society in gene r a l - w h e t h e r the Board likes it or not--will act as an arbiter between each of the stakeholder groups and the company. Society makes judgements about the urgency of dealing with issues. For example, is there a real pressure for getting more w o m e n into senior management? Is the U.K. consumer being asked to pay too much for CDs? The more society judges it appropriate for a c o m p a n y to be involved in this particular issue, the stronger its response is likely to be. Or, if they judge that the company is doing something other than what they see as its interest, then society will be suspicious. Once the overall business strategy is agreed, the top team and the board need to take the lead in the communication management process by taking responsibility for creating a topline communication strategy. What that means is making a clear, explicit statement of their intentions--and, just as important, of the core messages which follow from them, indicating where and w h y the various messages might need be articulated with different emphases for different groups. The Board must become ambassadors for the company's values and intentions towards its stakeholders. In this way, the top team members--themselves
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likely to be key deliverers and recipients of communication with all g r o u p s - - c a n themselves be more sure they will be holding a consistent line. They will also have prepared a sound basis from which communication specialists can back their efforts with a variety of activities and media, appropriate for particular audiences. Reporting performance is an important aspect of strategy-related communication to stakeholders. Some Boards are n o w widening the remit of their annual reports--both in print and face to face comm u n i c a t i o n - t o put on record their performance in each stakeholder relationship. If employees and "loyal" customers are to be seen as stakeholders, h o w will their " n e w " status affect the information they are given? Quite radical changes associated with disclosure and feedback can be anticip a t e d - a s k any organisation with a large proportion of employee or customer shareholders. It might be considered that the current style of neither the annual report, nor employee journal or published business plan, is any longer appropriate. Their replacement by stakeholder reports, journals and plans could be strongly argued.
Values A key part of taking an integrated approach to stakeholder communication is the laying d o w n of a set of "umbrella" values w h i c h embrace everything the organisation does, from strategy to policies to structures to management style and so on. Where communication with all stakeholders is not rooted in consistent values, companies increase their exposure to loss of credibility. Take high tech companies like Intel, for example. They have to reconcile the expectations of customers w h o use their products with little understanding of the science or technology behind them, only worrying w h e n things go wrong with employees for w h o m technical excellence is a natural and perhaps a too narrow goal. Such companies have to work particularly hard to be seen as people-focused. Intel's handling of what began as a relatively trivial problem with its fantastically successful Pentium chip product left customers and co-suppliers world-wide furious, shaking the company's hitherto excellent reputation and good all-round relationships. In a logical sense, no doubt Intel's technical staff were right to dismiss the problem as "minor", but in doing so they (and the company) were seen as failing on a "major" stakeholder criterion--acknowledging customers' concerns. By contrast, Mark Goyder of the Centre for Tomorrow's Company maintains that explicitly-stated values, able to be shared by managers and employees right d o w n the line, reduce the chances of such mistakes being repeated and liberate people to contribute fully. "Board members need to revisit the company Communication with Stakeholders: An Integrated Approach
values regularly and check whether their own behaviour and decisions are giving people the right lead". Siemens combines its values with a statement about responsibilities. These are set out in an internal document called Management by Co-operation, which advises that: "The management style and social awareness of our managers strongly influence the company's reputation. This reputation has been built on the fundamental principles of honesty, integrity and reliability. Our management practices must reflect the importance we attach to these principles if we are to build partnerships based on mutual trust and understanding".
Structure and Process The next consideration is h o w the process of stakeholder communication is to be managed. It is in this area, that many specialist communication practitioners foresee a radical shake-up in many organisations. Many "crises" are either brought about, or made worse by a failure to successfully co-ordinate communication processes. The company which withdraws a long-standing Christmas perk for its pensioners, for example, while at the same time announcing a considerable hike in the chairman's remuneration may have perfectly valid reasons for doing both and be guilty of nothing more than bad timing. However, it can expect to be pilloried as Scrooge, and not just at the time but possibly for ever more. A major contributor to the scale of the Perrier bottled water crises was identified as a profusion of different spokespeople each telling a different story and usually an overly-technical one. The Brent Spar incident can also be seen more as a failure of Shell's communication systems rather than its values. Writing in the GowerHandbook of Internal Communication, 8 Jon White, visiting Professor, Public Affairs, at London's City University Business School, said: "Management had clearly been taken by surprise at the strength of public reaction. As pressure built, it was experienced by different parts of the company in different ways. It is not yet clear whether internal communication links allowing for realistic assessments of pressure were in place, or, if in place, whether they were working. Such links could surely have helped the company, even after the initial prob~ lems, to make its case and win support". Conversely, those w h o are seen to manage themselves well out of a crisis, particularly by listening to and addressing stakeholder concerns, are among the fastest recoveries and most sustained performers. The biggest problem in most large organisations, is that the ownership and handling of communication activity (whether or not it is seen as such) is compartmentalised. Broadly speaking, Marketing takes care of customers, HR/personnel of employees, Corporate Communication of the community and share-
holders. This " s t a n d a r d " approach is reflected in a structure that looks like that shown in Figure 3. Vast numbers of companies rely on such structures, believing that the collective presence of these executive function heads will ensure that all perspectives
are represented and that a common message will go back out to all parts of the organisation. There is often a proviso that only the PR people may speak to the Media at times of crisis. This structure might look logical. It may even seem
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the best communication practice since it amounts, on a surface level at least, to segmentation. In practice, a very different picture emerges. See Figure 4. Communication in most companies run with such structures has the following characteristics.
• The employee audience is bombarded from all sides. One of the most common problems of employee communication is that all head office functions feel they have the right to communicate direct with line managers, who in consequence are overwhelmed by an undifferentiated collection of information. Priorities are missed, effort is duplicated or worse still, tells different tales causing wasted effort and confusion. At the same time, Marketing and PR effort aimed at external media often reaches employees before internal media does, undermining them with their families and friends and often adding more confusion. • PR and marketing plans often go down the tubes. External communicators habitually fail to tell customer-facing employees about campaigns in time, with the result that they haven't a clue about the advert/discount/new positioning the customer (who, remember, is possibly also a shareholder, or a member of the Media) is referring to. • Communication is often tragically wide of the mark for the audience. Communication is a professional activity. Yet companies continue to allow materials p r o d u c e d by Finance departments to reach shareholders and the Media, by HR and Strategic Planning departments to reach employees and n e w recruits--and by Marketers to reach other than consumer audiences. • Nobody's looking at operational decisions. Line managers under pressure to achieve results are often unaware or unconcerned about the finer points of the "reputation" the top team is endeavouring to create or maintain. Yet decisions made in the field are often those that mean most to customers and employees, whose reactions may well reverberate tellingly with shareholders and others. Too often the output of such set-ups--far from being the cohesive, coherent picture organisations are aiming for--is at best confusion. Rather like the man in the hall of mirrors, the c o m p a n y can find itself surr o u n d e d by different images of itself held by different groups. As an approach to communication it is amateurish and hardly fit for the purpose of managing stakeholder communication in the super-information environment post-2000--not with any hope of success anyway. A report published last year by Business Intelligence, The Strategic Management of Internal Communication 9 anticipated that in the new Millennium, companies w o u l d employ directors, or teams of direcCommunication with Stakeholders: An Integrated Approach
tors, with combined responsibility for internal, external and marketing communication. One of the authors, Linda Gatley, wrote: "Only an integrated approach of this kind will ensure that the messages communicated to all audiences work together in the best interests of the b u s i n e s s - - n o t just through the absence of contradictions and unnecessary overlaps, but through the cumulative addition of positive value". The report profiled major brewing company, Bass, where the process of integrating stakeholder communication has involved transferring some of the dayto-day employee communication functions to the line. A smaller team at the centre is then free to concentrate in a consultative capacity on the integration of internal and external communication. In the same report, British Aerospace's Ian Black, n o w closely involved in the company's Intranet development, predicted that "the processes of internal, external and marketing communications are going to become so closely aligned, as time goes by, that they will be carried out by the same people, in all businesses". He says integration makes for economy too. Having witnessed all three processes being driven through one point, Black concludes there is great synergy to be realised from a better aligned effort. Some companies know this, hence the current interest in appointing Corporate Affairs Directors. Though the title may mean different things in different companies, recruitment advertisements generally identify the post with stakeholder relations. Also writing in The Gower Handbook of Internal Communications, John Williams, Managing Director of corporate affairs specialists, Fishburn Hedges, says: "The first principle of best practice is for organisations to accept that the corporate brand and image must be managed as a totality. This requires giving responsibility for it to one senior executive or department and for them to be e m p o w e r e d to co-ordinate all those responsible for shaping corporate communication, internal and external". Examples of such "Communication Tsars" are not easy to find. Anticipating a need for "integrated communicators", the associate vice-chancellor of the Texas Christian University, Larry D. Lauer, said in an article published in 19951°: "Corporate leaders are going to be searching for communication executives and counsellors who can think strategically about all the tools in the communication tool box... Integrated communicators will need an understanding of product development and positioning, as well as reputation-development and stakeholder communication". Among companies beginning to incorporate responsibility for employee communication alongside external audience is the major brewing company, Whitbread. See Figure 5.
One consequence of this more integrated approach is more flexible solutions. For example, local television and radio are used in its communications with employees, following research which s h o w e d they preferred to watch television and listen to the radio over reading house magazines. "Conversely" says David Reed, Whitbread's Director of Corporate Affairs, "shareholders find employee publications and video programmes give valuable insights. Key to the process is that all elements of the communication mix are used to support the others".
More promising are attempts to attack key organisational problemsmlike a drop in sales in a particular area--by bringing to bear the best brains with relevant communication access and responsibilities to find and implement a solution.
Improving Professionalism Whatever structure is decided on, managing each stakeholder group requires processes designed to: • Listen
The "Virtual Communication Team"
• Inform
By contrast, it is possible simply to bring representatives of the various functions together at intervals to exchange ideas and strategies. It means attempting to bring about an end to "turf wars" over communication, convincing each specialist area to raise their awareness of a range of stakeholder needs, to humbly recognise their shortcomings as communicators, and to develop and to devise methods of recognising situations where it is important to act together. The idea has been tried in various companies, with varying degrees of success, often dependent on the personalities of those involved, or the need of one or other group to make the team succeed for a particular purpose at a particular time--for example, w h e n Marketing wants to bring about a change of customer service values.
• Manage agreement/disagreement • Learn together • Influence and be influenced. Research and segmentation is the real key. The priority for anyone responsible for stakeholder relations is to identify accurately the different groups involved, their different characteristics, aspirations, limitations, hopes and fears. Much of this is already being carried out on the external side: what is needed n o w is for the approach to so-called "internal" audiences to use the same research and relationship management t e c h n i q u e s m a n d then for the information pertaining to all audiences to be aligned. It is interesting that Kevin Murray, who took over as British Airways' Director of Communication in July Long Range Planning Vol. 31
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1997, has made his priority pulling together the substantial, but until now largely unco-ordinated reservoirs of research information on the perceptions of different stakeholder groups. And that, as a result, he has already taken the decision that for the next period, no less than 90% of his communication budget will be focused on employees rather than on external audiences, in recognition of employees' role at the heart of everything the company does and is trying to achieve. The rise of Internal Communication as a separate management discipline--largely as a response to continuing change within organisations--is fast moving things in that direction. IC managers are perhaps more aware than their colleagues of the pivotal link employees in most organisations have in balancing Communication with Stakeholders: An Integrated Approach
and satisfying the needs of the other stakeholder audiences (see Figure 6).
Developing the Skills of Stakeholder Listening For most stakeholder groups, the emphasis of companies' attempts to manage the stakeholder relationship is primarily on "outgoing" messages--on explaining the company's position or point of view. Yet at least equal emphasis should arguably be put upon listening to stakeholders. Some activities are well recognised for individual stakeholder groups-employee attitude surveys, customer research, inves-
tor analysis and so on. The problem is that all of this research only view stakeholders in one narrow role; moreover, there is no effective vehicle for comparing, say, customer perceptions of c o m p a n y reputation with employees' perception of reputation. Best practice in stakeholder listening w o u l d suggest that companies: • Invite stakeholders to comment in the light of all the roles they play (e.g. employee, shareholder, consumer) • Create forums for stakeholders to share expectations, values and understanding • Involve stakeholders in the creation of v a l u e s - - n o t least the definition of what the c o m p a n y means by " s u c c e s s " - - t h r o u g h consultation, or even by judicious appointments to the Board • Involve stakeholders in auditing h o w the company adheres to its policies and values. (One U.S.A. insurance c o m p a n y regularly invites a cadre of knowledgeable customers in to audit its systems for fairness and honesty).
2. A im to align needs, rather than satisfy or pacify individual groups Create strategy by looking in parallel at the key drivers behind business and stakeholder needs, and at their relative impacts
3. Build relationships Identify key relationships, then systematically build, improve and sustain investment in them.
4. Understand, then shape attitudes and behaviours Listening and planning, rather than guessing and firefighting, are the keys to effective communication.
5. A i m to co-ordinate management of all communication Create a structure and process to cover communication flowing up, down, across, backwards and forwards to and from the organisation.
6. Make communication management a core competency
Steps to an Integrated Approach
Do not ignore the skills gaps--find a w a y to encourage key players in communication processes to build on strengths and plug weaknesses in communication capability.
In summary, six key activities will help organisations both stimulate and maintain more successful outcomes from stakeholder communication.
Conclusions
1. Take a more strategic and more professional approach to communication This will lead the Board and the organisation as a whole to manage its reputation both holistically and proactively.
Managing stakeholder audiences as if they were discrete and unconnected is no longer a viable strategy. Companies need to develop systems and approaches that enable them to prioritise stakeholders, align more closely to them, integrate the messages to and from them and build bridges between them.
References 1. The Winning Streak Mark II, Walter Goldsmith and David Clutterbuck, Orio Publishing, (1997). 2. Financial Times, 24 September (1997). 3. Tomorrow's Company: the Role of Business in a Changing World, The Royal Society for the encouragement of Arts, Manufactures and Commerce, London (1996).
4. The Hungry Spirit, Charles Handy, Hutchinson, London (1997). 5. The Quality of Working Life, Institute of Management, London (1997). 6. The new agenda for global business and public affairs/pubfic relations, Roger Hayes, International Public Relations Association, October 1998. 7. What Price Reputation Report, Management Today, Haymarket Publishing, London, November (1997).
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8. Handbook of Internal Communication, Gower Press, Aldershot (1997). 9. Strategic Management of Internal Communications, Business Intelligence, London (1996). 10. Integrated Communication, IABC Communication World, August (1995).
Communication with Stakeholders: An Integrated Approach
TODAY, THE QUESTION FOR THE Board and for those who advise them in the area of strategy and communication planning, is not whether they should be communicating with this or that stakeholder group but h o w to manage communication across stakeholder groups. Academics and commentators may still be arguing about what constitutes a stakeholder. Or whether it is best (or indeed feasible) to take a "stakeholder approach", or only a "shareholder return", approach to business (Andrew Campbell and John Argenti's recent exchange in Vol 30 of Long Range Planning illustrates graphically this divergence of views). On the front-line, managers are confronting the need to deal with the growing power of individual stakeholder groups and the increasingly complex links between them, often with mixed success. In the search for possible redeeming strategies, it is important that we first revisit the factors that lie behind the power and the links.
• Globalisation. More organisations are fighting their battles on a world-wide stage--not only for custom but for capital, for employees with the right skills and attitudes and even for their licence to operate in local communities. At the same time, industries w h i c h are being forced to consolidate internationally (even Defence, for example) are seeing the distinction between competitor, customer and supplier become blurred, making each player more influential on the other. • The rise of the professional investor. The overall proportion of funds in private hands has declined dramatically: fund managers' interests in how the company is and will be performing goes way deeper than the annual P&L statement, nor will they wait for the annual meeting to make their views heard. • The rise of the sophisticated customer. On every Pergamon PII: S0024-6301(98)00007-7
aspect of the " v a l u e " mix--from price and product to convenience and service, today's customer is increasingly aware of new possibilities and therefore more demanding, a trend only intensified by the consolidation of consumer product and retail chain branding. • The rise of the e m p o w e r e d employee. With old managerial structures being dismantled and a reduction in the power of trade unions, individuals are taking more responsibility for improved performance--their own and the organisation'swand in turn, demanding more of a say in what happens around them. • The information revolution. Inside and outside organisations, the number of people who may now see, hear and start reacting within minutes to news of a take-over, a strike or a chemical spill, for example, is increasing at a phenomenal rate, thanks to the spread of electronic communication. • Rising awareness of the influence of business on society (for good and ill). Ethics and corporate Long RangePlanning, Vol. 31, No. 2, pp. 227 to 238, 1998 © 1998 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0024-6301/98 $19.00+0.00
integrity are high on society's agenda, from environmental and social impact to individuals' pensions. • Organisations' own wish to influence society. More companies are seeing the benefits of providing a suitable environment for continuing business (e.g. retailers' sponsorship of crime prevention initiatives; social and educational initiatives to provide good employment pools etc.) and of building credibility with specific audiences against the day w h e n disaster may strike. To this end, business is adopting models with a stakeholder component, such as the European Foundation for Quality Management framework. • Government support. Even in the U.K., often seen to be more in tune with the U.S.A. model of "individualistic" capitalism than the "stakeholder approach" of continental Europe, we are seeing the spread of more "socially aware" regulation: insistence on environmental standards, support for citizens' charters, the strengthening of consumer protection law, the promotion of employee consultation rights through Works Councils or their equivalents.
STRATEGY
VALUES
MANAGEMENT PROCESSES • Listening • Informing/educating • Influencing • Involving • Learning together • Managing disagreement • Setting priorities
In light of such factors, the era is clearly long gone w h e n the interests or activities of any one stakeholder group could be conveniently overlooked. The flow through from company strategy, values and structure/ processes all affects key stakeholders: and all of them have an influence on the key outcomes the company is looking for (see Figure 1). Commenting on its report What Price Reputation? published in November 1997, 7 the magazine Management Today expressed it well: "The days when companies could do as they pleased, fly in the face of public opinion, turn a deaf ear to the cries of staff, routinely give 'no comment' to the press and speak to the City only via their profit margins are long gone.., in the 1990s corporate reputation has become more important and more vulnerable than ever before". Even more striking than the growing power of particular groups, is their ability to act in combination on the organisation. A good proportion of the "reputation disasters" explored later in this article, we are n o w seeing as examples of one stakeholder group influencing another--which is w h y being a "good corporate citizen" is rapidly becoming a matter of sur-
,.Alignment Performance Loyalty
s~ppliers
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Robust reputation
Commitment Ambassador ~;!~:~;~!~Loyalty Ambassador
~
Sustained high profits
STRUCTURE INFLUENCERS • Media • Analysts • Agents • Brokers • Advisors • Third party resellers
Shareholders
Community
Understanding Loyalty Decision support Confidence
Rising share price
Understanding
Rising
Aail nce°perateLciento ce
Communication with Stakeholders: An Integrated Approach
I
asset base
vival rather than a choice, or an opportunity to "gain an edge" over less sensitive competitors.
Prominent Casualties The dispute between British Airways and its cabin crew in 1997 set the company back m u c h more than the £125 million cost of the strike itself. First, it clashed with the multi-million p o u n d launch of a new corporate identity designed to change the passengers' impression of it as being "inflexible" and "monolithic" to "genuinely caring" and " w a r m and friendly". Far from taking on board these new messages, some customers were moved to side with the cabin crew and switched to other airlines in protest. City disapproval of the Chief Executive's handling of the incident saw some shareholders off-loading stock. The Media's role in accelerating both trends was self-evident and there were clear long-term implications for manager-employee relationships--not least w h e n it comes to persuading other internal groups to get behind the company's business efficiency programme. Disney's image, so m u c h to do with good triu m p h i n g over evil, took a similar knocking recently w h e n the pressure group World Development Movem e n t accused it of boasting to shareholders about the huge profits it will make from its new film Hercules, while, the charity alleges, using Third World sweatshops to make the clothing associated with the merchandising of the film. Protesters paraded their accusations at the premieres in various cities. The issue, not the film, took the headlines. Shell, in the wake of environmental and h u m a n rights controversies, is another casualty of crossstakeholder problems. The Financial Times survey of Europe's most respected companies remarked that the most striking reversal in reputation had been that between BP and Shell. BP had risen to equal second in the eyes of European chief executives and investment analysts, while Shell, w h i c h had hitherto been in the top three, slid to eleventh. The run of bad publicity on Shell's part was at least partly to blame, according to the Financial Times. 2 By contrast, BP was described as having achieved a global operation while steering through the minefields of ethics and the environment. All these companies will doubtless, over time, recover any cash losses involved, but they may never fully regain aspects of their "general" r e p u t a t i o n - and this could prove the greater loss.
The Message is Beginning to Get Through These companies join a growing list of organisations now facing the reality that each of their audiences
will get to know what is being said or done to the others and will simply no longer tolerate the telling of different stories or inconsistent behaviour patterns. Here we come to the nub of the matter: the need to h a v e - - a n d deserve--a corporate reputation that can act as a buffer when things go wrong. It is the spectre of a damaged r e p u t a t i o n - - o f having to make costly reversals in policies or practices as a result of stakeholder pressure, or, worse, as a consequence of a selfinflicted w o u n d - - t h a t overhangs the urgency with which integrated stakeholder management now needs to be treated. Many individuals and certain companies have long recognised the " c o m m o n sense" dynamic behind this situation. In relation to a particular organisation, any single individual can be an employee, a pension trustee, a customer, a shareholder, an influential representative of the c o m m u n i t y or a member of one or more local, national or international pressure groups. And even where an individual has no existing relationship to the organisation, they may well have close links with people who do, which could influence their potential to react positively in one or other capacity w h e n the time comes. MORI studies, among others, have long shown that knowing an employee who speaks positively about their company is a bigger influence on would-be purchasers than any other factor, including advertising. Thus not only does news of the h a r m - - o r g o o d - done to one group quickly spread to others, but the swirl of opinion surrounding an enterprise continues to feed and reinforce itself as time goes on. There is some evidence that senior managers are beginning to get their minds around the need to better integrate their communication (and therefore their policies) across a range of stakeholder groups. But the situation seems to be a far from comfortable one for them. Many who are in favour of an integrated approach from a business perspective, prefer to portray it in terms of ethics, social responsibility and moral leadership. CEOs of successful companies profiled in The Winning Streak Mark 111 a book by Walter Goldsmith and David Clutterbuck, say they embrace "integrity" as an essential part of their culture. They also say they spend a good deal of their time in "transferring" this belief to others. Indeed there are examples of senior executives "going public" with policy reversals in deference to emerging concerns. When more than a decade ago conservation groups pressed the shoe company C&J Clark to renounce the use of leather cured with sperm whale oil, its first response was that it could not expect to change practices in the world-wide supply market. But sensing that here was an important issue of social responsibility, the Chairman, Daniel Clark, stepped in to lay new ground rules for the company. He stated that the company would accept the conseLong Range Planning Vol. 31
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quences of buying only leather cured without sperm whale oil and it w o u l d invest in equipment to check that supplies conformed to the n e w specifications. Each such decision has to be carefully balanced against the likely response of other shareholders-such as employees, customers and shareholders-w h o may not be best pleased at the potential extra cost involved. The anticipatory approach taken by Marks & Spencer comes close to getting it right. Announcing that it was to become the first high street retailer to stop selling eggs laid by battery hens, it made it clear that its n e w policy was a direct result of animal welfare campaigning. Thus it showed its social conscience and its sensitivity to public opinion while gaining a marketing advantage. Further evidence of CEOs' changing mindsets was found in a Financial Times survey of Europe's most respected companies. The CEOs interviewed judged that one of the marks of a good c o m p a n y was its ability to balance the interests of shareholders, customers, employees and the community. In the same survey, share analysts placed this characteristic even higher--more important, for example, than making the most of new technology, the pursuit of quality and satisfying customer needs. The MORI Captains of Industry Survey 1997 bears this out. Nearly three-quarters of chief executives questioned said that a business best serves its shareholders by also catering for the needs of its employees, customers, suppliers and the wider community. Both these are surely significant pointers to the future. A "balanced stakeholder" concept rapidly making ground is that of inclusion. It stems from the influential Tomorrow's Company report, published by the RSA (Royal Society for the encouragement of Arts Manufactures and Commerce) in 1996. 3 The report, w h i c h followed two years of intense research among nearly 8000 business leaders and opinion formers, is the shared vision of 25 senior executives from leading U.K. companies. According to them, the key feature of the successful c o m p a n y of tomorrow will be its "inclusive" approach to business--actively communicating with and being involved with a wide range of stakeholder groups. "On any issue, a c o m p a n y has to have all its relationships right, not just its relationship with shareholders," says Mark Goyder, Director of The Centre for Tomorrow's Company, the organisation created to build on the Inquiry's work. "You don't solve the problems of complex organisations by focusing on their ownership. The real task is first to understand and second to improve, the relationships b e t w e e n organisations and those who influence their successful operation." "The inclusive approach," says Goyder, "recognises that companies need to understand and meet the needs of their key relationships in order to sustain the long-term profitability of the business. If your Communication with Stakeholders: An Integrated Approach
employees don't work effectively you'll never get anything done. If you abuse your relationship with your local community it can make life very difficult for you and the inconvenience if a supplier goes bust because you didn't pay on time is obvious. But we believe that all these things are essential in order to build and sustain shareholder value, not at the expense of it," says Goyder. Promotion of the inclusive approach has been taken up by others. One of the most influential of management gurus, Charles Handy, urges organisations to turn themselves into citizen companies. In his n e w book, The Hungry Spirit, 4 he too says that the idea of the organisation as solely shareholders' property is out of date. The President of the International Public Relations Association, Roger Hayes, has recently concluded a year talking with senior managers around the world about the need for an all-stakeholder approach. Reporting his findings at a European Centre for Public Affairs conference in September, Hayes said he had found few best practice global communication strategies or models which embraced a holistic approach to planning and true integration between in-house functions and external advisors. "Corporations still lack the sense of creativity and immediacy demonstrated by Greenpeace and others in campaign management. Time and again the power of public perception and the emotional dynamics that drive perception override science, logic and reason. ''6 However, CEOs were becoming more aware of the relevance of an integrated approach to sustaining business success over time. "Corporations, particularly in high visibility sectors such as energy, chemicals, healthcare, transport and consumer goods, are beginning to react," he said. And he had seen, "everywhere at least an intent to align 'internal' and 'external' communication, based on a greater understanding that employees, particularly the younger, more e m p o w e r e d ones with newer value systems, can make or break an organisation's strategy in an increasingly competitive world". Examples of companies benefiting from an integrated approach to stakeholder communication are also growing. Indeed evidence reported by The Centre for Tomorrow's Company suggests companies that proactively move with stakeholders, rather than against them, out-perform others.
Planning More Integrated Strategies There are then equally acceptable defensive and offensive reasons w h y a c o m p a n y should plan its relations with stakeholders. The question then arises, how? Who should be responsible for what, what structures and processes are required, which are the priorities and h o w should the output be measured?
In preparing to lead companies into the stakeholder era, Boards and all those working with them in this arena, need to review their approach to communication as a whole. They need to begin with the three principal areas in which their own decision making has the most impact: strategy, values and structure.
Strategy Stakeholder groups can be assessed against strategic aims according to three equal sets of criteria--influence, impact and alignment (see Figure 2). For example: • To what extent will the strategy affect them, positively or negatively? • H o w far does the strategy align with their existing beliefs about our values and purpose? • H o w far do they share our values and purpose in this area? • What potential do they have to influence the business directly or indirectly (via other shareholders), positively or negatively? • H o w robust is our existing reputation with them? • H o w likely is it that the effects of our action in regard to this group will act as a prompt for action by other groups? What should emerge from this discussion is a view of h o w the various groups' needs stack up against each other, where they might clash and where they might reinforce each other. Each of the elements in Fig. 2 is measurable, to a greater or lesser degree. Clearly, the higher the poten-
tial to influence the business fortunes and the higher the business impact on stakeholder group, the more important it is to maintain a constructive dialogue. That dialogue becomes easier, the greater the alignment of values between the c o m p a n y and the stakeholder group. (But there is another side to the argument--the influence of society itself). It is important to bear in mind that society in gene r a l - w h e t h e r the Board likes it or not--will act as an arbiter between each of the stakeholder groups and the company. Society makes judgements about the urgency of dealing with issues. For example, is there a real pressure for getting more w o m e n into senior management? Is the U.K. consumer being asked to pay too much for CDs? The more society judges it appropriate for a c o m p a n y to be involved in this particular issue, the stronger its response is likely to be. Or, if they judge that the company is doing something other than what they see as its interest, then society will be suspicious. Once the overall business strategy is agreed, the top team and the board need to take the lead in the communication management process by taking responsibility for creating a topline communication strategy. What that means is making a clear, explicit statement of their intentions--and, just as important, of the core messages which follow from them, indicating where and w h y the various messages might need be articulated with different emphases for different groups. The Board must become ambassadors for the company's values and intentions towards its stakeholders. In this way, the top team members--themselves
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likely to be key deliverers and recipients of communication with all g r o u p s - - c a n themselves be more sure they will be holding a consistent line. They will also have prepared a sound basis from which communication specialists can back their efforts with a variety of activities and media, appropriate for particular audiences. Reporting performance is an important aspect of strategy-related communication to stakeholders. Some Boards are n o w widening the remit of their annual reports--both in print and face to face comm u n i c a t i o n - t o put on record their performance in each stakeholder relationship. If employees and "loyal" customers are to be seen as stakeholders, h o w will their " n e w " status affect the information they are given? Quite radical changes associated with disclosure and feedback can be anticip a t e d - a s k any organisation with a large proportion of employee or customer shareholders. It might be considered that the current style of neither the annual report, nor employee journal or published business plan, is any longer appropriate. Their replacement by stakeholder reports, journals and plans could be strongly argued.
Values A key part of taking an integrated approach to stakeholder communication is the laying d o w n of a set of "umbrella" values w h i c h embrace everything the organisation does, from strategy to policies to structures to management style and so on. Where communication with all stakeholders is not rooted in consistent values, companies increase their exposure to loss of credibility. Take high tech companies like Intel, for example. They have to reconcile the expectations of customers w h o use their products with little understanding of the science or technology behind them, only worrying w h e n things go wrong with employees for w h o m technical excellence is a natural and perhaps a too narrow goal. Such companies have to work particularly hard to be seen as people-focused. Intel's handling of what began as a relatively trivial problem with its fantastically successful Pentium chip product left customers and co-suppliers world-wide furious, shaking the company's hitherto excellent reputation and good all-round relationships. In a logical sense, no doubt Intel's technical staff were right to dismiss the problem as "minor", but in doing so they (and the company) were seen as failing on a "major" stakeholder criterion--acknowledging customers' concerns. By contrast, Mark Goyder of the Centre for Tomorrow's Company maintains that explicitly-stated values, able to be shared by managers and employees right d o w n the line, reduce the chances of such mistakes being repeated and liberate people to contribute fully. "Board members need to revisit the company Communication with Stakeholders: An Integrated Approach
values regularly and check whether their own behaviour and decisions are giving people the right lead". Siemens combines its values with a statement about responsibilities. These are set out in an internal document called Management by Co-operation, which advises that: "The management style and social awareness of our managers strongly influence the company's reputation. This reputation has been built on the fundamental principles of honesty, integrity and reliability. Our management practices must reflect the importance we attach to these principles if we are to build partnerships based on mutual trust and understanding".
Structure and Process The next consideration is h o w the process of stakeholder communication is to be managed. It is in this area, that many specialist communication practitioners foresee a radical shake-up in many organisations. Many "crises" are either brought about, or made worse by a failure to successfully co-ordinate communication processes. The company which withdraws a long-standing Christmas perk for its pensioners, for example, while at the same time announcing a considerable hike in the chairman's remuneration may have perfectly valid reasons for doing both and be guilty of nothing more than bad timing. However, it can expect to be pilloried as Scrooge, and not just at the time but possibly for ever more. A major contributor to the scale of the Perrier bottled water crises was identified as a profusion of different spokespeople each telling a different story and usually an overly-technical one. The Brent Spar incident can also be seen more as a failure of Shell's communication systems rather than its values. Writing in the GowerHandbook of Internal Communication, 8 Jon White, visiting Professor, Public Affairs, at London's City University Business School, said: "Management had clearly been taken by surprise at the strength of public reaction. As pressure built, it was experienced by different parts of the company in different ways. It is not yet clear whether internal communication links allowing for realistic assessments of pressure were in place, or, if in place, whether they were working. Such links could surely have helped the company, even after the initial prob~ lems, to make its case and win support". Conversely, those w h o are seen to manage themselves well out of a crisis, particularly by listening to and addressing stakeholder concerns, are among the fastest recoveries and most sustained performers. The biggest problem in most large organisations, is that the ownership and handling of communication activity (whether or not it is seen as such) is compartmentalised. Broadly speaking, Marketing takes care of customers, HR/personnel of employees, Corporate Communication of the community and share-
holders. This " s t a n d a r d " approach is reflected in a structure that looks like that shown in Figure 3. Vast numbers of companies rely on such structures, believing that the collective presence of these executive function heads will ensure that all perspectives
are represented and that a common message will go back out to all parts of the organisation. There is often a proviso that only the PR people may speak to the Media at times of crisis. This structure might look logical. It may even seem
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the best communication practice since it amounts, on a surface level at least, to segmentation. In practice, a very different picture emerges. See Figure 4. Communication in most companies run with such structures has the following characteristics.
• The employee audience is bombarded from all sides. One of the most common problems of employee communication is that all head office functions feel they have the right to communicate direct with line managers, who in consequence are overwhelmed by an undifferentiated collection of information. Priorities are missed, effort is duplicated or worse still, tells different tales causing wasted effort and confusion. At the same time, Marketing and PR effort aimed at external media often reaches employees before internal media does, undermining them with their families and friends and often adding more confusion. • PR and marketing plans often go down the tubes. External communicators habitually fail to tell customer-facing employees about campaigns in time, with the result that they haven't a clue about the advert/discount/new positioning the customer (who, remember, is possibly also a shareholder, or a member of the Media) is referring to. • Communication is often tragically wide of the mark for the audience. Communication is a professional activity. Yet companies continue to allow materials p r o d u c e d by Finance departments to reach shareholders and the Media, by HR and Strategic Planning departments to reach employees and n e w recruits--and by Marketers to reach other than consumer audiences. • Nobody's looking at operational decisions. Line managers under pressure to achieve results are often unaware or unconcerned about the finer points of the "reputation" the top team is endeavouring to create or maintain. Yet decisions made in the field are often those that mean most to customers and employees, whose reactions may well reverberate tellingly with shareholders and others. Too often the output of such set-ups--far from being the cohesive, coherent picture organisations are aiming for--is at best confusion. Rather like the man in the hall of mirrors, the c o m p a n y can find itself surr o u n d e d by different images of itself held by different groups. As an approach to communication it is amateurish and hardly fit for the purpose of managing stakeholder communication in the super-information environment post-2000--not with any hope of success anyway. A report published last year by Business Intelligence, The Strategic Management of Internal Communication 9 anticipated that in the new Millennium, companies w o u l d employ directors, or teams of direcCommunication with Stakeholders: An Integrated Approach
tors, with combined responsibility for internal, external and marketing communication. One of the authors, Linda Gatley, wrote: "Only an integrated approach of this kind will ensure that the messages communicated to all audiences work together in the best interests of the b u s i n e s s - - n o t just through the absence of contradictions and unnecessary overlaps, but through the cumulative addition of positive value". The report profiled major brewing company, Bass, where the process of integrating stakeholder communication has involved transferring some of the dayto-day employee communication functions to the line. A smaller team at the centre is then free to concentrate in a consultative capacity on the integration of internal and external communication. In the same report, British Aerospace's Ian Black, n o w closely involved in the company's Intranet development, predicted that "the processes of internal, external and marketing communications are going to become so closely aligned, as time goes by, that they will be carried out by the same people, in all businesses". He says integration makes for economy too. Having witnessed all three processes being driven through one point, Black concludes there is great synergy to be realised from a better aligned effort. Some companies know this, hence the current interest in appointing Corporate Affairs Directors. Though the title may mean different things in different companies, recruitment advertisements generally identify the post with stakeholder relations. Also writing in The Gower Handbook of Internal Communications, John Williams, Managing Director of corporate affairs specialists, Fishburn Hedges, says: "The first principle of best practice is for organisations to accept that the corporate brand and image must be managed as a totality. This requires giving responsibility for it to one senior executive or department and for them to be e m p o w e r e d to co-ordinate all those responsible for shaping corporate communication, internal and external". Examples of such "Communication Tsars" are not easy to find. Anticipating a need for "integrated communicators", the associate vice-chancellor of the Texas Christian University, Larry D. Lauer, said in an article published in 19951°: "Corporate leaders are going to be searching for communication executives and counsellors who can think strategically about all the tools in the communication tool box... Integrated communicators will need an understanding of product development and positioning, as well as reputation-development and stakeholder communication". Among companies beginning to incorporate responsibility for employee communication alongside external audience is the major brewing company, Whitbread. See Figure 5.
One consequence of this more integrated approach is more flexible solutions. For example, local television and radio are used in its communications with employees, following research which s h o w e d they preferred to watch television and listen to the radio over reading house magazines. "Conversely" says David Reed, Whitbread's Director of Corporate Affairs, "shareholders find employee publications and video programmes give valuable insights. Key to the process is that all elements of the communication mix are used to support the others".
More promising are attempts to attack key organisational problemsmlike a drop in sales in a particular area--by bringing to bear the best brains with relevant communication access and responsibilities to find and implement a solution.
Improving Professionalism Whatever structure is decided on, managing each stakeholder group requires processes designed to: • Listen
The "Virtual Communication Team"
• Inform
By contrast, it is possible simply to bring representatives of the various functions together at intervals to exchange ideas and strategies. It means attempting to bring about an end to "turf wars" over communication, convincing each specialist area to raise their awareness of a range of stakeholder needs, to humbly recognise their shortcomings as communicators, and to develop and to devise methods of recognising situations where it is important to act together. The idea has been tried in various companies, with varying degrees of success, often dependent on the personalities of those involved, or the need of one or other group to make the team succeed for a particular purpose at a particular time--for example, w h e n Marketing wants to bring about a change of customer service values.
• Manage agreement/disagreement • Learn together • Influence and be influenced. Research and segmentation is the real key. The priority for anyone responsible for stakeholder relations is to identify accurately the different groups involved, their different characteristics, aspirations, limitations, hopes and fears. Much of this is already being carried out on the external side: what is needed n o w is for the approach to so-called "internal" audiences to use the same research and relationship management t e c h n i q u e s m a n d then for the information pertaining to all audiences to be aligned. It is interesting that Kevin Murray, who took over as British Airways' Director of Communication in July Long Range Planning Vol. 31
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1997, has made his priority pulling together the substantial, but until now largely unco-ordinated reservoirs of research information on the perceptions of different stakeholder groups. And that, as a result, he has already taken the decision that for the next period, no less than 90% of his communication budget will be focused on employees rather than on external audiences, in recognition of employees' role at the heart of everything the company does and is trying to achieve. The rise of Internal Communication as a separate management discipline--largely as a response to continuing change within organisations--is fast moving things in that direction. IC managers are perhaps more aware than their colleagues of the pivotal link employees in most organisations have in balancing Communication with Stakeholders: An Integrated Approach
and satisfying the needs of the other stakeholder audiences (see Figure 6).
Developing the Skills of Stakeholder Listening For most stakeholder groups, the emphasis of companies' attempts to manage the stakeholder relationship is primarily on "outgoing" messages--on explaining the company's position or point of view. Yet at least equal emphasis should arguably be put upon listening to stakeholders. Some activities are well recognised for individual stakeholder groups-employee attitude surveys, customer research, inves-
tor analysis and so on. The problem is that all of this research only view stakeholders in one narrow role; moreover, there is no effective vehicle for comparing, say, customer perceptions of c o m p a n y reputation with employees' perception of reputation. Best practice in stakeholder listening w o u l d suggest that companies: • Invite stakeholders to comment in the light of all the roles they play (e.g. employee, shareholder, consumer) • Create forums for stakeholders to share expectations, values and understanding • Involve stakeholders in the creation of v a l u e s - - n o t least the definition of what the c o m p a n y means by " s u c c e s s " - - t h r o u g h consultation, or even by judicious appointments to the Board • Involve stakeholders in auditing h o w the company adheres to its policies and values. (One U.S.A. insurance c o m p a n y regularly invites a cadre of knowledgeable customers in to audit its systems for fairness and honesty).
2. A im to align needs, rather than satisfy or pacify individual groups Create strategy by looking in parallel at the key drivers behind business and stakeholder needs, and at their relative impacts
3. Build relationships Identify key relationships, then systematically build, improve and sustain investment in them.
4. Understand, then shape attitudes and behaviours Listening and planning, rather than guessing and firefighting, are the keys to effective communication.
5. A i m to co-ordinate management of all communication Create a structure and process to cover communication flowing up, down, across, backwards and forwards to and from the organisation.
6. Make communication management a core competency
Steps to an Integrated Approach
Do not ignore the skills gaps--find a w a y to encourage key players in communication processes to build on strengths and plug weaknesses in communication capability.
In summary, six key activities will help organisations both stimulate and maintain more successful outcomes from stakeholder communication.
Conclusions
1. Take a more strategic and more professional approach to communication This will lead the Board and the organisation as a whole to manage its reputation both holistically and proactively.
Managing stakeholder audiences as if they were discrete and unconnected is no longer a viable strategy. Companies need to develop systems and approaches that enable them to prioritise stakeholders, align more closely to them, integrate the messages to and from them and build bridges between them.
References 1. The Winning Streak Mark II, Walter Goldsmith and David Clutterbuck, Orio Publishing, (1997). 2. Financial Times, 24 September (1997). 3. Tomorrow's Company: the Role of Business in a Changing World, The Royal Society for the encouragement of Arts, Manufactures and Commerce, London (1996).
4. The Hungry Spirit, Charles Handy, Hutchinson, London (1997). 5. The Quality of Working Life, Institute of Management, London (1997). 6. The new agenda for global business and public affairs/pubfic relations, Roger Hayes, International Public Relations Association, October 1998. 7. What Price Reputation Report, Management Today, Haymarket Publishing, London, November (1997).
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8. Handbook of Internal Communication, Gower Press, Aldershot (1997). 9. Strategic Management of Internal Communications, Business Intelligence, London (1996). 10. Integrated Communication, IABC Communication World, August (1995).
Communication with Stakeholders: An Integrated Approach