Virtually all organizations are run by a senior leadership team that is responsible for setting strategy and carrying out the organization’s vision. Although publicly traded companies, as well as nonprofit organizations, may be governed ultimately by a board of directors, this board looks to the chief executive and his or her senior team to operate the company on a day-to-day basis.
The key functions in an organization include finance, headed by a chief financial officer (CFO); legal, which reports to the General Counsel; human resources, led by a chief personnel officer (CPO); information services, reporting to the chief information officer (CIO); marketing, often led by a chief marketing officer (CMO); and communication, which reports to the chief communications officer (CCO). These functional areas serve the operations of the company, which in some cases report to a president or chief operating officer. In many cases the CEO also is president/COO (chief operating officer) of the organization.
Although organizational structures vary from company to company, these basic functional areas are usually present in the senior team. In some cases, the communication function is subordinated under another area, such as marketing, legal, or human resources. When this is the case, it becomes more difficult for the senior communications leader to play a meaningful role in the strategic decision-making process. The communication function brings to the senior team a different perspective from these other areas. The legal function is focused primarily on compliance with the law; marketing is focused primarily on the company’s competitive position with the customer; human resources (HR) is focused almost exclusively on employee compensation and development issues. In other words, communication is the only function with eyes on all the publics inside and outside of the organization, and should be included in strategic decision making.
Role of Communication in Decision Making
One of the common denominators for officers in the C-suite is the imperative to make good decisions that affect their ability to positively contribute to the goals of the organization. The ability to make good decisions often defines a valuable manager. To make good decisions, managers need good information. By definition, good information helps reduce uncertainty in making a decision. Rarely is a decision made with utter certainty, but managers need enough information to have confidence that their decisions will result in positive consequences. This information is provided as data regarding these various functions: product testing, market research, legal precedents, and financial statements. Since public relations’ role is to help the organization develop and maintain good relationships, it must provide data or information about how the organization can achieve this. This is how strategic public relations earns its seat at the executive table.
The communication function looks at all the stakeholders in the organization and uses a variety of tools and tactics to enhance relationships with these publics. At its best, the communication function uses research and monitoring methods to keep a finger on the pulse of internal and external perceptions of the organization. It uses a variety of communication channels to enhance the organization’s reputation. And most importantly it provides strategic counsel to the organization’s leaders to help the team make better decisions.
Some have suggested that the communication function serves or should serve as the corporate conscience. They contend that communication leaders have a uniquely objective perspective that allows them to weigh the sometimes conflicting needs of different publics and to help the organization make more balanced decisions. Although there is much truth to this perspective, we add that the conscience of the organization, its moral obligation to do the right thing, is one that is shared by all who lead it, including the CEO, the board, and the senior management team.
As the top communication professional, the CCO has an important responsibility to ensure that all key stakeholders are given due consideration when critical decisions are made. In that regard, the CCO acts as the voice for many who are not in the room when choices are made. He or she must keep in mind the minority shareholders, overlooked employee segments, nongovernmental organizations, special interest groups, elected officials, community leaders, and others who may be affected by the decision and who have influential roles in their respective areas.
By providing this overarching perspective, the CCO does much more than deliver tactical communication products. This strategic counsel is what CEOs and other leaders are increasingly seeking in all members of the senior team. By delivering it, the CCO enhances the value of the function and ensures ongoing participation in charting the future course for the company.
Strategy and Profit Motivation
Public relations as a profession is often thought of as nothing more than a simple set of tactics. Far too often those in the profession are portrayed in the media and in popular culture as a group of empty-headed party planners or deceptive flacks willing to say anything to get publicity for their clients. The tools of the trade—news releases, press conferences, media events, employee newsletters—are considered as discrete tactics that rarely if ever are driven by an underlying strategy.
This, like other stereotypes, is simply not supported by fact. As practiced by most large organizations and agencies, public relations is an integral part of overall strategy. Communication programs are developed based on extensive research to address specific business objectives with stated outcomes, target audiences, and key messages. The results of these efforts can be measured, both qualitatively and quantitatively.
Think of it this way: When an organization develops a strategic plan, it usually does so with a relatively small number of key executives. These leaders look at the company’s strengths, organization, challenging issues, and potential problems that could arise. They consider the organization’s financial position, its growth prospects, its competitive position, and the changing landscape in which it operates.
When they have considered all of these factors, they map out a strategy that will build on the company’s current strengths, address its relative areas of weakness, take advantage of opportunities, and prepare for looming threats. They may decide, for example, to be the low-cost provider in their industry segment. Or they may decide to take advantage of their expertise in new product development, or to exploit their superior distribution network.
At some point, the strategy must be executed by a much larger, geographically dispersed network of employees. This is where the communication strategy becomes crucial. If a company has a long track record of fighting with its employees over issues like pay, benefits, union representation, child care programs, or workplace safety, it will be much more difficult to call upon them to launch a new initiative aimed at improving customer service.
In large measure, an important role of the communication function team is to help balance the needs of all publics—employees, investors, customers, communities—as the organization makes key decisions. For example, assume that a company is facing financial difficulties due to declining market share in one part of the United States. They are faced with the decision of closing a regional plant since that level of manufacturing capacity is no longer needed. In the past, they simply might have turned to the public relations executive and said, “We’re closing the Milwaukee plant. Try to put a good face on it.” An organization that views the communication function as a strategic partner instead would say,
We’ve got too much manufacturing capacity; operations is recommending that we close Milwaukee. We’d like you to take a look at the impact this will have with our employees, customers, and the community there and help us measure this as we examine the alternatives. There may be another choice that won’t be as painful to the organization.
Balancing the needs of publics is just one facet of the impact public relations can have on achieving organizational goals. It obviously depends on the organization, but in almost every case, effective communication programs help drive strategy from conception to delivery. Successful internal communication programs can improve the ability of supervisors to motivate employees and build pride in the organization. Creative external communication programs can improve customer relationships, build brand recognition, encourage investor interest in a publicly traded company, and increase the effectiveness of traditional advertising and marketing efforts. Community outreach programs can help local residents appreciate the impact of a company on the surrounding area in which it operates. The impact of well-conceived strategic communication programs can be profound, and many companies have already benefited by recognizing this importance and building upon the strengths public relations brings to the table.
In 2007, the Arthur W. Page Society, a membership organization of chief communications officers at the largest corporations, agency CEOs, and leading academics, produced a white paper called The Authentic Enterprise.The Authentic Enterprise (2007). The report examined the evolving role of the senior communications executive in 21st-century business. According to this report, the role of the CCO is much broader than it was even a few years ago. The CCO of today and tomorrow must assert leadership in the following:
- Defining and instilling company values
- Building and managing multistakeholder relationships
- Enabling the enterprise with “new media” skills and tools
- Building and managing trustThe Authentic Enterprise (2007), pp. 29–30.
The communication executive does not own these responsibilities alone. They are shared with other members of the leadership team. But the communication executive can and should take a lead role in ensuring that these responsibilities are fulfilled by the organization.
Having a seat at the decision-making table is not a right, it is a privilege. Think of it this way: If you were planning an extended trip to Mexico, you would probably want to brush up on your Spanish before embarking. You could probably get by without speaking Spanish, but you would be far more effective and much better accepted by the locals if you at least made an attempt to speak their native language.
It is not so different at the management table. There the participants are speaking the language of business. They are talking about margin performance and market capitalization and earnings growth. They are discussing business strategy and market share and competitive position. If you are not conversant in this terminology and the thinking behind it, you are at a distinct disadvantage as a team member.
The Page Society surveyed chief executive officers at large multinational corporations to determine how these CEOs viewed the role of the chief communications officer in a successful executive team. According to results reported in the Authentic Enterprise white paper, the most important attribute of an ideal CCO or communications manager was detailed knowledge of the business.
This is far and away the most critical quality for a top communications executive. All CEOs believe that their businesses are large and complex entities, and that their companies cannot be communicated well if their top communications executives do not intimately understand them.The Authentic Enterprise (2007), p. 44.
Why does this understanding matter to CEOs and other members of the C-suite? In order to build persuasive communication programs that advance the objectives of the organization, the communication team, especially those who lead it, must first understand these objectives. They must also understand the context in which the organization is pursuing the objectives—both the business context and in external forces.
It is extremely important to build credibility with the publics you are trying to reach. When a spokesperson for an organization cannot convey anything beyond what is contained in carefully scripted talking points, the recipient of the information loses trust and confidence in the individual. Many reporters are reluctant to speak to a media relations professional if they believe that individual does not really understand the organization or the industry in which it operates. Communication professionals who have a thorough understanding of business, government, community issues, and the specific organization they serve are simply more valuable contributors to the overall effort.
Gaining knowledge about an organization and its business objectives does not mean gaining the expertise needed to be CFO, General Counsel, or head of accounting. There are some fundamental areas that are important to understand, general principles that will help communications professionals speak more credibly and work as more valued team members.
For example, publicly traded, for-profit companies all operate within a set of guidelines, standard benchmarks, and mileposts that help their publics gain insight about their financial health, prospects for growth, and competitive position. These measures can provide a quick snapshot of an organization’s health in the same way that temperature, pulse rate, and blood pressure readings can give a physician a measure of a patient’s well-being.
Maintaining Core Competencies
How does one gain much of the knowledge referenced earlier in addition to staying current with rapid changes? In some cases it makes sense to do so by pursuing additional educational opportunities. A number of courses are offered, for example, that teach basic finance for nonfinancial managers. Some communication professionals return to school to pursue a Master of Business Administration (MBA) or executive Master of Arts (MA).
Even without taking these steps, we can learn a great deal by simply following the business media, especially the Wall Street Journal; the major business magazines such as Business Week, Fortune, and Forbes; and broadcast media such as CNBC or Fox Business. The Internet also provides an endless source of information about individual companies and issues that affect all types of organizations and industries.
In the end, conversations with colleagues can provide incredible educational opportunities. The ability to listen, to ask insightful questions and to learn from others enables the communication professional to gain ample knowledge of the workings of business in general and a single company or organization more specifically. This knowledge, combined with an understanding of the industry and the ability to utilize communication expertise, provides a valuable combination of specialized abilities that can be used to benefit the entire organization.