Corporate Communications as an Effective Tool - Essay Example

Corporate Communication – an effective tool - Prajakta Kanegaonkar Corporate communication is more of an art than science. In the article below we are going to discuss various aspects or corporate communication. Corporate Social Responsibility It is very difficult to define Corporate Social Responsibility in exact terminology and words. It can be explained and defined as relationship between corporate and stakeholders and the relationship of the corporate with the society as a whole. There are 3 basic principles which make corporate social responsibility all round: 1. Sustainability 2. Accountability 3. Transparency The concept of CSR has gained prominence in last few years. World over it is gaining the attention of not only the academicians but also of media, people and society at large. A corporate should plan to achieve beyond social and economic benefits simultaneously. The corporate communication should be a manifestation of the organization’s responsibility towards society. Let us analyze Nike example regarding the same. Nike has been attacked by NGOs constantly for its attitude for its manufacturing units overseas. Nike claims itself to be a marketing firm rather than a manufacturing one. It entirely out sources its manufacturing and contracts the work across the globe. However more than once it has been embarrassed by the attacks on its overseas operations. In the year 1996, there was a child labor issue when a major story in the Life magazine featured a photograph of a very young Pakistani boy sewing a Nike Soccer ball. In response the co announced that it will raise the minimum age of the factory workers. In the 1970s most Nike shoes were made in Taiwan and South Korea. When the labor in these countries started to organize themselves for better wages and working conditions the company shifted its activities to Indonesia, China and also Vietnam. It is analyzed that Nike preferred these countries due to their poor enforcement of labor laws and also cheap labor availability. However in October 2000, the BBC exposed Nike factory in Cambodia which broke its own strict code of conduct and rules. Post this, Nike promised to remove all underage workers from its factories and assured to pay for their education till the age of 16. In 1997, Nike was exposed for its hazardous conditions in south-east Asian factories where the labor was subjected to toxic material and fumes. All this while Nike tried to avoid responsibility for factory conditions by saying that they are “just buyers”, but the anti-sweatshop movement has refused to accept the excuse. The movement also forced Nike to take responsibility for the workers who make their products. The company incorporated CSR into its overall business strategy, which was necessary for its survival. The question arises that did Nike have to wait for the press and media to find out about underage workers, toxic and hazardous conditions etc? The corporate communication not being transparent and neither the corporate social responsibility accountable it landed the company in major trouble. It soon discovered the flaw in its communication strategy. It did not help being defensive all the time. It applied the principles of Corporate Social Responsibility and advocated them. By moving beyond defensiveness and compliance it became a leader in progressive business practices. This resulted in Nike getting the number one rank in Apparel industry in the list of America’s most admired Companies by Fortune magazine. Stakeholders of the organization All those who participate in the organizational activities in some or the other way are the stakeholders of the organization. The focus of enhancing the shareholder value has now shifted to satisfying the stakeholders. This is initiated by transparency in the communication and allowing a share in the profits. The stakeholders are divided into two categories: 1. Internal stakeholders: shareholders, employees and management. These are directly impacted by any decision taken by the management 2. External stakeholders: individuals and groups who have some claim on the company. These would be consumers, suppliers, creditors and community. Corporate communication strategy changes from every member and every group of stake holders. Let us look at it in detail: A. Internal Stakeholders 1. Shareholders: They are considered to be the owners of the company. These are also considered as members of the company who help to achieve the company’s goals by investing in the business. They are not only entitled to good returns on their investments but also to up-to-date information about the company’s performance. Disclosing relevant information to shareholders, subject only to the legal requirements and competitive constraints, respecting the shareholders requests, suggestions, complaints and formal resolutions is also required to maintain a good communication with this group. 2. Employees: This group runs the organization. It is very imperative for the organization to maintain the following terms in its communication with the employees: 1. honesty in communication and open ness in sharing information. 2. Active listening and implementation of employee suggestions, ideas, requests and complaints. 3. In case of conflict negotiation required. 3. Management: According to the stakeholder theory, an organization should be unbiased and totally impartial to al the stakeholder groups. Therefore the management task is to keep the balance in the stakeholder relationships. This principle guides the communication between the management and the other members of each stakeholder groups. B. External Stakeholders. 1. Consumers: Consumers exchange resources for the products of the firms and in return receive the benefits of the products. The organization in its communication should pay attention to the customer needs, and by doing so already pays attention to the needs of suppliers and owners. Customers increase the sales and profits by word-of-mouth and spreading positive about the company. They play an active role in constructing or destroying the company. Hence customer delight should be the top priority in an organization’s communication policy. 2. Suppliers: An organization’s relationship with suppliers and subcontractors must be based on mutual respect. While dealing with them the organization must seek fairness and truthfulness. The activities undertaken should be free from coercion and unnecessary litigation. If possible information should be shared with the suppliers and they should be integrated in the planning process. 3. Creditors: Creditors play an important role in the organization. World over the late payment of creditors have become a very grave and common problem. The consideration from both the debtor as well as creditor point of view should be there in the communication strategy. 4. Competitors: In an era of globalization there is a cut throat competition to acquire the largest market share. In all this the organizations must not lose the ethics of the business. The communication towards the competitors should be based on values and principles the organization manifests. One of the examples would be refusing to acquire commercial information by dishonest and unethical means such as industrial espionage. Let us look at some of the strategies implemented and communicated by world’s leading fast food chain McDonalds. McDonald’s commitment to employees: Our People Promise is more than words. McDonald’s and its independent owners/operators have made a commitment to employees that we strive to achieve with our actions every day. And to make sure we deliver on this promise, we have in place five office principles. These people principles reflect McDonald’s values and describe the culture we embrace. Respect and Recognition: Managers treat employees as they want to be treated. Employees are respected and valued Employees are recognized formally for good work performance, extra effort, and teamwork and customer service. Values and Leadership Behaviors: All of us act in the best interest of the company We communicate openly, listening for understanding and valuing diverse opinions We accept personal accountability. We coach and learn. Competitive pay and benefits: Pay is at or above local markets. Employees value their pay and benefits. Learning, Development and Personal Growth: Employees receive work experience that teaches skills and values that last a life time Employees are provided the tools they need to develop personally and professionally. Resources to get the job done: Employees have the resources they need to serve the customer. Restaurants are adequately staffed to allow for a good customer to experience as well as to provide schedule flexibility, work life balance and time for training. Creation of McDonald’s Supplier Compliance Program The Code of Conduct In 1993, McDonald’s formalized its Code of Conduct. It began to use the Code as one of many tools for review of supplier’s performance. In 1997, it refined the Code of Conduct and distributed it to all its suppliers. It also communicated their expectation that compliance is the condition of doing business with McDonald’s. Steven J. Harris, vice president of communications at General Motors, explained, “If leaders are successful, they will spend an increasing amount of time on communication issue. Just pick up Fortune, for example, and you will see executives explaining what their companies are doing”. As per Dr Linda Bourne, the project management and the communication associated with it is divided into 3 dimensions. It is considered as a mixture of art and craft. It is very closely connected with leadership principles. The essential factors are the ‘hard’ skills such management of control of time, scope, cost and the ‘soft’ skills such as leadership and effective communication. The 1st dimension includes the hard skills and as craft of project management. The 2nd dimension is about art of project leadership where application of hard skills is involved. This stage becomes very crucial because it is people who make the project come into picture with the application of techniques and hard skills. Communication plays an extremely important role at this stage. The 3rd dimension however goes beyond the usual leadership, management and communication. This involves the willingness of the managers to understand and operate within the existing framework of organizational culture, power bases operating the organization, the mindsets and functioning of stakeholders, and strategizing towards success. Issues and Crisis Management 1977, Howard Chase coined the term “issues management”. It is a tool which can be implemented to identify, analyze, and manage emerging issues and respond to them before they become a public knowledge. It is adopting a proactive approach rather than a reactive one. Most companies react after the issue turns into a crisis and then have to accept the changing conditions with no control over it. Hainsworth in 1990 described importance of issues management as: Where legislation and regulation are concerned, issues are always resolved to someone’s advantage and to someone’s disadvantage. If it is the object of the corporate management to maximize the organization’s profits and minimize its losses in a socially responsible manner, then issues management should be seen as a critical element in overall corporate planning and management. Issue management always involves dealing with the constant change. The entire effort is directed towards controlling the impact of caused by the continuous changes happening in the environment. The public policy of an organization can be shaped through early identification of the changes happening, by doing effective analysis and creative thinking for assessing the outcome of the changes that would take place. It is not however a defensive activity. Crisis can be defined as an unwarranted event that has occurred with an undesirable consequence. Crisis management plays an effective role in planning an implementation of management policies and ideas. No planning is an effective planning without contingency or crisis planning. Crisis management involves stages as follows: Compliance, Preparedness, Training and Resource Development and Information management. The stages would always prepare the management for effective coordination for various activities that go on in an organization. There are clear instructions issued in case of eventualities which reduce chaos and confusion. Constant assessment of potential and actual damage that might occur is possible. Business operations go on smoothly and are carried on with minimum loss to production and output expected. However in issues management the constant danger of anticipation of changes and acting upon it may dampen the spirit of the organization. This leads to the extreme case of no risk and no development. Similarly if the crisis management fails or goes in a wrong direction the setback to an organization may be too much to recover. In both the cases the leadership communication within and outside the organization keeps the organization on its toes and directs to the positive and desired output. The organization’s issue management and crisis management policy should be reflecting in the corporate communication that is relayed. This helps in building the image of the company and strengthening the ties with the organization. In sum total corporate communication is a total of effective and profitable communication from the organization to various sectors of management and the society at large. It is an effective relationship building exercise. In practice it is a strategic tool which can help a corporation to gain a strategic advantage over its competitors. Needless to say today’s managers need to learn this effective public relation technique to lead, motivate, persuade and inform public and employees as well. Bibliography and References: 1. Bourne, L. & Walker, D., Visualising and mapping stakeholder influence, Management Decision, 43, 5, 649 – 660 2. The Power of Communication – Paul A. Argenti. 3. Corporate Management – Michael Goodman 4. Article by Geary W. Sikich on Crisis management planning. 5. Risk issues and Crisis Management - Michael Regester. 6. References for McDonalds- www.mcdonalds.com Read More