The Alignment Factor

Leveraging the Power of Total Stakeholder Support

Cees B.M. Van Riel

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136445460
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The importance of creating a favourable impression is hard to overstate in all walks of life - in business it's vital to achieve strategic goals. Customers, journalists, bloggers, investors, governments and other groups are all important stakeholders in an organizations performance and in persuasively communicating a company's ethical and socially responsible behaviour, these groups can be kept onside.

Supported throughout by lively examples, this book contains guidance for implementing strategies that engage stakeholders - highlighting those organizations which employ communication professionals as key performers. Van Riel reveals how a dominant logic develops among executives, which influences styles and techniques of trust-building communication.

The practical insights demonstrated via cases including Google, Unilever and Barclays make this book useful reading for MBA and other graduate classes across areas such as public relations and reputation management as well as thinking managers across the globe.

1

ALIGNING STAKEHOLDERS THROUGH CORPORATE COMMUNICATION

Visionary managers all have one thing in common: a strong desire to implement their ideas through actions that result in success. The ability to divine an ingenious strategy and stimulate others to move down its path is the hallmark of great generals, winning coaches in sports and, of course, highly esteemed chief executive officers (CEOs). And yet, the most brilliantly designed and calculated strategy is absolutely futile, or doomed to utter failure, if the key stakeholders that the organization depends upon do not support it.

Alignment with those stakeholders is perhaps the most important factor in how well an organization conducts its business. Total stakeholder support, which is the strongest form of alignment, gives a company tremendous leverage that opens markets, wins government permission to do business and minimizes problems. The path to this objective, however, is one that’s long, twisting and uneven, and it includes forks that can take a business in a wrong direction. Therefore, I frequently make reference to drawing up a road map to alignment. Most of the processes and ideas that follow are elements that will help an organization create that map.

Large corporations that touch on many aspects of society have numerous stakeholders, many more, in fact, than was recognized only a couple decades ago. The need to forge an alignment with employees, investors, customers, the financial media, elected officials and regulators is obvious. Today, however, that expanded list includes self-appointed advocacy groups that watch for corporate missteps; business partners and contractors; the general media, which now operate on a news cycle that never stops; and, of course, the collective power of individuals communicating through social media, which can send a small criticism of a company viral. Although companies clearly own the promise that’s made by their brand, we now know that it’s the internal and external stakeholders who own a company’s most precious asset, which is its reputation.

Building alignment implies establishing a relationship with stakeholders, resulting in at least the willingness of both entities to listen to each other’s arguments and assess the pros and cons of joining forces in ways perceived as being mutually rewarding. The ultimate goal of building alignment is to increase the perceived ‘added value’ of the company for customers, shareholders and employees, by creating synergies within the company and also between the company and its key external stakeholders.¹ Building those effective synergies requires senior executives to orchestrate the actions of managers in finance, marketing, purchasing, human resources, information technology and, perhaps above all, corporate communication.

The emphasis of this book is on the role of communication in building and maintaining alignment. Corporate communication managers can contribute substantially to the success of an organization by selecting the most appealing messages, which persuade internal and external audiences to be open minded towards a beneficial relationship. The messages crafted by communication managers have to be embedded in the purpose and overall strategic goals of the firm, and they also have to show recognition of the expectations of the key stakeholders.

This sometimes creates a schizophrenic position for corporate communication managers, as they have to balance the interests and demands of the internal dominant coalition – the few individuals who actually run a company, set its directions and dictate its abiding values and culture – versus the desires and beliefs of external groups. A communication executive must have the capability to offer serious, frank and even bold consultation to top management on potentially divisive employee beliefs or contentious external issues of reputation. What’s more, to be truly effective, the communication executive needs skills comparable to those of a lead business consultant, so that he or she commands the full respect of the CEO and other line executives. In turn, and equally important, the CEO must fully appreciate that communication is no trivial or secondary matter and, in truth, may be as important to the company’s success as a new product or highly productive factories.

The communication function does two exceptionally important things: first, it helps the executives draw up that road map to alignment, a clear and systematic set of steps that all departments of the company follow, on a path towards achieving alignment with internal and external stakeholders. Elements of the map and how it is created, interpreted and managed are found throughout the following chapters. However, in short, there are waypoints on the journey that involve intelligence-gathering, analysis, message creation, delivery and reiteration. And, although the map is very much an organized process, large companies must be inherently flexible with its use, as achieving alignment in today’s very public world takes corporations into terrain where firms of forty years ago never had to travel.

However, once that alignment is achieved, and in particular with external stakeholders, the company will have earned what I’ve come to term an unrestricted licence to operate. It is the hypothetical product of a sterling reputation and reflects the quality of the performance of the firm in general and the contributions of the communication department specifically to organizational objectives.

Indeed, in abstract terminology, the licence embodies the organization’s degree of success in obtaining and maintaining favourable relations with the permission-givers of society. It isn’t a wallet-sized card bearing the corporation’s photo and its height, weight and age. In this context, licence has an exceptionally broad definition. But, in terms in winning permits, concessions or contracts with governments, a licence to operate can be quite literal and legally binding, the loss of which could put a firm out of business. When indirect stakeholders interfere with business operations, or create disfavour among consumers, the company certainly may not go out of business, but it will suffer wounds. To carry on the analogy of the privileges afforded a motorist by society and its laws, a person convicted of driving while intoxicated could lose his or her licence or be prohibited from driving at night or be limited to driving only to and from work – adverse stakeholder relations can put restrictions on a company’s licence.

So, an unrestricted licence is perhaps an organization’s most valuable asset, not unlike an individual’s good personal reputation. For organizations that wish to earn or renew that licence, the formula shown in Figure 1.1 is the first stretch in the road map to alignment.

FIGURE 1.1 Antecedents of licence to operate

Put into words, what this means is as follows: the success of external corporate communication is the result of excellence in organizational performance, multiplied by excellence in communication, divided by the nature of the social context in which the organization operates.

The recognition of this dynamic presents the very idea of corporate communication in a very different light from in decades past. Although firms have always considered government relations a serious part of the business, ‘public relations’ was often viewed as fluff, a necessary-but-soft buffer between the company and the media and customer complaints. For many decades, it seems as if all too many executives believed that employees were lucky to have jobs, and, by and large, they were expected to perform tasks without any knowledge of how they contributed to corporate objectives, if they were even informed of the strategic intents.

Today, communicating with employees on all business matters is a vital piece of almost any major operation. Consequently, successfully fulfilling the communication executive’s role requires having a deep knowledge of the organization and an understanding of the beliefs of internal and external stakeholders.

Perhaps my favourite saying about the discipline is that the role of communication executives is foremost corporate, and only then communication. What I mean is that, in working with line executives to draw out a road map to earning that unrestricted operational licence, the communication manager must have a general understanding of the business and, in fact, put the needs of the business itself above the communication function. Although creating messages is clearly an important thing, the communication executive is much more than a message-maker, or even an image-maker. The tactical actions of communication are carried out in support of the strategic objectives of the corporation. Thus, the corporate role is foremost, and the communication element follows.

Once a strategic road map has been created, it must then be implemented. This is often done with departmental reorganizations, job shifts, new hiring programmes and the downsizing or elimination of entire departments, often done with the assistance of change management consultants who help the organization change without destroying the value of an initiative. All the physical and psychological changes, however, are facilitated through effective communication. These three basic characteristics of corporate communication in building and maintaining alignment are summarized in Figure 1.2.

FIGURE 1.2 Three starting points in creating alignment with corporate communication

Starting point 1: Gather relevant intelligence

Organizations gather intelligence in a variety of ways and using several specialists. Such experts usually identify information that is most useful for their own part of the organization. For instance, the research and development department searches for the most promising technologies and sciences that could improve the company’s products and processes, whereas the legal department keeps watch on proposed legislation. Marketing looks for shifts in consumer behaviour and emerging needs. Corporate communication executives focus on more holistic types of information, which enables them to serve the organization as a totality. Communication managers have to know in detail what stakeholders know and believe about the organization. Gathering the required intelligence from employees and external groups requires substantial investments in time and money.

Gathering and using external intelligence can be distinguished at two levels. First, continuous tracking of social issues and beliefs about the company is aimed at understanding the reactions of these key stakeholders to the overall strategy and purpose of the organization. The information serves as input for decision-making about how to position – or adjust the positioning – of the company in relationships with corporate stakeholders such as financial analysts, governments and potential employees. Second, intelligence is needed to build alignment with stakeholders on specific strategic objectives that are extensions of the company’s overall vision and purpose.

In order to implement a new strategy successfully, organizations depend on stakeholder consent, or at least a neutral position on the claims the company is making. Anticipating the beliefs and expectations of crucial external audiences requires serious investments in intelligence-gathering, both before introducing a strategy and after its launch. Especially large companies touch many segments in society; consequently, it is crucial for them to have a timely awareness of negative attitudes and even hostile behaviour of external advocacy and activist groups.

Creating alignment with external stakeholders is thus a matter of building and maintaining long-term relationships, a delicate matter indeed. Unlike with employees, external relationships are not greatly influenced by hierarchy or job security. Few external stakeholders have great emotional or financial dependency on a firm; investors, for example, can simply move their money elsewhere. Consequently, tracking the dominant trends in social issues – linked directly or indirectly to the new strategy – is one step towards developing a comprehensive grasp of the external context in which the company has to operate.

An organization also needs regularly to track its reputation at several levels, including its relative position within an industry and in each of the countries in which it does business. An essential aspect of using the intelligence wisely is frequently comparing the realities against the expectations of the company’s managers. Knowing the gaps between desired strategy and facts and figures about external beliefs and behaviours is a crucial starting point for effective interventions, both in general executive actions and specific tactical communication.

Gathering intelligence aimed at understanding the external context in which a new strategy has to be implemented requires tracking and tracing the beliefs and behaviours of crucial external stakeholders – before launching the strategy and during its implementation.

For an illustration, let’s look at Barclays, the giant financial institution based in the United Kingdom. Barclays’ strategy is, according to its website: to achieve good growth through time by diversifying its business base and increasing its presence in markets and segments that are growing rapidly. This is driven by the ambition to become one of a handful of universal banks leading the global financial-services industry, helping customers and clients throughout the world achieve their goals. Barclays applies four strategic priorities: build the best bank in the UK; accelerate the growth of global businesses; develop retail and commercial banking activities in selected countries outside the UK; and enhance operational excellence.²

Becoming recognized as a leading global financial service company requires intelligence-gathering in retail and wholesale banking to see if key stakeholders hold an opinion of Barclays similar to the company’s aspirations. This suggests that the bank also tracks the beliefs of customers, investors and government officials on whom the company depends to realize its ambit...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• Illustrations
• Foreword: A defining piece of work
• Preface
• 1. Aligning stakeholders through corporate communication
• PART I. Building internal alignment
• PART II. Building external alignment
• PART III. Key performance indicators in establishing alignment with corporate communication
• PART IV. Epilogue
• Bibliography
• Index