The priorities and expectations an enterprise articulates to its investors ultimately are translated into the corporate culture.  And the corporate culture drives employee morale, product and service quality, customer relationships, and the company’s place in their community.

When all constituencies share the same general expectations, the company is like an aquarium that is in perfect balance.  But too often, that balance is lost:  Something gets exaggerated during an investor presentation because it’s hot with investors ….  An acquisition doesn’t go exactly as planned because a surprise that wasn’t discovered during due diligence was discovered after the acquisition, but that isn’t quite fully explained ….  A shift in an R&D effort is attributed to budget reasons, but the company also fails to acknowledge that personnel who had been working on the project left to go to a competitor….  A new product is going to be released late for a reason the company doesn’t want to disclose because it could hurt competitively, so a less accurate reason is cited.  Often, there are legitimate reasons for tweaking the story one way or another.  But the cumulative effect results in the loss of that highly desired aquarium-like balance of shared expectations and priorities among all constituencies.

Often, The Best Thing About A Bad Situation Is That It Gives You The Opportunity To Do So Much.

As I’ve discussed before in the article “The Good Part About Bad News: Some Random Thoughts About The Economy From An Investor Relations Perspective,” there are a number of reasons why bad news has a true silver lining.  For one thing, an awful quarter this year raises the probability of good period-over-period comparisons next year.  But the best part of bad news is that when the stock has already hit a historic low, corporations can take the opportunity to reset expectations for all constituencies, even if it means another hit to the stock (assuming the value of the stock isn’t of immediate concern because it isn’t going to be used as currency for an acquisition or some other reason).  What might be lost in short-term value is often more than off-set by stock performance that is unleashed when all components of the total corporate story get totally in line with the company’s true expectations, possibilities, values and standards.

The past few months have been extremely disruptive.  Even the strongest companies that are leaders in their industries have had to adapt to changes: maybe a change in strategy or tactics, a change in budgets, expansion plans, capital improvements, employee policies.  More changes are on the horizon because the economy and capital markets are still dynamic – to say nothing about possible game-changing political actions that loom on the horizon – and businesses will have to be similarly dynamic.  Nobody in their right minds – not investors, not employees, not customers, not the community as a whole – expects any individual or institution to emerge from this period without change.

So Why Not Exploit The Opportunity And Articulate The Realistic Change?

It’s time for a cathartic moment.  Clean the slate.  Rearticulate the story.  Even if the story wasn’t all that out of balance before the current economic meltdown, it’s at least somewhat out of synch now and may become even more so as economic, market and political events play out.  What is at risk if a new, more accurate, more robust, story is introduced?  Another dollar off the share price?  Does it matter?  What is to gain with such a more accurate story?  The benefits will include investors with more accurate expectations now and into the future, employees with a more realistic view of their own prospects, and customers with a high degree of credibility in the company.

First Step In The Process:  Change The Corporate Communications Structure

I have a fairly accurate idea of how communications functions are structured and operate within a corporation.  For twenty of the forty years I have spent in the communications business, I focused on investor relations and corporate communications (for more information, see my bio).  From 1981-1991 I worked in-house as part of the senior management teams of three public companies (two NYSE and one AMEX); and that was followed by another ten years working for scores of public companies of all sizes and business areas as an outside IR consultant.  During the entire 20 years during which my focus was almost exclusively on IR, I always reported to the most senior person in the enterprise.  Since co-founding Qorvis Communications in 2000, my focus has expanded beyond IR and corporate communications, but my views about the corporate organizational structure have only strengthened due to my wider scope of experience.  More significantly, the model we have established at Qorvis – which is a new and somewhat radical way of organizing communications efforts – has proven that there is a much better way of attacking the structural issues.  Read on.

My thinking starts with the basic premise of this article:  “The priorities and expectations an enterprise articulates to its investors ultimately are translated into the corporate culture.”  Is there any reason to question the veracity of that premise?  I think it is obvious: tell an investor that the company is going to emphasize this or that, that it is going to grow at this rate, that it is going after these markets, that it is going to introduce these innovations, that it is going to keep personnel costs at this percent of revenues – whatever the company tells investors, it will drive the corporate culture even if what the investors are told is not 100 percent true.  In fact, the less than honest statements to investors are more potent than the honest statements because they create conflicts within the corporation’s constituencies and conflicts usually become very obvious – more obvious, often, than when things go right.

If The Premise Is True, The Conclusion Is Clear:  The Communications Structure Of The Corporation Should Be Anchored By The IR Effort.  But With A Totally Different Approach.

Here’s the debate I have heard within numerous corporations when it comes to the question of who – if anyone – should take the lead with the enterprise’s several communications efforts.  I’ve articulated the logic for giving that role to the investor communications effort above.  But others have legitimate arguments:

• The HR executive will argue:  “Boss …. the employees are really what drives this company.  They are the ones who produce what we sell.  They are the ones closest to the customers.  They are the ones that will deliver the earnings we need to produce for the investors.  We need to focus on communicating to employees.  And since those of us in HR know the employees best, we should take the lead.”  Makes sense.

• What the marketing and sales people will say also makes sense:  “Boss …. It all begins and ends with the customers.  Our biggest communications expenses are for advertising and other marketing communications aimed at the customer.  If that doesn’t produce results, we have no sales and without sales the investors don’t care what we say and the employees will have no job.  The most critical communications is what we communicate to customers.  Sales and marketing should take the lead for the entire communications effort.”

Others may step forward wanting to take the lead with the communications effort, depending on the corporation.  In a start-up R&D-driven company, for example, the head of R&D may feel that they should take the lead.  In any case, the issue of the corporate communications strategy is less an issue of what messages should be taken to which constituencies, and more an issue of which interest (investors, employees, customers, etc.) is considered the ultimate driver of the communications campaign.  That becomes an issue of who coordinates the program.  And that is an organizational issue.

The Organizational Issue Can Be Solved In A New Way: Eliminate The Need To Have A “Boss”.  Instead Try A Team Approach With A “Team Leader.”

I am constantly amazed when I see that the impact of the technology advances of the past decade or so have been manifested most dramatically in terms of its impact on daily life by the way people communicate, but the entire process and business of communications haven’t changed accordingly.  I’ve made this point in other posts (particularly, “The Message Is The Medium: Prepare for a New Era of Communications Campaigns“).  Just think of it, the communications business is defined by distribution channel rather than goal.  Here is what I mean:

• The advertising function (or ad agency) is defined by virtue of the fact that space or time on media owned by others is bought for the sake of communicating a message.

• The PR function is defined differently because time or space on distribution channels owned by others is “earned” by virtue of the quality of the message.

• Digital communications uses a digital distribution channel.  Sports marketing uses some arena as its distribution channel.

• BUT, the distribution channel should really be a minor factor when developing a communications plan.  For one very simple reason:

The Goal Of Communicating Is Not To Use A Distribution Channel.  It Is To Communicate Well-Crafted Messages To Targeted Audiences To Achieve Specific Goals.  The Distribution Channel Just Gets That Job Done – It Should Not Be The Keystone Of The Effort.

I learned this lesson at Qorvis.  We founded the company on the premise that our clients really do not care how busy we were; they only care about the value we provide.  So we haven’t kept time sheets from Day One.  Without time sheets we cannot manage the company by virtue of how much time a client consumes, or how many hours a “practice group” bills, or how jammed an individual’s time sheet looks.  As a result, we do not have “silos.”  Thus, rather than saying “this is an ad account” or “this is a public affairs account,” we focus on the actual problem and then we build a team based on that, adding to the team whatever areas of expertise are necessary to fulfill the actual goal.   As a result, we can launch the nirvana of communications campaigns: a truly integrated approach.  There is a big “but” in the equation however:  a “team leader” is necessary to coordinate the entire effort and get all that expertise working together.  The way to do that is for the team leader to be focused on one over-riding question:  what are we trying to communicate to whom to achieve what goals?

Similarly, within the corporation, a unified communications team should be built rather than assign parochial communications goals to segregated communications silos.  It is dramatically more difficult to achieve the aquarium-like balance for the overall corporate messaging when the communications efforts for employees, customers, investors and other constituencies are kept as silos.

This is especially important in 2009 and beyond.  People are getting their information from all sorts of sources.  What the employee sees is likely to be seen (sooner or later, in one form or another) by investors, customers, etc.  So, all communications efforts need to be totally coordinated.  At the same time, that allows much more efficient selection of distribution channels, and in these perilous economic times, efficiency is a great asset.

A New Type Of Collegiality Is Required.

The communications team will include people who report to various executives.  The IR person may report to the CFO or the CEO.  The internal communications person may report to the head of HR.  The marketing communications people may report to the COO or product line managers.  But they must work together.  How?

There is only one answer: build one communications team and consolidate individual budgets into one.  This team should be comprised by people who bring expertise as defined by target (customers, for example) or by distribution channel (Internet, for example).  But the team needs to be led.  All efforts need to be coordinated.  Each effort needs to incorporate input from everyone else.  That way, messages do not become conflicted between audiences.

The Role Of The Team Leader

The team leader must have two essential characteristics.  They must have a robust corporate overview, and they must be able to engender the right spirit of collegiality.  The investor relations (corporate communications) pro is in the best position to have those characteristics.

• First of all, in telling the corporate story to investors, the IR person must address all components of the company because investors, while focused on earnings, ask questions to obtain a keen understanding of employee issues, production issues, sales issues, etc.  So, the IR person needs to have that knowledge, whereas the person in charge of marketing to customers does not need as robust an understanding of the corporation.  Simply put, no other person with a communications role brings the robust overview the IR person has.

• Secondly, if not directly a part of the C-suite, the IR person is only one step away from the CFO and/or CEO and Chairman.  Thus, the IR person brings the imprimatur of the most senior corporate executives to the effort.  That “prestige” is necessary to lead the team effort and encourage the collegiality within the team that is absolutely essential for the team approach to work.

The Issue Of Budgets

I said something above, almost as an aside, which is really a very serious issue.  I said that all individual communications budgets should be consolidated into one budget that would be used by the entire team.  I’ve been inside many corporations, and I know those can be “fighting words.”  So, my idea needs some explanation.

The people who do marketing communications know which publications and other media should carry their advertising and PR to customers.  The IR person is not in the position and does not have the expertise to develop the marketing communications budget.  But once that budget is developed, it should be added to a total communications budget pool; same with the internal communications and all other communications budgets.

Once all the individual communications budgets are consolidated into one budget, the entire team can determine whether certain dollars can do double duty.  For example, part of the HR communications budget for recruitment may go to trade journals where the company is also trying to get their message to customers – can there be more efficiency if both goals (sales and employee recruitment) are sought with the same ad?  Placing a sales-oriented ad in The Wall Street Journal?  Investors will see that ad also.  Can it do double duty?  If so, the company can stretch its dollars, allowing it to spend less, and/or spend the much more powerfully.

Of course, such an effort will require more than “collegiality;” it needs a level of collegiality that is rarely seen within corporations.  But it’s rarer yet to see it within a communications agency, and we’ve managed to achieve it at Qorvis –  so I know it can be achieved within a corporate setting.  How?

Like Everything Else, Success Will Require The Support Of The Boss.  How Do You Get That?

A change of the magnitude I suggest must be made by the most senior person(s) within the corporation.  How can that support be won?  The benefits are so clear that the articulation of the benefits should sell the approach on their own merits:

• Better communications overall because all messages are controlled by one team and the various “minor” tweaks to the message for one purpose or another are eliminated.

• Better use of budget because all expenses are examined to see which can serve more than one purpose.

• Greater corporate efficiency because consolidated teams working without silos generate less waste than individual silos working separately.

• Better senior management control over the communications program because there will be one point of contact (the communications team leader) that become the “go to” person in order to implement changes to any priorities, strategy, budget, etc. that may be required on short notice in turbulent times.

• Finally, investors will have accurate expectations about the company and the stock should be less volatile as a result.

I think all this makes sense and I have been around enough communications people and enough CEOs and other senior corporate execs to have a strong sense that most of them will agree with me also.  Usually the approach I suggest hasn’t been put in place has been because the timing was bad.  There is no timing issue now – except that there is a timing opportunity.  The opportunity ought to be exploited.