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Corporate Communication:
an organisational perspective
“Corporate communication can be seen as a managing perspective that treats
communication as a mode of managing and as intersubjective, concerned with ‘we’
rather than as an internal or external event or thing (‘it’ - objective). Communication
occurs within the social groupings we call corporations and markets. We need to think
in terms of consciously interacting social groups (or stakeholders), rather than the
activities and words as communication...
As van Riel (2000) has shown, the various communication specialists
operating in the corporation have a communication responsibility - to contribute to
creating sustainable corporate stories which resonate positively with internal and
external stakeholders.”
Kitchen & Schultz (2001, pp.66-7).
Kitchen & Schultz’s “Raising the Corporate Umbrella - corporate communications in the
21st century” challenges us to appreciate the increasing complexity and also growing
importance of ‘managing’ or influencing stakeholder perceptions of the corporation as a
means of enhancing the organisation’s effectiveness and consequently its competitive advantage. They argue
that “it is simply not feasible to continue to use marketing and communication approaches developed for and
in the Industrial Age in an arena of globalization, electronic commerce, instantaneous communication and the
like.” (ibid, p.3). So what is it that they see as having changed? Why do they argue there is
need to now reappraise what may constitute ‘effective corporate communication’?
“The most obvious characteristic of the interactive marketplace is that buyers,
customers, consumers, and stakeholders will have significantly greater access to
information than in any previous phase of economic and social development.
Corporations will be more visible than ever before. They will have to exercise social
responsibility to a greater extent than ever before. All businesses, irrespective of the
location of corporate headquarters, will have to build real relationships with real
stakeholders.” (ibid. p.15)
In other words, it is a combination of greater visibility of organisational activities and greater
expectations on the part of stakeholders that organisations will behave responsibly respecting
their concerns in the sense of a real relationship (i.e. demanding greater awareness of what
the needs and expectations of stakeholders might be and focusing organisational efforts to
achieve them). Corporate communication is not simply concerned with efficiently
communicating the corporate message it is increasingly more concerned with communicating
an effective message that is easily understood and can be communicated to others. Mission
statements provide the most visible example of a ‘corporate image’ through which
stakeholders can understand and communicate the goals of the organisation ... and against
which actions can be interpreted as justified and consistent in the pursuit of these goals.
“The Communicator’s old role of cascading information down from the top is being
replaced by their new job of developing core messages that everyone in the entire company
should be communicating with one another”.
Calahan (1995)
Corporate communication is by its very nature necessarily intended to serve the ‘purpose’ of
the organisation and this must lead to a consideration of the relationship of trust that is
present between the organisation and the audience for the message as this will obviously
influence the degree of latitude for ‘interpretation’ of ‘intent’ and ‘meaning’ that is still
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‘favourable’ to the organisation. The practices of many high profile organisations over the
last decade (e.g. Enron, Baring’s, Equitable Life, Railtrack, MG/Rover, Nike, GAP,
MacDonalds and so on...) whether it is activities affecting employees, customers,
shareholders, suppliers or the wider community can be argued to have resulted in greater
public scrutiny. Consequently the ‘corporate image’ is formed after taking into account
‘communications’ from a variety of sources and interpreted by an ‘audience’ that is expected
to be increasingly sceptical of the activities of big business and more demanding that it
adheres to certain ethical standards. This is particularly important if, as suggested by some
authors (e.g. Eales 1990; Melewar & Saunders 1998, 2000), it is this corporate image that is
becoming one of the key factors in determining consumer choice for an organisation’s
products and services over its rivals.
“The power of a corporate brand will increase if various stakeholders perceive the same
(or at least similar) basic values as crucial in their appreciation of the company.
Consistency avoids contradictions, limits fragmentation, increases recognition of a
company, resulting in a higher degree of familiarity and appreciation”
van Riel citing Schultz et al. (1993).
Kitchen & Schultz suggest that there is a close relationship between corporate
communication and marketing - if each stakeholder is viewed as ‘a customer’ and each
communication is seen as ‘a product’ through which to strengthen the ‘relationship of trust’
with the organisation then the organisation can be argued to be ‘marketing’ itself through its
communication with each of its stakeholder groups. However, as Gronstedt (2000) reminds
us “communicating the vision with words alone will lead management down the path of slogans and
exhortations. No matter how impeccable the rhetoric of top management is, or how frequently it is repeated,
employees and stakeholders listen to their actions more than their words. It is management’s actions that
determine if the vision becomes a force of corporate unity or a source of employee criticism.” cited in Kitchen
& Schultz (2001, p.12).
When considering corporate communication it is important to always consider the different
stakeholder groups for whom the ‘communication’ is intended - understanding the audience
and their expectations is essential to producing effective communication. A powerful
example of this is the Johnson & Johnson Credo reproduced below:
The Johnson & Johnson Credo
“We believe our first responsibility is to the doctors, nurses and patients, to mothers and
fathers and all others who use our products and services. In meeting their needs, everything
we do must be of high quality. We must constantly strive to reduce our costs in order to
maintain reasonable prices. Customers’ orders must be serviced promptly and accurately.
Our suppliers and distributors must have an opportunity to make a fair profit.
We are responsible to our employees, the men and women who work with us throughout the
world. Everyone must be considered as an individual. We must respect their dignity and
recognize their merit. They must have a sense of security in their jobs. Compensation must
be fair and adequate, and working conditions clean, orderly and safe. We must be mindful
of ways to help our employees fulfil their family responsibilities. Employees must feel free to
make suggestions and complaints. There must be equal opportunity for employment,
development and advancement for those qualified. We must provide competent management,
and their actions must be just and ethical.
We are responsible to the communities in which we live and work and to the world
community as well. We must be good citizens - support good works and charities and bear
our fair share of taxes. We must encourage civic improvements and better health and
education. We must maintain in good order the property we are privileged to use, protecting
the environment and natural resources.
Our final responsibility is to our stockholders. Business must make a sound profit. We
must experiment with new ideas. Research must be carried on, innovative programs
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developed and mistakes paid for. New equipment must be purchased, new facilities
provided and new products launched. Reserves must be created to provide for adverse times.
When we operate according to these principles, the stakeholders should realize a fair
return.”
Source: www.johnsonandjohnson.com
It will be a useful exercise for you to describe now (in one short paragraph) how you would
explain your role as a ‘corporate communicator’ within your organisation and to produce a list
of ‘stakeholders’ with whom you communicate on behalf of the organisation. Consider how
well you understand how they see their role, their goals within the relationship? How might
this understanding influence the effectiveness of your communication with them?
In the workbooks there is consideration of the many issues that fundamentally determine the
effectiveness of corporate communication - issues relating to communication theory and
issues relating to the practice of corporate communications - the intention being to raise
awareness and to provide you, as a practitioner, with a greater understanding of how a
corporate communication is likely to be received ... and why!
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The Role of Trust in Corporate Communication
“Brand is all the things a company wants you to think and feel when you hear its name, the
sum total of its communications, while reputation is all the things you really do think and
feel, the result of communications plus behaviour. Brand is something you build; reputation
is something you earn. Brand is a promise; reputation is the result of keeping that
promise.”
Holmes (2000)
An organisation’s reputation is a ‘result of keeping promises’. In other words, stakeholders
have placed their trust in an organisation to meet their needs and expectations and that trust
has been fulfilled. However, the concept of trust demands closer inspection for it is
fundamental to effective corporate communication. Trust is about confidence in the face of
risk (Lewis & Weigert, 1985), it involves positive expectations about another’s motives
(Boon & Holmes, 1991) and necessarily is about accepting a degree of vulnerability to
another’s motives (Baier, 1986) given that the trust might be ‘ill founded’ and result in
disappointment. In many ways, we take trust for granted and this enables us to carry out our
daily transactions without fear or anxiety (Limerick & Cunnington 1993; Powell 1990; Burt &
Knez 1996) and possibly this is why it is so devastating when our trust is not ‘well founded’
and why it is so hard to recover or rebuild the trust that previously existed in the
relationship. As reputation is so critical to an organisation’s success it is important to reflect
upon the nature of trust and its significance within corporate communications.
“Trust is a state of mind, an expectation held by one trading partner about another, that
the other behaves or responds in a predictable and mutually acceptable manner.
Predictability in behaviour exists, however, for different reasons, and this allows us to
distinguish between three types of trust.
First, mutual trust may exist such that each adheres to specific written or oral agreements.
For want of a better label, this type of trust may be called ‘contractual trust’ predicated on
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both trading partners upholding a universalistic ethical standard, namely that of keeping
promises....
A second type of trust concerns the expectation of a trading partner performing its role
competently. Technical and managerial competence is at issue here and this type of trust
may therefore be labelled ‘competence trust’...
A third type of trust is of a more diffuse kind and refers to mutual expectations of open
commitment to each other. Commitment may be defined as the willingness to do more than
is formally expected. This trust in open commitment is labelled ‘goodwill trust’.”
Sako (1992, pp.37-8)
Sako identifies three ‘types’ of trust but in reality there is a certain amount of each type
within any situation - for instance, would you enter into a ‘contractually binding’ agreement
with any builder regardless of their competence to do a really good job ? And would it not
be useful to know that should an unforeseen difficulty arise when doing the job that there
was a sufficient level of goodwill in the relationship to ensure that a satisfactory solution might
be found? If, on the other hand, you were wanting to buy a newspaper it is highly likely your
only concern would be contractual and ‘trust’ would not seem a very significant issue in this
situation. The critical difference between these two scenarios being the importance of the
‘relationship’ that is present within the situation - factors such as the frequency of
transactions (e.g. daily paper delivered to my home by local newsagent), the importance of
the transaction (e.g. purchasing a property), the probability that something might not go
according to plan and so on... So how is this connected to corporate communication?
"A level of trust is a fundamental element of the social fabric and a factor in all market
transactions"
Creed & Miles (1996, pp.17-18).
Obviously, contracts are commonplace between organisations and their stakeholders - every
employee, every customer (through purchases), every retailer/distributor/supplier, many
local authorities and agencies supplying utilities such as gas, water, electricity etc.,...,
shareholders, banks and financial institutions all require a legally binding contract with the
organisation. In whatever corporate communications that take place between these parties
this represents the ‘ground zero’ or ‘base line’ upon which the relationship is founded. It is
generally only when there is a real crisis that either (or both) parties resort to the ‘legally
binding’ contract - such as at a time of proposed mass redundancies, changes in working
practices, claims for damages or concerns over ethical/trading standards. It is at this point
that ‘interpretations’ of the wording reveal themselves and due legal process may be needed
to determine the eventual resolution of the actual terms of the contract. For many
stakeholders of the organisation there is the belief in a ‘psychological contract’ that creates an
expectation of ‘fairness’ that supersedes whatever may be formally and legally binding
(Knapp 1991) - an organisation might express its purpose and goals with respect to its
responsibilities to stakeholders (e.g. Johnson & Johnson Credo) in a way that is more about
‘intention’ than ‘legality’.
‘Competence trust’ is likely to be the most significant factor in choosing one organisation
and its products/services over another in those situations where there is a noticeable
difference in the quality and/or price involved. Consequently, the organisation’s reputation
for quality at a reasonable price is a critical factor in its competitiveness over its rivals and
this reputation is established and maintained through satisfying the needs and expectations
of its stakeholders. It can take a long time for an organisation to build up a good reputation
and damage to this reputation can prove very costly and potentially impossible to repair.
Granovetter’s (1992) relating of this to personal relationships makes the point very clearly:
“My mortification at cheating a friend of long standing may be substantial even when
undiscovered. It may increase when the friend becomes aware of it. But it may become even
more unbearable when our mutual friends uncover the deceit and tell one another.” (p.44)
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Of course, the influence of others’ experiences has a significant effect upon our own
decisions as to which organisations we do business with (Zucker 1986) and according to Burt
& Knez (1996) they serve to reinforce our level of trust. Where there is either a great deal of
trust or distrust present in our relationship with the organisation there is more possibility of
this being amplified after taking into account the opinions of others.
‘Goodwill trust’ is an expectation that both parties are committed to the relationship being of
mutual benefit and therefore worth working at even though this might mean ‘going beyond
the letter of the law’. It could be that a supplier is finding difficulty meeting the quality
standards imposed upon them within the contract it has with a major manufacturer and,
despite having no legal commitment to ease the supplier’s plight, the manufacturer decides to
work with them to increase their effectiveness in supplying parts at the quality, price and
frequency required - it could be because for the manufacturer this supplier ‘relationship’ is
preferable to any other it could enter into or because the ‘transaction costs’ in switching
suppliers is too great or that this ‘situation’ is temporary and offers a good opportunity to
work more collaboratively to gain greater efficiencies and effectiveness for now and the
future. For employees, it could be that ‘goodwill’ relates to an employer attempting to
preserve their career in the face of severe difficulties:
“With one of his buildings still burning behind him, the 69-year-old owner of Malden
Mills... spoke the words everyone in the [community] wanted to hear... ‘We’re going to
continue to operate in Lawrence... We had the opportunity to run to the south many years
ago. We didn’t do it then, and we’re not going to do it now.”
Milne (1995) citing “The Boston Globe” Dec. 12.
When we consider corporate communications between an organisation and its stakeholders
to what extent do these issues have relevance? As an employee do I rely upon my
contractual agreement? Is the competence of the organisation an issue (i.e. will it still be in
business in 5 years?) that I need to consider before joining or when considering other
opportunities? If I’m going through a difficult personal circumstance (e.g. moving house,
divorce, serious illness) do I trust my employer will demonstrate a level of ‘goodwill’ when
considering my performance at work (or my lack of attention to my duties) ? Similar
questions can be asked of a customer, a supplier, a shareholder and so on... And how can
they be answered? Obviously, there is an importance that the corporate communications of
an organisation with its stakeholders gives a sense of assurance that they can rely upon its
contractual obligations being met, that it has the level of competence to satisfy their
reasonable expectations for ‘quality at a price’ and will be willing and able to demonstrate the
importance of the ‘relationship’ by exercising ‘goodwill’.
Consequently, the corporate communications of the organisation need to be understood as
influencing the degree to which there is trust in the relationship with stakeholders - reports
of ‘sweat shop’ working conditions for Nike’s suppliers employees; reports of how
‘unhealthy’ the food provided in MacDonald's restaurants; reports of how ‘unsafe’ pension
provisions for many employees of many organisations are all require organisational responses
to preserve or bolster the reputation of the organisations involved. Similarly, there needs to
be a consistent ‘corporate message’ that is acceptable to the expectations of organisational
stakeholders and any failures to provide ‘answers’ to their questions is facilitating the level of
scepticism and cynicism that develops the distrust that undermines organisational reputation.
It is worth considering a corporate communication that you feel presented a good
impression of an organisation and then asking yourself why it was so successful? To what
extent did it depend upon your trust in the organisation or its products/services? How
might other reports on the organisation have affected your understanding of their goals and
activities?
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Sensemaking and its importance to Corporate
Communication
“[If] researchers and managers are to both practice and understand communication
management in a meaningful way, they need to strive to interpret other points of view, other
sets of values different from their own, other ways of making sense of communication
activities.”
Daymon (2000)
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