Corporations are like communities: each with its own culture, structure and organizational hierarchy. And for CEOs, the ability to communicate vision, culture and values is a necessary leadership skill, for they are far more accountable for every action a corporation takes than ever before.

As a result, internal, or employee, communications is giving media relations a run for its money as the hot spot – the sexy, exciting area of communications work. IC is now likely to be only two or three positions away from the CEO. Communications pros drive the function and usually have good access to the CEO’s ear and time.

CEOs understand that in order to communicate objectives, internal communications must be a priority. It’s not just a means to ensure the employee population is invested in the agenda at the top, but also the pipeline for information to flow back to the C-suite. “IC plays a huge role in shaping culture,” said Linda W. Boff, director, employee marketing at General Electric in Fairfield, Conn. Ed McCraw, vice president, employee communications at Verizon in New York, agreed. “Really good IC drives cultural change, and is an advocate for such change.”

Ideally, effective IC helps CEOs implement their agenda, creates a culture where employees become engaged with corporate goals and values, and keeps management in tune with what’s going on around the company. “It’s a way to motivate, to manage, and to shape the company’s reputation,” said David A. Ruth, vice president of corporate communications for Merck & Co., Inc. in Whitehouse Station, N.J. And it helps the bottom line as well: “Having engaged employees leads to stronger business results,” said Ron Fuchs, senior director of employee and executive communications at Agilent Technologies in Palo Alto, Calif.

A corporation’s commitment to informed relationships with its employees is at the heart of good internal communications. “It’s sort of like anthropology – you have to understand what a culture is and how people interact,” said Nick Balamaci, vice president and director of internal communications at Citigroup in New York.

Anthropology? Balamaci isn’t off the mark. How corporate management approaches and communicates with its employees is just as important as what they are told. For IC is far more than just spreading news. “The main mistake I see is that IC people want to report news,” McCraw said. “We want to interpret the news – to help employees understand our strategy and how they fit into it.” And help them fit into it, if need be.

All of that feeds into creating employee engagement – keeping them interested in the business and their roles within – and transmitting the values leadership seeks to convey. “Most companies have three groups of people,” McCraw said. The first, he explained, is “highly engaged, thinking about the business. The second is checked out, disillusioned, looking for another job. Those in the middle are neither engaged nor disengaged. It’s that middle group we want to reach and influence, to show them why it’s important for them to be engaged, or get re-engaged.”

Gary Grates, vice president, communications/North America at General Motors in Detroit, said the company is quite familiar with the kind of havoc that can result from unengaged or disengaged employees. A 1998 strike, which resulted in 54 days of lost production and $2 billion of lost revenue, forced GM to realize it lacked good relationships with its employees. G. Richard Wagoner Jr., GM’s chairman and CEO, has since made IC a priority, and a broad set of procedures are now in place to keep employees engaged with the company and its goals.

Each GM plant in North America has a dedicated IC person who follows a set of monthly procedures to make sure two-way communication – home office to employees, and employees to home office – is constant. This commitment to communications and employee engagement has born fruit. “A few years ago, the plant worker mindset was on infrastructure problems,” Grates said. “Now, at one of the monthly State of Business meetings, you’ll hear ‘What is our small car strategy?’ They’ll even get up on a Saturday to check out the cars in a local showroom – ours as well as our competitors. We’ve opened them up, and it’s opened us up as well.”

TUNING IN

Typically, a corporation of significant size will have a dedicated IC area within its communications department. Within it will be at least three distinct sub-areas, with responsibilities such as running the intranet, creating leadership and communications tools, writing articles for and editing the employee newsletters or magazines, writing memos, scripting, filming and broadcasting videos, training managers to communicate effectively, and setting up ways for the CEO to reach employees directly.

That’s not even all of the work. IC is also a strategic hub – the place that determines how to get the message out so that it will be taken in. Coordination with media relations and human resources teams is essential, as well as with IC professionals in non-communications business units, to make sure all messages are in strategic alignment. “You can’t shoot from the hip – you have to do IC as a piece of the structure,” Balamaci said.

An increasingly important piece of IC is training management to communicate to the core employee base. At General Electric, Verizon and other firms, the IC team created toolkits that GE’s Boff described as “meetings-in-a-box” – all of the ingredients, from case studies and talking points to the agenda – that a manager would need to hold an employee meeting on a specific topic. “For some managers, communication comes easy – they do it without thinking of it – but others can use extra tools and support,” she said.

IC may not necessarily be housed in communications, although that’s more frequent these days. At The Gap, for example, which is undergoing strategic realignment under its new CEO, IC was moved from corporate communications to human resources, “so that we would be closely aligned with the change efforts,” said Jill Nash, vice president, internal communications at the San Francisco-based company. 

“We should not get wrapped up about where we sit,” said Agilent’s Fuchs. “What’s most important is to have a strong partnership between all of the functions.”

When a company gets hit with a lot of change due to public policy issues, as pharmaceutical giant Merck has been over the past few years, internal communications is an especially important piece of its strategy. “People come to work at Merck because they want to make a difference, but the industry has come under attack because of the cost of drugs,” said Merck’s Ruth. “Employees are our first line of communications, and have to be at the center of our reputation management strategy.”

But companies, said Maril MacDonald, founder of the business strategy consultancy Matha MacDonald in Chicago, “need to become more receiver-centric to provide information on demand – when the employees need, rather than when the corporation sends.” Some corporations have done this by providing archives of articles and research reports posted on the intranet, on-demand video clips and the like.

But there’s still no guarantee employees are actually going to access these items, or even pay attention to what is being communicated, let alone respond to it. “The hardest piece is building two-way communication,” Verizon’s McCraw said. “They don’t feel we have done enough to give them forums for feedback and opinions.”

And there’s no guarantee the information needed most will flow back to IC. “It has always fascinated me how fast a good rumor will fly,” said Robert W. Turner, senior vice president, corporate relations at Union Pacific Corporation in Omaha, Neb. “How do we create an environment where information is pulled through the system? How do we get to these folks in a meaningful way?”

That’s ironic, as IC has long been regarded as, in Nash’s words, “a propaganda spin machine.” The “2004 Spin Report,” a 2003 survey by professional services firm Towers Perrin on corporate communications and employee trust, found that 55 percent of 1,000 random employees surveyed believe their companies try too hard to spin internal stories, and believe their employers are “least truthful when communicating the fundamental ‘deal’ between the company and its employees – what the company needs from its employees and what employees can expect to receive in return.”

One way to build trust in the IC channel is to guard it carefully. “When you put something on, make sure it’s useful and informative – frivolous communication cheapens the value,” Balamaci said. But that doesn’t mean one can’t use humor, Boff added.

Ruth said it should also be consistent. “You want it to reflect what they’re reading and hearing from other sources.” And it should tell the truth, whether the news is good or bad. “Raise the tough issues. Engage in an honest dialogue.” Nash said. “Give employees a forum to voice things.”

Above all, said Larry Mark, director of employee communications at Merrill Lynch in New York, IC should be “timely, real, honest and credible.” To Balamaci, IC is failing “if our employees get information about Citigroup from newspapers. Your Aunt Sadie shouldn’t be the one telling you what’s going on here.”

Bottom line, though, “Communicating with employees should have the same respect within a corporation as communicating with customers or the press,” Boff said. GM’s Grates agreed: “If you want to know how a company manages, look at how it communicates. And vice versa.” Or, as Merck’s Ruth put it, “If your employees don’t get it, the rest of the world won’t either.”

THE FUTURE

Finding ways to expand IC offerings isn’t always the top initiative, but executives still have their wish lists. Agilent, for example, has a large, extensive and many-lobed IC department, but Fuchs would like to see a bit of intellectual expansion. “I think there’s a place for printed materials,” he said. “I would want to have an in-house journal for managers with high-level content – kind of an internal Harvard Business Journal.”

Merrill’s Mark also would like to have more interactive elements, such as making senior managers available online in real time and also expanding the use of technology, particularly video and audio webcasts. Citigroup’s Balamaci, meanwhile, said his department is currently negotiating for a budget to develop a live desktop video channel for employees, so that they can access video files on demand – a tool Verizon already makes available to its employees.

Grates, however, is not looking for more tools, but rather more awareness at the board level of the strategic role of IC. “The IC game is being played on a more strategic level,” he said. “I’d like to have regular board-level briefings to help them understand how internal communications is linked to leadership. It would elevate it to a level where proper funding and attention would be discussed, debated, and acted on.”

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Amy Friedman is a contributing writer to Positioning Online.

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© 2004 Heyman Associates, Inc.