When leaders miss the bigger picture: why investors and egos kill corporate communications

4 years, 11 months ago

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A myopic focus on investors may result in extremely naïve communications practices and at worst may act as a spur to unethical behaviour. By Richard Northcote.



Share price is important. Not for one second do I doubt that. 
 
If any organization fails to deliver a suitable return on investment, it will fail to attract capital and become an unsustainable ageing monolith that will eventually crack and disintegrate. We have seen it many times before.
 
The myopic organization
 
Investment is the key to driving corporations to achieve growth and thereby ever improving returns. Without investment in technology, equipment, expansion, or people, companies will fail. The same is true for regions, countries, governments and all other forms of organization. 
 
The battle to attract investment, or funding, is fierce and often forces corporate communications functions to focus the vast proportion of their attention on this particular stakeholder group. The result, unfortunately, can be extremely damaging to corporate reputation and of course reputation is a critical aspect of an organization that actually attracts investment.
 
This paradox is not an exclusive problem for publicly listed corporations. While rewarding shareholders is necessary for continued growth in listed companies, private enterprises must attract continued investment from private lenders, banks, or through bonds, which often results in these stakeholders becoming the only ‘real’ audience of interest to the individuals who comprise their boards. 
 
In the public sector, or in NGOs, the story is slightly different. Donations, or investment if you like, is raised from a much wider group. The contributing audience is often the general public who, in the case of many governments, is attracted to vote when the messages they receive balance with the tax they pay. If they don’t agree, they cannot withhold their contributions to the authority; but the time will come when they can change that authority. 
 
NGOs rely heavily on public contributions and other funding mechanisms and their messages are targeted to attract this income flow through the beliefs and consciousness of this audience.  They compete ferociously for their share of the pie through targeted messages via a growing number of channels. If they fail to attract commitment, they disappear and are replaced by another ‘nobler’ cause.
 
It may be fair to say, therefore, that both the Public Sector and NGOs aim to spread the messages to include the majority of stakeholder groups, with the specific intention of attracting a large number of people to their cause.  The same cannot be said of many corporations.
 
A typical stakeholder grouping for any business corporation would include employees, customers, suppliers, investors, authorities, media, interest groups and local communities. When investors become the centre of attention, there is every likelihood that other groups will be disillusioned by messages designed to focus solely on financial performance in order to ensure a continued flow of capital. 
 
As the business environment changes, corporations will jump on the bandwagon to proclaim their support for the environment, Corporate Social Responsibility, or whatever is ‘in vogue’, though not to say unimportant, at that particular time. But we know that few will take the lead in these areas if there is any unnecessary risk to the bottom line. We also know that few will show real commitment to these pressures as they balance their positive words with bystander actions in order to appease investors.
 
There are those who sit at the top of large multi-nationals, or even corporate communications functions, who see communications as a natural process of saying what they want to say. ‘I will speak and they will listen,’ is often their motto. 
 
How can such a complicated puzzle, the pieces of which are constantly changing due to internal and external pressures, be solved through a general brochure, pretty annual report, company website or intranet? Or, most frighteningly of all, a simple press release that offers nothing but corporate blah? All these tools are designed to deliver specific messages to specific stakeholder groups and none of them alone will ever be all things to all men.  
 
It becomes obvious that there are many ‘leaders’ who do not see the full picture, nor partake in the deep thought process that results in each of the stakeholder groups being addressed with the specific messages they need to receive to ensure what every corporation should be trying to achieve: a positive and strong reputation.
 
Of course investors need proof of good returns before they empty their savings into a corporation, but just as important is the reputation assigned to that particular corporation. For without a positive market reputation sitting alongside a healthy financial performance, a wise man will realise that the returns are unsustainable.
 
It is this myopic focus on investors that results in extremely naïve communications practices which can eventually drive leaders to deliberately change balance sheets or ‘miscount’ their production output. But before they get that far, they will already have ignored logical and valid arguments contrary to what they wish investors to believe. They develop a mentality that assumes that theirs is the only voice being heard and trusted by investors. In truth, the opposite will ultimately prove to be the case. The ego has risen.
 
The deadly ego
 
Corporate communication is much more than mastering the art of public speaking or scribing a paragraph in a memo.  It is not about developing a casual comfort in front of camera, nor is it about producing an attractive website. And it is certainly not simply about pushing forward a corporate intranet. Communication in a corporate context is a major part of leadership. It is about who you are and what you do.  It is the respect you pay and the influence you develop among others.  It is the integrity of aligning your behavior with your message.  It is listening intently, not simply listening. It is building relationships of trust with people you rarely see and don’t know by name. 
 
Successful corporate communication is about doing all of this with every audience that matters; or just as importantly, will matter; every time it needs to be done. It requires honesty – for you cannot simply pretend to be someone or something you are not. 
 
Of course a perception can be created for an individual or an organization, but it cannot be sustained through ‘spin.’ To start something ‘spinning’ requires minimal effort. But as every physicist will tell you, it will eventually stop unless you keep expending ever more tiring effort. It is much simpler to be what or who you are; not what or who you would like to be, or feel you should be.  The latter may be rewarding for a limited time, but the former is much more sustainable and rewarding in the long run. 
 
Spin has no place in Corporate Communication. To address every stakeholder group with the information it needs in order to enhance a corporate reputation takes a much greater understanding; and a lot more work.  However, like many challenges, the work undertaken in the beginning will be directly reflected in the end result.
 
Unfortunately all of this can be spoiled by an individual, or a group of individuals, who are not interested in the end effect; only in themselves and their position in society.  We have seen it many times. 
 
This is as true in the corporate world as it is in the public sector. There are many occasions where captains of industry refuse, have refused, and will refuse, to listen – never mind listen intently – to the internal and external voices that surround them.
 
What is often forgotten by those who view corporate communications as a simple process is the fact that the sender of a message is never totally in control of the situation when it comes to managing effective external corporate communication. They rely on others to spread the corporate message and often cannot accept the fact that it is not they who decide what information is worth disseminating and what is not. 
 
It may be that some are deluded into believing that their every utterance has a value to each stakeholder group, but it is more likely that they fail to take into account the needs and wants of the various audience groups that make up their stakeholders.  Perhaps they only see the one group – investors – in the first place. And there are those who would argue that legally that is exactly what they should be doing. I am very aware that this argument – accurate in law – has never ‘gone away’ and, in fact, is gaining strength, partly in reaction to the rise of private equity.
 
While egos can often trigger a mad public argument between corporate captains; which is, by the way, newsworthy, it can have a more damaging corporate result. Too often an unnecessary quote or message can dilute what may have been a reputation enriching message in the first place. When an ego contributes to the negation of a reputation, it contributes to a drop in the bottom line. And if the investor finds this out, the leader will find him or herself no longer talking down to their audiences.
 
 
Author’s Details
Richard Northcote, Chief Sustainability Officer and Executive Committee Member, Bayer MaterialScience AG, has a wealth of experience in construction, journalism, communications and chemicals. He has lived and worked in a variety of European countries, the Middle East and Asia. He has worked in the chemicals industry since 1996 and joined Bayer MaterialScience in 2009, where he serves as Chief Sustainability Officer, a member of the company’s Executive Committee plus is also head of global communications and public affairs.
 
Richard Northcote is a Steering Committee member of the Oxford University Business Economics Programme (OUBEP); an advisor to the Board of the European Institute for Industrial Leadership (EIIL) and a member of the Editorial Board of Reed Business International´s chemical magazine ICIS.
 
 
 

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Richard Northcote

Richard Northcote, Chief Sustainability Officer and Executive Committee Member, Bayer MaterialScience AG, has a wealth of experience in construction, journalism, communications and chemicals.

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