Design and Placement of the Corporate Communication Function

The need to centralize or decentralize usually comes down to weighing the considerations of company size, product, or service diversity, and geographic spread. For a company as diverse and large as General Electric, for example, the question was moot. Such a huge, diverse organization involved in activities as different as aerospace and network television cannot possibly remain completely centralized in all of its communication activities. Perhaps then, the best structure for large companies is some combination of a strong, centralized, functional area plus a network of decentralized operatives helping to keep communications consistent throughout the organization while adapting the function to the special needs of the independent business unit.

Corporate Communication Function

Despite its advantages, the mix of centralized and decentralized activities presents problems for organizations in terms of reporting relationships. If the communications operatives report to their local managers, as they inevitably would, they will run into problems when the manager from headquarters disagrees with an action taken at the local level. On the other hand, if they report to headquarters, the operatives may not fit in with the rest of the organization at the local level.

These problems can often be handled creatively using some combination of both a strong centralized control for all affairs related to communications through out the company and the participation of the local operatives who, as in the case of General Electric, act as “reporters” back at headquarters. The problem of centralization versus decentralization across business units will be more or less important depending on company size, geographic dispersion, and the diversity of the company’s products and services.

Companies have also begun to recognize the need for different talents in communication experts at the corporate and operations levels.

The former increasingly brings more of a strategic perspective to planning, goal setting, recruitment and development, issues and crisis management and evaluation of activities across the organization… personnel “in the field” are ever more likely to focus the bulk of their time and other resources and tactical implementation. In addition, they are often perceived inside organizations to have a more intimate knowledge of the company’s product lines and capabilities as well as to be closer to the marketplace when compared with colleagues at headquarters.

One final issue of centralization versus decentralization needs to be addressed as well. In addition to the communication challenges of companies with multiple business units spread throughout the world, companies looking to build their corporate communication function need to worry about how decentralized communication activities are at the corporate level. Often, some of these activities are already handled through another functional area. For example, the employee relations function could be handled within the human resources department and the investor relations function could be included in the treasury department, even though all of these activities require communication strategies connected to the central mission of the firm.

Recent surveys of major companies have shown that most of the top corporations in the United States place the responsibility for employee communications in the corporate communication function. This trend suggests that companies today realize that the internal constituency is not very different from external ones in terms of the need for sophisticated communications techniques. To ensure that messages sent to employees are closely aligned with those sent to external constituencies, employee communications should be tied very closely to an overall corporate communication strategy.

Increasingly, the corporate communication department gets involved in employee communications that pertain to the company’s overall mission and strategy, and the human resources department deals exclusively with employee issues, such as information about training programs or complicated health and benefits packages. For example, if employees read in the press about increased competition from foreign competitors, the corporate communication department should get involved in giving employees an idea of how senior management sees the problem and plans to respond to meet the challenge. This kind of communication helps employees feel more like insiders and can motivate them to serve as goodwill ambassadors of the firm to its outside constituencies.

Ideally, both the corporate communication and the human resources departments would have someone in charge of communications to employees. The person in the corporate communication department would obviously report to the vice president in charge of that area, while the person in the human resources department would report to his or her respective vice president. Both should have a dotted-line relationship with the vice president in the other area to ensure that each department’s goals are fully met in all communications and to keep the lines of communication open between these two critical functional areas in a firm.

Financial communications, which is also called investor or shareholder relations, has emerged as the fastest-growing subset of the corporate communication function and an area of intense interest at all companies. Traditionally, financial communications has been handled by the finance or treasury department, but the focus today has moved away from just the numbers to the way the numbers are actually communicated to various constituencies. For this reason, although financial communications usually “reports to the Chief Financial Officer at most firms… this function has closer ties to corporate public affairs in many cases today that it did 10 years ago, especially in shareholder communications and media relations.” Financial communications deals with securities analysts on both the buy and sell side who are often also a direct source for the financial press, which this sub-function cultivates, as do the company’s experts in the media relations area. This area also involves direct contact with investors. Every public firm must produce financial statements and annual reports, which are produced by financial communications professionals. Given the highly quantitative message involved in all of these activities, as well as the need for individuals to choose their words carefully to avoid any semblance of transferring inside information, investor relations should be a coordinated effort between communications professionals and the chief financial officer, comptroller, or vice president for finance.

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