Who is in charge: Corporate Communications or Corporate Marketing?

Transcription

1 Who is in charge: Corporate or Corporate Marketing? A European survey amongst the top reputation leading companies i Markus Will, Malte Probst and Thomas Schmidt, ii Centre for Corporate, mcm institute at the University of St. Gallen, Switzerland Introduction: In January 1999 the authors issued a survey to the 60 reputation leading companies in Europe. The sample contained the 50 companies of the Dow Jones Eurostoxx 50 index as well as additional ten leading companies in Europe, selected from their national market indices. iii The response rate was 47 per cent; amongst the ones responding were seven of the top ten reputation leading companies of the annual Financial Times Survey Names such as Allianz, DaimlerChrysler, Elf Aquitaine, Nestlé, or Nokia were, for example, amongst the respondents. In great majority, the questionnaire was answered by the Head of Corporate, usually a person on the Senior Vice President or First Vice President level generally reporting to the CEO. The initial purpose of the survey was threefold: Firstly, the increasing importance of Corporate Marketing can be regarded as a fact in the business environment of communications specialists. This implies a changing landscape for companies which is due to economical, sociological, and technological developments. These are eventually the driving key factors for a much stronger need for Corporate Reputation Management, in order to

2 provide strategies and tools for distinguishing a company from its competitors. Secondly, the increasing need for Corporate Reputation Management requires a holistic management concept for the various views of a company`s reputation and organization. The business model must apply to the necessary integration of these various and somewhat independent views. Ultimately, it includes the question of which internal and external target groups are relevant for the reputation of a company. Thirdly, the increasing pressure on a company`s Management demands answers to the responsibilities for the Corporate Marketing process and subsequently for the company`s reputation. The two departments who might want to establish that responsibility are obvious: Corporate and Marketing. On the basis of the observations made in the communications environment, the authors designed a questionnaire, which focussed on the one hand on the structure of Corporate and on the other hand on the differences between Corporate and Corporate Marketing. Therefore, the survey focussed almost solely on organizational rather than contentional aspects. iv Business Model: v For designing the questionnaire we used a business model which is currently being developed at the Centre for Corporate. The model stresses the process rather than the structure of communications. Therefore, we used the model, which applies more to the communications management process, and checked it against the organizational 2

3 structures, which exist in business. The business model comprises four aspects: Firstly, the model focuses on three levels: a) the normative level, which determines both the integration of independent communications functions into the overall central management concept as well as the coordination of all communications functions in decentralized divisions; b) the strategic level, which determines the holistic approach to marketing the reputation of a corporation; c) the operational level, which determines the actual areas of communications. Normative Level Strategic Level Operative Level Management Corporate Marketing Corporate Figure one: Level of Management Secondly, the model combines both aspects a) the marketing/branding with communications dimension and b) the corporate with product level. In doing so the model applies to the degree of centralism in organizations and to the degree of complexity derived from the product portfolio. C o m m u n i c a t i o n s M a n a g e m e n t Corporate Marketing Corporate Brand Corporate Branding Product Marketing Product Brand(s) Product Figure two: Aspects of Management 3

4 Thirdly, the model integrates all functions of communications, which are necessary for the holistic approach to all various target and intermediary interest groups. Corporate Direct external Indirect external Direct internal CA CD CS MR IR GR EC CU DE EM SH CO PD Production Capital Environment Target groups of the Reputation and Management CA Corporate Advertising CD Corporate Design CS Corporate Sponsoring MR Media Relations IR Investor Relations GR Government Relations EC Employee CU Customers DE Deliverers EM Employees SH Shareholders CO Competition PD Public Domain Figure three: Integration of Management Fourthly, the integration leads to a process, which allows the communication of the business strategy via all target groups and intermediaries. Subsequently, this comprehensive communication of the business strategy leads to a fair evaluation of the company. Business Strategy GR IR MR EM Interaction LO AN JO II EM PI Fair Value SH SH CU Interaction CU CO CO PD PU GR: Government Relations IR: Investor Relations NR: Media Relations EM: Employees SH: Shareholder CU: Customer CO: Competition PD: Public Domain Figure four: Business Model Questionnaire: The survey raised twelve issues: Questions about the structure of Corporate, including its various tools and targets; further questions dealt with the 4

5 structure of Corporate Marketing, including its relation to product marketing. Eleven questions were designed as prestructured multiple choice questions as to limit the variance in answers. One question was designed on an open answer basis. SURVEY: I. Trends: The results underline two key trends: a) the aspect of complexity is reflected by the companies: 85% of the respondents cover at least six of nine communications areas. However, b) only 5% of the companies do integrate their various communications areas. Thus, reduction of complexity of the communications process is not really achieved through the underlying communications structure. a) complexity Atomized media, fragmented markets, globalized topics, and digitized channels of communications led to four areas of specialization: defined areas for special interest media (i.e. Life Style), for special markets (i.e. IR for capital markets), for special topics (particularly in relation to political topics), and for special distribution channels (i.e. Internet or Business TV). b) integration Though, one can identify the increasing degree of complexity, one can also observe the lack of generalization. Subsequently, there seems to be an even increasing need for an overriding frame, which would overcome not only interdepartmental specialization (i.e. Finance via Investor Relations), but also intradepartmental specialization such as the above. c) reduction of complexity Reduction of complexity is one aspect for integrating these trends, the other is the 5

6 increasing velocity of target groups. Due to digitization target groups tend to commingle in a way that is new for corporate communications. Therefore, finding ways and means to establish new identifications for communities is another need for integrating communications areas. II. Results: 1. Product portfolio: How many different products or product groups do you have? Please specify your main products? The product homogeneity was subdivided into three classes: 1-2 products: - 4% 2-5 products: - 15% more than 5 products: - 81% The figures represent a very heterogeneous product portfolio. Only one company featured just one product. The vast range in product classes indicates the complexity of communicating a consistent image across all products. 2. Organization: The organizational structure of the communication areas principally has to provide a framework for an efficient and effective business model for communications management. (multiple answers possible!) a) general communications areas What are the Corporate Communication areas in your company? Media Monitoring - 83% Sponsoring - 96% Product Marketing - 33% Corporate Marketing - 71% 6

7 Employee - 100% Investor Relations - 67% Politics / Lobbying - 75% Event PR - 75% Media Relations - 100% On average, the companies had an organizational set-up for seven communication areas. The most common communication departments were Employee Communication and Media Relations. Moreover Investor Relations and Corporate Marketing had a very strong presence. The strong appearance of Political PR / Lobbying must be viewed considering the disproportionate size and high profile of the companies in the sample. A striking feature is the weak presence of Product Marketing. Only 33% of companies identified product marketing as a means of communication. It is based on the organizational tradition of most companies that Product Marketing is in the first place not seen as a communication area but rather as a sales and marketing tool. b) degree of central communication areas Which communication areas are organized on a central organizational level? Media Monitoring - 63% Sponsoring - 67% Product Marketing - 4% Corporate Marketing - 79% Employee - 12% Investor Relations - 100% Politics / Lobbying - 100% Event PR - 13% Media Relations - 83% The structural complexity of corporate communications depends decisively on the product heterogeneity, but also on organizational patterns. The degree of central coordination of communication appears to be a critical factor for organizational complexity. On average the companies in the sample organized five communication areas on a 7

8 central level. Obviously, central departments indicate their service as corporate communications platforms. In contrast, Product Marketing and Event PR are organized on the product or business unit level. In the sample 96% of the companies did structure their Product Marketing on a decentralized business unit or product management level. c) integration of communication areas How many divisions are responsible for your communication areas? 1 division - 21% 2 divisions - 16% 3 divisions - 26% >3 divisions - 37% The organizational integration of communication areas was highly fragmented throughout the sample, which indicates that organizational patterns increase the complexity of consistent communication. The average sample company had three different divisions responsible for the communication areas. In one case up to seven divisions were responsible for nine communication areas. d) responsibility for the communications division Please list the ultimate top management function in the executive management for your communication areas. All companies had a communication division, which was headed in 74% by a director of corporate communications. He or she reports in 65% of the companies directly to the CEO. In the remaining sample he or she reports to the board members for marketing/sales or strategy/planning. The high hierarchical position of the head of corporate communications clearly indicates the strategic importance of communications. However the results also demonstrated that the responsibility of communications is strongly fragmented among different divisions. vi 8

9 In most companies Product Marketing is integrated into the business units, respectively on a lower level into the product management. Only 4% of all companies integrate the central parts of their product marketing into the communication division. Moreover, Investor Relations is handled by 78% of the sample companies by the CFO and is accordingly separated from the and/or Marketing divisions. 3. Resources: The resources of the communication areas is derived from the dimensions employees per communication areas and budget. a) employees How many employees are working for the communications divisions? Coordination - 1 Media-Monitoring - 2 Sponsoring - 3 Corporate Marketing - 5 Employee Relations - 9 Investor Relations - 5 Politics/ Lobbying - 3 Event-PR - 3 Media-Relations - 14 In order to secure the empirical validity of the dimension headcount resources, only the figures given for the corporate headquarters were taken into account. On average the sample had 38 positions for communication in their headquarter. Media Relations and Employee Relations absorb most of the resources. b) budgets What is your approximate budget that is dedicated to? Excluding marketing communication, 38% of the companies spend more than 27,5 Mio Euro 9

10 for their communication division, with 78% of the companies spending more than 11 Mio Euro per year. 4. Corporate Marketing In most companies the role of Corporate Marketing is not well defined altogether. The objective of the second part of the survey was to examine the definition and role of Corporate Marketing. The focus was to find out whether Corporate Marketing had a strategic corporate management role, integrating the various communication areas in order to generate a consistent and homogenous image. Altogether 71% of the companies responded they had a Corporate department - the vast range of answers however strongly indicated how different the objectives and concepts diverge among the sample. Accordingly different is the organizational implementation handled. Most companies (61%) regard Corporate Marketing as an integral (but not superior) part of the communication division. In 22% of the companies (mostly from French speaking Europe) Corporate Marketing is part of the Strategy & Planning division and in 17% it is part of the Marketing division. Selected answers to the open-ended question on the role and task of Corporate Marketing If Corporate Marketing is separated from Corporate in your company, please indicate why and describe what Corporate Marketing is responsible for: Corporate Marketing doesn t exist We don t have a Corporate Marketing department! Corporate Marketing is responsible for the brand, while Corporate is dealing with the press Global Brand Management is responsible for all marketing matters relating to the brand. Corporate is responsible for most other communication issues. 10

11 Corporate Marketing is part of the Corporate Planning and Strategy Department. All business units have their own marketing organisations Corporate Marketing is organised as an inhouse marketing and customer management consulting unit. It works purely on a project basis for group member companies. As it has only limited staff functions it is separated from Corporate. Corporate Marketing is responsible for products. Corporate is responsible for the image of the company in general. III. Conclusion: There are two main conclusions which should be drawn from the trends and results: Firstly, further reduction of the complex requirements for communications and reputation management. Managing the company`s reputation could only be organized by the central communications management. Therefore, companies must apply their variety of communications skills, instruments or knowledge to one single source of responsibility. It requires an integrated holistic management function which supports both the communications processes within central management functions vis-à-vis all external an internal target groups as well as between centralized and decentralized management functions in view of the corporate reputation. Secondly, further co-operation with the Product Marketing function. It is easy to tell from the survey results that their is increasing need for harmonizing Corporate and Product Marketing. 11

12 Additionally, management functions must be made acceptable for both sides the corporate as well as the product side Ultimately, Corporate Marketing and Corporate are two elements of one management concept. ENDNOTES: i The survey was gratefully sponsored by GK Unternehmens- und Personalberatung, Frankfurt/Germany, one of the top Executive Search Consultants in German speaking Europe for positions in Corporate. ii Dr. Markus Will is Managing Director of the Centre for Corporate (ccc) at the mcm institute of the University of St. Gallen, Switzerland. The centre is an international research consortium and think tank for all aspects of communications management, sponsored by companies such as Bertelsmann, Merrill Lynch, Novartis, Siemens and Swiss Re. Thomas Schmidt is Ph.D.-student, Malte Probst graduate student at the ccc. iii The Dows Jones Eurostoxx 50 is a relatively new, but very broad index which incorporates companies from most industries and countries across Europe. The additional companies were selected either form the FT Survey list or from national indices, in case they had not already been included in the Eurostoxx 50. iv For purposes of clarity, the authors did not distinguish between Corporate Marketing and Corporate Branding, since branding has always been part of the marketing terminology. Additionally, the authors did not distinguish between Corporate Brand, Corporate and Corporate Reputation. Again, Brand is part of the marketing terminology, which does not follow the necessary holistic approach and could otherwise have been misleading. Corporate applies more to the management process of communications, while Corporate Reputation focuses on the management concept. For the differentiation between Reputation Management and Management see Will (1999a). On the conceptional level, the authors followed Fombrun/Van Riel`s definition (1997) of Corporate Reputation. On the process level, the authors referred to Argenti (1998) and (1997) for defining Corporate. Both are complementary for the one key objective which is the holistic approach to the communications needs of companies. v The Centre for Corporate is currently developing a business model for Corporate 12

13 and Management. See Will (1999b). vi The results compare nicely with Fombrun/Rindova (1998, page 207), who identified an Chief Reputation Officer as being responsible for Reputation Management. In our survey, some companies mentioned the Chief Officer as the person with ultimate responsibility. As elaborated in endnote ii, we consider this being more a difference in process or structure rather than a difference in responsibilities. FOOTNOTES: Argenti, P.: Corporate Communication, Boston, 2 nd Edition, Argenti, P.: Corporate Communication as a discipline, in Management Communication Quarterly, I.1998, pp Fombrun, C. und C. van Riel: The Reputational Landscape, in Corporate Reputation Review, 1997, Vol 1, Nr 1 and 2, pp Fombrun, C. and V. Rindova: Reputation Management in Global 1000 Firms: A Benchmarking Study, in: Corporate Reputation Review, 1998, Vol 1, Nr 3, pp Will, M.: Reputation und Management, in: Martini, B. (Ed), Handbuch PR, 1999a, in Press. Will, M.: Corporate, in Leitolf, J. (Hrsg.): Lexikon der Presse- und Öffentlichkeitsarbeit, 1999b, in Press. 13