From Cost Center to Value Creation: 3 Steps to Transform Internal Communication

By Jim Shaffer—There’s never been a better time to elevate the internal communication function to a role that focuses less on churning out news and information and more on improving strategy execution and business results. It’s doable, but it requires thinking and acting bigger, bolder, and broader than before.

Most internal communication functions are cost centers. They spend money informing employees but have little to no impact on making money, saving money, or influencing what’s important to shareholders and customers.

Most business leaders believe that in commercial enterprises no department or function should be immune from adding value and that the internal communication departments need to step up and contribute.

“Our communication people are worried about the wrong things,” a marketing senior vice president at a pharmaceutical said. “They worry about click-throughs, opens, mentions, share of voice, awareness, and retweets. I’m worried about sales and gross margin. Where can I find communication people who can help us improve our business?”

Many internal communication practitioners are aware of their reputation. A Poppulo survey (personal communication) of communication employees last year found that many believed they:

  1. aren’t perceived as adding value,
  2. have the wrong priorities, and
  3. lack competencies needed to affect business results.

While social media has improved internal communication flow and speed in many organizations, it’s also become the shiny bright object that’s relegated many internal communication practitioners to tactical roles that have little to no effect on business performance. The main difference is that tactical work has become digitized.

Some communication functions have begun the journey. They’ve made significant improvements in quality, service delivery, sales, productivity, safety, and turnover.

FedEx was an early adopter. Their communication leaders and Dave Bronczek, FedEx’s CEO, teamed up to improve export sales. The effort was precipitated by a communication assessment revealing that FedEx leaders and the company’s communication team wanted to work more closely in order to improve business results. Their initial effort was in Los Angeles, where they reduced or eliminated communication breakdowns that were impeding export sales. In 90 days export sales increased 23 percent. The investment generated a 1,447 percent return. They replicated the effort in five more FedEx operations and increased sales by $6.1 million while generating a 1,660 percent ROI. Similar FedEx communication projects reduced freight claims paid in their Memphis hub by 25 percent and cut truck accidents in Houston by 54 percent.

At ConAgra Brands, the CEO and his communication leaders adopted a communication value proposition that stated: “Our work will help the company make money or save money. If it doesn’t make or save money, we won’t do it.” ConAgra Brands reduced workplace injuries by 35 percent in one Midwest U.S. operation cut damage and improved productivity by 65 per cent and 16 percent respectively. The successes became a model for the way ConAgra managed communication company-wide.

Similar gains were made by communication professionals in consumer goods, manufacturing, high tech engineering, diversified technology, software engineering, logistics, and food products.

Successes came from internal communication people thinking and acting bigger, bolder, and broader, with a focus on results, not just activity. Here are three steps to get started:

1. Manage communication as an integrated system.

Historically internal communication managed formal channels, from town hall meetings, newsletters, brochures, blogs, speeches, social media, video, and digital signage, among others. But that’s only a small piece of an organization’s communication system. It’s also the least potent piece when it comes to driving results.

Communication represents all the ways we send, receive, and process information. It’s the things we say and the things we don’t say. It’s what we do and what we don’t do.

It includes what leaders say and do. It includes systems and processes that communicate what’s important and by what is measured, rewarded, and recognized. Work processes, technology, learning and development, and the environment communicate in various different ways. We’re bombarded daily by thousands of signs, signals, cues, and messages that tell us what’s important and what’s not. We factor in the sum total of all the messages we get in a day and then we act.

  • Information drives our decisions;
  • Our decisions drive our actions; and
  • Our actions drive the results we create.

The communication system needs to be managed as an integrated system, not as a collection of formal channels that might or might not come together to drive the right results.

2. Measure what matters.

Traditional communication functions measure the number of tweets, retweets, page views, campaign effectiveness, content consumption, readability, and channel usage, to name a few.

None of these reflect the state of our businesses. None of them matter to shareholders, customers, or business leaders. Adopting these traditional measures disconnects internal communication from the business. This is why the people in the 2017 Poppulo survey said that communication people often have the wrong priorities.

Communication functions should focus on measuring and improving business measures that are included in the strategic plan and the organization’s goals. These include customer net promoter scores, customer retention rate, revenues, cycle time, gross margin, operating income, order fulfillment, quality, service delivery, cost, scrap, re-work, yield loss, and productivity.

Identifying and tracking the right measures enables internal communication people to identify where communication breakdowns cause under-performance, surface root causes of the under-performance, eliminate the root causes, and improve results.

3. Shift from a cost center mentality to a value creation mindset.

Shifting to a value-adding function requires four steps. They are:

1. Get your leaders on board. As Kristin Kelley, vice president of Global Communications at O-I, the glass manufacturer, said, “Leaders want to make their numbers, so when our leaders saw others getting the kinds of performance gains we were able to help them generate, they wanted more of the same.”

2. Assess your current skills and activities. Begin with assessing your current competencies and those you might need for the new role, but don’t yet have. Traditional communication departments typically possess skills and knowledge related to distributing news and information. Performance-based communication departments possess similar skills but have a deeper understanding of business, finances, leadership development, change management, and consulting/business adviser skills.

Do a value-to-cost assessment of your current communication activities. Compare how well they’re performing against their cost. You will learn volumes about the productivity of your communication investment.

3. Build a business case with a value proposition that clarifies what you will and won’t do in your results- and value-driven role.

4. Now start improving critical results in areas that matter to the business. Ask these questions to get you started:

  • Where are the best opportunities to improve performance by better managing the communication system?
  • What’s the size of the opportunity?
  • What are the root causes of the under-performance?
  • What will it cost to improve?
  • Is the ROI acceptable?

Image thanks to Annie Spratt on Unsplash.

No ratings yet.

Please rate this

Shopping Cart
Scroll to Top