Internal Communication Function

2.

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The internal communication function This chapter takes a detailed look inside internal communication functions worldwide. How are they structured and how many employees work in the function? How has this changed over the years and what are the trends driving future changes?

Chapter Contents 2.1 Overview .............................. 12 2.2 Structure of the internal communication function ......... 12 2.3 Internal communication staff headcount ............................ 18

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The internal communication function

2.1 Overview This chapter takes a detailed look inside internal communication functions worldwide. How are they structured and how many employees work in the function? How has this changed over the years and what are the trends driving future changes?

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2.2 Structure of the internal communication function • The most popular area of the business for the internal communication function to be placed in is corporate communication, with 44% of respondents selecting this option (see Fig 2.1, below). • In 2003, just 28% of respondents selected this option, indicating a rise of 16% (see Fig 2.2, right). • Eighteen percent of respondents said their internal communication function sits within HR, a rise of 10% on 2003 figures. • The areas that are now less popular include housing internal communication within PR/Public affairs (down from 15% in 2003 to 8% in 2006), marketing (dropped from 15% to 9%) and within the office of the CEO (from 12% to 4%). • Where respondents replied “Other” many did so because the function was shared between

Fig 2.1 Where does the internal communication function sit?

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The internal communication function

a number of other business areas. Some typical responses include: “It’s a cross-over function between the CEO and corporate communications” “Combination of PR and Compliance” “Has its own department but sits with media, corporate affairs, marketing, HR, business development and volunteering” “Shared by Marketing and Corporate Communication/PR” • Many respondents who selected “Other” also said that individual business units had their own internal communicator or internal communication function: “Company wide internal communication is in Corp Comm, but business segments have their own Internal Comm.” “The majority of internal communications roles sit in Corporate Communication, but others are employed within individual business units” “Centrally it sits in Corporate Communication but at Branch level it is located in HR.”

Fig 2.2 Where does the internal communication function sit? (2003 data) % of respondents Corporate communication

28%

Public relations/Public affairs

15%

Marketing

15%

Office of the CEO

12%

HR

8%

Strategy and planning

4%

Organizational development

2%

Legal and corporate affairs

2%

Finance

.5%

Other

13%

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The internal communication function

EXPERT COMMENTARY: The structure of the internal communication function It’s good news to see the trend for internal communication moving into either corporate communications or HR (see Fig 2.3, below). Both provide an opportunity to build a more powerful, joined-up proposition – whether as part of an integrated communication strategy within corporate communications or an employee engagement strategy within HR.

This is borne out by fact that changes in structure are happening largely because organizations are seeing internal communication as more important and want to position their practitioners to be able to add more value (see Fig 2.6 page 17).

“Changes in structure are happening because organizations are seeing internal communication as more important.”

An ideal home: HR or corporate communication? The question of which of these two areas is the most appropriate home for internal communication always provokes lively debate. Many internal communicators instinctively resist a reporting line into HR. They see it as a function that can find itself under fire and undervalued by the business (why should internal communications be tarred with the same brush?), sometimes overly focused on process, and less “independent” than a pure communications team and therefore less able to play the middle person between employees and the business.



However, HR is the home of recruitment and induction, leadership competency frameworks, learning and development, and performance management – all areas that can help make communication a key part of every leader’s role and give them the skills to fulfil their responsibilities effectively. Fig 2.3 Where does the internal communication function sit? (2003 Being part of a strong HR team may vs 2006 data) bring the opportunity to be a part of a compelling, value-adding employee 2003 2006 engagement strategy that combines every aspect of the “people” toolkit to +16% Corporate communication 28% 44% help shape an organization’s culture -7% PR/Public affairs 15% 8% and drive its performance.

15%

But here is an opportunity to be part of a team where communication is the main order of the day. Your external

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12% 8%



Marketing The argument against the corporate communication function, of course, is Office of the CEO that it owns none of those things. It HR may also be lead by a director or VP with a PR or public affairs background, Strategy and planning who might give more of their time, attention, budget and air-time at board Organizational development meetings to the external communications areas they know best. Legal and corporate affairs

-6%

9%

-8%

4%



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Since the 2003 survey, the rise of the concept of employee engagement seems to have helped crystallize the business value of having employees who are motivated and committed, highlight the role a strong internal communication strategy can play and raise the profile of internal communications in general.

+10%

18%

4%

2%

2%

2%

2%

1%

Finance

0.5%

1%

Other

13%

9%

The internal communication function

communication colleagues are generally experts in their field and you can develop a joined-up strategy, with consistent messages, for all stakeholders. There is also a less “navel-gazing” feel, as your externallyfocused colleagues continually prompt discussions about what the media and analysts are saying about the company, what the competition is up to and what politicians and regulators have in store.

Who is valued in your organization? At the end of the day, what’s best for your function depends on what and who is valued in your organization. We all want to work for someone who sees the value of internal communication, has influence at board level, gets you good access to the CEO, and whose function is well-respected, valued and makes a difference.

“Reporting lines and structures are not barriers to an internal communication professional with a good network, sound relationships and strong influencing skills.”

No matter where you report, to be effective you’ll need strong working relationships with both the HR and corporate communication functions. Reporting lines and structures are not barriers to an internal communication professional with a good network, sound relationships and strong influencing skills. Talking of access to the CEO, one disappointing result is the reduction in the number of internal communication professionals reporting directly to the CEO. Hopefully the other consistent results we see throughout this report reflecting a growing appreciation of the importance of internal communications mean we shouldn’t read anything too untoward into this, and my comments about networks, relationships and influencing skills style apply. But it’s a bit disappointing to see, nevertheless.

Finding value in a restructure If you see value in a structural change, the challenge is that you may lose good people in the process. Communications teams do seem to be restructured more than most, and I continue to see organizations lose strong internal communicators who are searching for stability and a company that doesn’t feel the need to keep asking them to re-apply for their job every 18 months. There’s also the risk that you may lose focus on your strategy and have to renegotiate and rebuild business relationships.

Do hairdressers have the worst haircuts? Conversely, a restructure brings opportunities to refocus your strategy, bring new energy to the team, sharpen relationships, and of course makes eminent sense where the business itself is re-organizing. The rules for us are the same as those we tell our internal customers embarking on a restructure: • be clear about the reasons behind it • paint a clear and compelling vision for the new function; • focus on why your people would want to be a part of it; • make roles and responsibilities clear; • manage stakeholders carefully; and • of course, communicate, communicate, communicate. It may sound obvious, but then they do say hairdressers tend to have the worst haircuts.

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The internal communication function

Current and future structure of the internal communication function • A highly centralized model was the most popular choice for the current structure of the internal communication function (87%). (See Fig 2.4, below). • However, only 53% of respondents selected this model as one of the ways their function would be structured in future, a drop of 34%.

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• Unsurprisingly, many respondents said they didn’t know how the function would be organized in the next one to five years. • A shared service model was the only option that respondents gave more votes for a future structure than a current one (58% currently, rising to 64% in one-to-five years’ time). Fig 2.4 How is the communication function currently organized and how will it be organized in the next one to five years?

Note: the survey allowed respondents to select more than one option for current and future organizational structure.

Fig 2.5 How is the communication function currently organized? (2003 data)

Percentage of respondents Highly centralized

42%

Organized by business units

18%

Shared service model

16%

Highly decentralized

10%

Other

6.5%

Organized by geographical lines

4.5%

Don’t know

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3%

The internal communication function

Reasons for structural changes

• The majority of respondents (40%) said they plan to restructure in order to become more value adding (see Fig 2.6 below). • Just over one quarter (26%) said they were restructuring to reduce costs. • Twenty-eight percent said restructuring was planned in line with a wider organizational restructure. • Just six percent of respondents were restructuring for a reason different to the above options.

Fig 2.6 Primary reason for structural change (all respondents)

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The internal communication function

2.3 Internal communication staff headcount Number of internal communicators compared to budget size • The overall average number of internal communicators employed by survey respondents’ organizations was 13.8.

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Fig 2.7 How many employees are there in your company’s internal communication function?

Internal communication budget

Average number of employees in internal communication function All respondents ..........................................................................13.8 0 - $100,000 ...............................................................................2.8 $100,001-$200,000 ....................................................................4.4 $200,001-$300,000 ....................................................................6.6 $300,001 - $500,000 ................................................................10.5 $500,000 - $700,001 ................................................................17.8 $700,001 - $1 million.................................................................19.6 $1.1million - $3 million ...............................................................14.6 $3.1 million - $5 million ............................................................103.8 $5.1 million - $10 million ...............................................................44 More than $10 million .................................................................26.4 Note: see chapter 3, page 24 for more on internal communication budgets.

Changes to internal communication headcount • Almost three times as many respondents have seen an increase in internal communication staff headcount compared to those who have seen a decrease (see Fig 2.8, below). • Over one-third (34%) of respondents report either an increase or a dramatic increase in Fig 2.8 How has the number of internal communication staff in your organization changed over the past 12 months?

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The internal communication function

internal communication headcount over the past year. • Only 12% of respondents say the number of internal communication staff employed in their organization has decreased over the past 12 months.

Regional changes to internal communication headcount • Regionally, Asia-Pacific saw the largest growth with 43% of respondents reporting an increase or a dramatic increase in internal communication headcount (see Fig 2.9, below). • At the opposite end of the spectrum, UK-based respondents were most likely to report a decrease over the past year, with 18% reporting their internal communication headcount was less than this time last year (compared to just 11% in North America and 10% in Asia-Pacific and Rest of World). • In North America, 33% of respondents reported an increase, compared to 31% in the UK. • The Rest of World region saw most stability in headcount with 61% of respondents reporting headcount had stayed the same over the past year.

Fig 2.9 How has the number of internal communication staff in your organization changed over the past 12 months? (By region)

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The internal communication function

Reason for changes to number of internal communication employees • By far the biggest reason (45%) for headcount changes is an increased emphasis on internal communication (see Fig 2.10, below). • Other explanations given for headcount changes are due to wider organizational headcount increases (nine percent) or decreases (16%).

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• Six percent put headcount changes down to the devolution of communication responsibilities to individual business units • Six percent say the change is due to their company being acquired or acquiring another organization. • Only three percent say the change is due to decreased emphasis on internal communication. • Of the 14% of respondents who selected “Other,” the majority involved internal restructuring: “Restructure created additional business units.” “More emphasis on external comms incidentally increased attention to internal.” “Going through a change process - it is recognised that internal communications is under resourced.” “Structural changes - Internal Communication Unit created within HR department.” “New director who views external comms with a higher importance than internal comms.” • A significant number also responded that employees had left the function and not been replaced: “VP Communication left the company and has not been replaced.” “Departures from the organization. Resources have not been replaced.” “Organizational restructure with members of staff leaving and not being replaced.” Fig 2.10 What is the primary reason for changes to the number of internal communication staff?

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The internal communication function

EXPERT COMMENTARY: The size of the internal communication function It’s good news to see that so many internal communications functions are growing (see Fig 2.8, page 18), and apparently because of an increased emphasis on internal comms within organizations (see Fig 2.10, page 20). So why the emphasis? Well, I refer again to the prominence of employee engagement. Not so many years ago the term wasn’t even in our business vocabulary. Now, everyone talks about it, and the language is so much more compelling. “Communication” suggests “Senior leaders are “information.” It’s just about talking to people and sending out e-mails, isn’t seeing evidence it? Everyone knows how to do it. “Engagement” suggests something much more sophisticated and value-adding, and there are a range of models that we can add showing the link to business performance, employee retention and external value.” reputation.

Results lead to investment But it’s not just about theory and semantics. While I still meet plenty of internal communicators struggling to be seen as more than writers, distributors and conference organisers, where internal communication professionals are being given the license to operate, we’re making a clear difference to company results. Senior leaders are seeing evidence that we can add value. For example, at Melcrum’s US Summit1, a CEO and a senior leader from two large global corporations stood up and spoke passionately about the difference effective internal communication has made to their businesses. They quoted impressive “We have improvements in revenues, profits and retention rates. I’d defy any senior team to listen to the powerful way those two business leaders spoke and not compelling data at want to make the investment.

Using research as the foundation

our disposal to illustrate the value we can add.”

These days we also have sound research into the business value of communication that we can call on to help make our case. From classic case studies such as the Holiday Inn service-profit chain2 piece, to ongoing studies into the impact of communication on performance by companies such as Watson Wyatt, internal communicators have compelling data at our disposal to illustrate the value we can add if we’re given the opportunity. And data, after all, is the language of business.

The importance of leadership buy-in It’s hard to say why the UK has seen the largest decrease in internal communications headcount (see Fig 2.9, page 19). It would be interesting to know how much is down to the type of activity internal communicators are choosing to focus on (and therefore the value they’re seen to add) and how much is due to senior leaders that just don’t see the point, full stop. As that CEO said at the Summit, some leaders will just never get it. It’s certainly noticeable in the UK how many high-quality communication professionals are choosing to leave their in-house roles and take the freelance route, where they can decide upon the organizations and the leaders they want to work with.

Are you really making a difference? All things considered, I firmly believe that what will continue to make the difference, wherever we are in the world, is demonstrable proof that effective internal communication makes a positive impact on business results. Are we actually doing the things that make a difference? Do we have the courage to operate as coaches, challengers, and trusted advisers to senior teams? Are we investing in our professional development to

 

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The internal communication function

build our competence? And if we know data is what makes leaders sit up and take notice, why are so many of us apparently not measuring our results? (More of that in Chapter 5, page 45.)

 

But – it’s great to see that we’re being given the resource and the positioning to make a difference. Let’s show our companies the return on their investment. References: 1. Strategic Communication Management Summit, US, 2006, Melcrum.

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