What are Open Communication Cultures and what effect can they have on bottom line results? Roger D'Aprix and Barbara Fagan-Smith explain why openness represents best practice.
So-called “best practice” is a curious thing. How does it get to be that way? Is it because an elite group ordains it? Is it simply a preferred way to do things? Or is it somehow an idea or an insight that rings so true that you wonder why you didn’t think of it yourself? The notion of Open Communication Cultures (OCC) fits all three of those descriptors, but that’s getting ahead of ourselves.
In 2006 we at ROI Communication convened an ad hoc group of senior communication executives that we dubbed the ROI Executive Communication Forum. It has continued as an invitation-only group of the senior-most communication leaders at Fortune 200 companies or their equivalent. Our goal was to provide a forum for discussion of the problems that the group faced in common. At our very first meeting when asked what issue they wanted to explore first, the vote was close to unanimous: measurement.
A consequence of hard times and intense cost-cutting has been the continuing need for staff organizations to justify their existence. Rather than finance a task that is seemingly peripheral to the organization’s primary mission, senior leaders have frequently chosen to outsource any activity that couldn’t demonstrate a return on investment. Or alternatively to severely limit its funding or growth.
All of that is perfectly logical behavior in an era of intense competition when the bottom line continues to be under pressure. The result for the affected departments like internal communication or human resources, for example, has been an intense interest in measuring the impact of their work on the organization’s goals. The ultimate question comes down candidly and roughly to: what have you done for us lately?
But measuring what?
As a group we began to explore what should be measured and how. Which brought us very quickly to the question of the ultimate purpose of organizational communication. Why indeed would senior leaders want to house and support a communication function? What is the payoff?
After careful research of the existing work that has been done on the value of a vital communication strategy, we concluded that there were four fundamental reasons for the existence of a team of communication experts in any organization:
- To support and guide the leadership at all levels in fulfilling its communication responsibilities.
- To encourage more open communication cultures in general so that the effort was proactive and deliberate and not simply left to chance.
- To inform and educate people to the news events and realities of the organization and the marketplace.
- To positively affect the engagement and ultimate performance of the workforce.
It was obviously critical to determine these four prescribed roles before we could determine how to measure the extent to which they were being achieved. Coincidentally, the research was also pointing the way to understanding why any CEO and his or her fellow leaders should care about the communication function. What eventually resulted was the ROI Communication Scorecard™ and a robust employee survey process to create a database so that participants could compare their results against the four standards and with those of other similar companies.
Here’s the final version of the scorecard in Figure One. Note that its four quadrants essentially prescribe the elements of strategic communication in a fast-changing and highly competitive global world. These were the things we concluded needed to be measured to determine the extent to which an organization’s strategic communications are effective.
Open Communication Cultures
Once we had defined those four standards, we wanted to dive deeper into the “what and why” of strategic communication so that it wasn’t just “a nice thing to do” but rather a vital business process. The group decided they wanted to begin by exploring the question of open communication cultures. Their logic was the assumption that openness was likely fundamental to the other three standards. (Our eventual plan is to do the same kind of investigation for the other three standards.)
What would such a culture look like in practice? And why would any organization want to institute it? Senior leaders are often tempted to keep company information close to the vest. Their skittishness derives from suspicions about the intentions of the media, continuing worries about information leaks and keeping proprietary and other confidential information secure. If there were embarrassing facts to be explained or legitimate secrets to be kept, wouldn’t a nervous leadership be foolish to reveal itself to all comers?
In the beginning our inclination was to advocate openness regardless, a position that we suspected would resonate with most communication practitioners. But we realized that for senior leaders highly sensitive to risk, it had to be a conscious choice that was consistent with the company culture and that was accompanied with a strategy and a plan.
But a conscious choice based on what? Honesty? Integrity? Transparency? That all seemed apparent, but would conservative leaders buy that alone as a rationale? Or would they see it as another example of naïve recommendations from people who simply didn’t get it. We concluded that the deciding factor had to be a persuasive business case that considered both the potential gains and the risks.
A definition and a rationale
One of our first challenges was to define and describe an Open Communication Culture in terms that were both clear and defensible. What would it look and feel like? Who would drive and shape it? After lots of deliberation and many drafts, we arrived at the following definition as a working premise:
“An Open Communication Culture is one in which information flows freely and is easily accessible to both insiders and to the public at large. Consistent with the culture and values of the organization, its leadership enables, advocates and provides open access to information in which employees, customers, shareholders and the general public have a legitimate interest. Proactive communication initiatives and dialogue with and among the various stakeholders are the primary means for achieving open communication objectives. Among the obvious exceptions to the rule are proprietary, regulated financial and competitive information or confidential employee, customer or client information.”
The shorthand version of that extended definition boils down to: an OCC is a culture in which non-confidential and non-proprietary information is actively and freely shared with both employees and interested stakeholders with the leadership’s blessing and proactive participation.
In the original research for the scorecard we had accumulated a number of studies that, taken together, made a prima facie business case for communication openness. Here are a few examples with their sources and conclusions from the studies we looked at:
- There is a cause-effect relationship between employee and customer satisfaction; (Northwestern University).
- Communicating a clear vision of the future is the number one factor in building employee commitment (Melcrum).
- A culture of communication, integrity and innovation increases employee discretionary effort (Corporate Leadership Council).
- The primary driver of employee satisfaction is effective communication (Northwestern University).
- Satisfied employees create loyal customers. A5 percent increase in customer loyalty yields a 25 to 95 percent profit increase (Author Frederick Reichheld in The Loyalty Effect).
- Internal communication is the top factor in determining a CEO’s reputation, which in turn is critical to shareholder value (Burson-Marstellar).
The fact is that open communication, engagement and performance are inevitably linked together in a virtuous cycle. And the ultimate payoff? In its 2010 report, Towers Watson found that companies that met their standards for highly effective communication had 47 percent higher total returns to shareholders over the five-year period (mid-2004 to mid-2009). It also discovered that companies with high levels of employee engagement had a return on assets six times higher than those with low engagement levels.
A new environment
While we were impressed with this broad evidence, we understood that the diversity of organizations in the real world meant that there was unlikely to be a one size fits all approach to this important issue. Aside from the critical business case, what were the other forces that argued for a more open communication culture?
For one thing the existence of unprecedented technology had made every individual a potential publisher who could broadcast his or her opinions everywhere without filters or even without much accountability. People inside or outside an organization could speak their minds with concern only for the libel laws. And even then, innocents could be tempted to say just about anything or make reckless accusations. Closed and secretive organizations would be special targets as the WikiLeaks episodes had shown. Even repressive and ruthless governments can’t suppress the freely expressed opinions of their people. Uprisings in the Middle East and elsewhere are clear evidence.
And then there is the important question of recruiting and retaining essential workplace talent. Of special concern is the younger segment of the workforce used to free access to any information that they deemed important and interesting. How would they fare in a repressive and secretive culture that operated on some version of need-to-know? The prospects of recruiting and retaining that generation reared in an age of free-flowing information, Twitter, constant texting and instant contact will be slim.
Taken together all of these facts suggest an inescapable conclusion. If senior leaders don’t manage the new information environment and determine how to open their organizations to freer information access, more public scrutiny and to the fact of information as raw material for collaboration and innovation, that environment may well do them in. Does that mean that every organization must make itself transparent? The answer lies less with transparency than it does with conscious leadership attuned to the culture and needs of a particular organization, as well as the forces that are requiring greater openness.
In the “real” world
In actual practice organizations will probably occupy a continuum from “Open to Closed” as they confront the challenges of an information society and figure out how best to meet them. Figure Two shows how a selection of organizations might line up on an OCC continuum in a normal distribution.
The two types of organizations on the left side of the curve represent a negative to cautious response to the demands and threats of the digital age. By nature these leaders and their organizations tend to be more risk averse, and that is an important part of what defines their current cultures. Their leaderships are likely to hold attitudes that range from considerable caution to outright resistance to openness.
In the middle are likely the majority of organizational leaders who see the handwriting on the wall but who are determining how best to approach the issue. What does it mean for such things as protection of proprietary and competitive information? How much openness is desirable or even prudent? Where’s the tipping point in accessibility? And how can they objectively determine where they are now so they can formulate a strategy and a plan to get to where they want to be?
On the extreme right side of the curve is the early adopter, the progressive organization that actively and early on embraces the concept of openness, recognizing the advantages in achieving its particular business objectives. Slightly to their left might be the “early majority”- those organizations that are receptive to the idea of openness but want to approach it a bit more cautiously, as their leaders debate the potential advantages and disadvantages with a bias toward change.
The point is that the openness decisions are not always going to be clear cut or easy to uphold in the face of pressures for transparency or the threat of negative consequences.
So where do we end up in arguing that an OCC represents a best practice in a changing and chaotic world? We believe that two irresistible forces are now in play. One is the opportunity to bring greater openness to the organization as a positive and proactive competitive force. The other is the threat of ignoring the power of the Digital Age – its advantages and its risks – and paying the price for that ignorance. That’s the reality that both business leaders and communication professionals need to understand and appropriately act on.
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