Communication is not a support function/Risk Management vs. ROI

Kick off by Lindsay Uittenbogaard, CommScrumming from The Hague

In 2001, COSO, a noted advisory body on corporate governance and risk, developed a framework that managers could use to evaluate and improve enterprise risk management in their organizations.

After several high-profile business scandals and failures (e.g. Enron, Peregrine Systems and WorldCom) the calls for enhanced corporate governance led to the enactment of Sarbanes-Oxley legislation and International COSO standards became very widely used.

One of the eight components of the COSO enterprise risk management framework is communication.  The handbook defines this aspect as: relevant information is identified, captured, and communicated in a form and time frame that enable people to carry out their responsibilities. Effective communication also occurs in a broader sense, flowing down, across, and up the entity.

The reason this is significant in the CommScrum forum is because Enterprise Risk Management is becoming increasingly mainstream as a whole Management strategy.  It doesn’t view ‘core business’ as being more important than ‘support functions’.  It doesn’t cut communication budgets before sales budgets.   It takes more of a whole systems perspective, realizing that the achievement of ongoing business control (to meet changing world requirements) is a multi-faceted, inter-dependent process.

The risk management inclusion of communication is just an example.  It would be possible to talk about how communication is a central component of lots of different business modes / strategies / processes too.

If you move further on down that train of thought a little, then it seems the interests of the Communication Department are actually broader than the interests of their Leaders (CEO excepted).  Because communicators pursue objectives that are relatively long term: about connecting people to strategy, achieving change, getting the right information to the right place, and building communication competency – then they require leaders to support them by participating and exemplifying good communication practices in order to achieve those wider objectives.

Looking through the COSO lens and then thinking about how communicators need the support of their leaders, arguably more than their leaders need them,  takes me to my point: communication is not a support function.  It is, in it’s own right, a critical part of an organization.    Let’s continue to talk it towards those terms.

Mike Klein – CommScrum Saint Gilles-Sint Gillis

“Communication isn’t a support function” should go without saying, particularly with CommScrum readers.  And while the COSO approach is heartening, it actually raises a larger issue–that of how the value of communication is measured.

For too long, the communication mainstream–particularly the publishers and associations–have leapt onto the bandwagon claiming “Communication must demonstrate it’s return on investment (ROI)”, and more insidiously, “Communication shouldn’t be done that doesn’t demonstrate ROI”, and “no communicator who  doesn’t take his/her ROI demonstration responsibilities seriously can’t be considered a serious business person.”

What COSO has done, perhaps inadvertently, is move the role of organizational communication into a risk management role, where I think it mainly belongs.  While risk management is harder to quantify into a dollar figure than ROI, it reflects the role of effective communication far more effectively.  As in “you’re spending a billion dollars on a change program and you wonder whether to spend $200,000 on a fairly lean communication approach.  Which is more important–protecting a $1 billion investment or saving $200,000 and having people make the communication up as they go along?”  Or, in footballing terms, is a good defender’s real measure the number of goals he scores or the number he keeps from being scored on him?

I never knew why risk-based measurement and demonstration of communication’s value has become so toxic, particularly given that ROI measurements can often be seriously contrived.  If COSO’s thinking reopens a real debate between Risk and ROI, it would be huge indeed.

Kevin Keohane – CommScrum London

And we all know Sarbanes-Oxley has not only prevented corporate risk from coming to roost, but made everyone’s lives a lot easier, right?

Joking aside, of course communication shouldn’t be a support function as we’ve argued here many times.  At its best, a good business strategy should have its core rooted in the heart of the consumer/client/customer and arguably other stakeholders – all of which richly benefit from audience understanding/centricity.

So is it about ROI or is it about Risk Management? well, clearly, it is about both, but as Mike says perhaps the balance has swung too far.  There are always upside and downside considerations in business management, so why not comms management?

So from this perspective, looking at communication from the risk management perspective is sensible: What are the risks (commerical and cultural, personal and professional) of unclear, conflicting, inconsitent, poor communication to, from and amongst stakeholders?

My initial reaction was “you’re having a laugh” – the world of Risk Management does not beckon me very appealingly – so with the caveat that it can’t become a slave to the bureaucratic, doublespeak “CYA” model of risk management (and the COSM definition made me a little sick in my mouth – it’s a bit like saying “Money should come in to the business, and after expenses, interest, tax, depreciation and amortisation any remaining money can be called profit” – but it’s a step in the right direction…. ) then by all means, Risk Mitigate away!

Dan Gray – Commscrum Riyadh

Forgive me if I’m missing the point (I may be going stir crazy in my hotel room here), but if someone were to tell me that my primarily role as a communicator was as a ‘risk manager’ (as Mike appears to be saying above), I’d tell’em to go take a hike.

I don’t think anyone here would argue with Lindsay’s central point that comms is more than a support function, however the use of ERM to illustrate the point, frankly, chills me to the bone.

I must confess, my immediate reaction to reading this was similar to Kevin’s (i.e. yeah, right, and greater emphasis on risk management has done a bang-up job in preventing massive corporate cock-ups!). However, unlike Kevin, I’m finding it hard to move beyond that observation.

Take BP, for example, which apparently spends $100 million a year on Sarbanes-Oxley and presumably takes ERM very seriously. That hasn’t stopped it from perpetrating arguably the biggest piece of corporate comms BS in history with its ‘Beyond Petroleum’ greenwash.

Had it been genuinely committed to CR, it wouldn’t have been drilling to depths beyond those permitted, it wouldn’t have outsourced the drilling in the first place, and it would certainly have borne the extra expense of installing an automatic switch to close off blow-outs. Now, instead of a bill for $50,000 for one of those, it’s had about $30 billion wiped off it’s stock value.

And lest I digress too far with my little ‘sustainability rant’, let’s look at where that’s left the focus of the comms effort now – playing the very unedifying games of disputing high leak rate figures and Olympic-standard buck-passing between BP, Haliburton and Transocean.

That has “comms as support function” written all over it – attempting to clean up the mess that others have left behind.

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15 thoughts on “Communication is not a support function/Risk Management vs. ROI

  1. Adam Hibbert says:

    Not only SOx – in the UK, anyone subject to the FSA’s “treating customers fairly” regime has a statutory duty to listen to their employees.

    You can build a negative case for IC on all the costs *not incurred* because it’s working as it should. And it certainly looks easier to do that than to refract out the positive contribution to value that we make, from all the other factors adding to performance. BUT.

    Can I just put in a bid for the bit of common sense, in that the parts of a business that have power and clout are the parts that bring *additional* value to the table? Governance always plays catch-up to that, and fights a constant battle with the business not to get ignored. So positioning ourselves behind the banners of risk mitigation might prove to be, shall we say, a sideways promotion?

    *Posting from a city not built on Oil revenues, tee hee*

  2. Timely and well argued all round. We could bring in a bit of PR theory here — Dan’s righteous calling out of BP’s greenwash (a bit of the old razzle-dazzle: pay no attention to that catastrophic explosion, we want solar!) exposes the sort of typical after-the-fact use of communication we see too often.

    Dr. Grunig would say that BP should have changed its goals as a consequence of interacting with its publics — perhaps even a subtle change to expense management might have prevented the explosion (or perhaps not), or a bit of a change to business continuity planning could have resulted in better mitigation strategies after it occurred. The hole in Excellence Theory is the idea of mutual change being a necessary component of excellent PR.

    I like the concept of risk avoidance as a measure of PR/Comms effectiveness, however. Media relations folks earn their stripes in crises by minimizing the damaging impact of the media, but as we see, there are many crises that by their nature are not able to be mitigated.

    At National City, some media metrics were part of the ERM analysis — tone versus competitors, adjusted reach compared to competitors, etc. This placed communication in partnership with ERM, rather than subordinate to it — which I surmise is one reason, Dan, that it made you nauseated…

  3. G’day all, interesting reading again. After I finally went into rant mode on measurement this week on my site, I think it would be best if I didn’t go down that path again, something which will relieve Sean a great deal, I’m sure.

    I style myself as a leadership and strategic communicator. I do this to emphasise that I support CEO in their leadership of organisations, and organisations in their leadership of their stakeholders, especially their people and customers.

    Risk management and ROI are relatively minor players in the leadership arena and consequently get a minimal amount of my time in terms of measurement. I have found that I can quickly develop tick box measurement approaches to both that keep everyone satisfied and allows me to focus my efforts on leadership goals, including relationship building and reputation management.

    Don’t really know if that adds anything to your discussion other than to say that we have the power to define our own approaches and destinies.

    Cheers, geoff

  4. @Geoff and @Adam — really? Leadership doesn’t consider ROI important? Maybe my own experience, then, is mere testament to my ineptitude in making the business case for communication.

    Increasing numbers of leaders cast a critical eye on communication staff (as well they should, many communicators continue to focus on the ‘art’ rather than science of communication), and they ask the question, “What do I get from this investment?” They don’t like “soft” answers (perhaps that’s just a manufacturing-related or finance-related thing…).

    Lastly — a question I got just 18 months ago — “How do you know what you propose to do will bring about the results you offer?” Good thing I had research to back me up, and step-wise measures to bring to the discussion, eh?

    • Adam Hibbert says:

      Ach, Sean. An argument against embracing a risk framework isn’t necessarily an argument against doing your homework. Research is good, ‘kay?

      The point is not to lose sight of the fact that most of what you need to know about influencing senior leaders can be learned on the rugby pitch (field? ground? Oops, bookishness exposed).

    • Dan Gray says:

      Hmmm…

      So Sean, you’re saying that leaders *are* interested in ROI and are casting an increasingly critical eye on the comms function.

      And you’re saying that’s the case because, in not so many words, they don’t entirely trust the comms folk to do really great job.

      I don’t know if you’ve read Geoff’s measurement post but, if you haven’t, you should, ’cause that’s a perfect example of what he’s arguing.

      For me, your point is far less a case for the importance of ROI than it is one about the need for the comms profession to raise its game (a la one of Kevin’s recent posts on DITM http://bit.ly/bZIwhc).

      I think that’s what irks me most about the whole ERM alignment thing – I don’t see how that moves us forward. As Adam said right at the top of the comments thread, it’s a sideways move at best.

  5. Dan – thanks for the link to the great discussion. As I commented on my reply to @geoff’s post, http://bit.ly/aRdNQk — I think we all are in violent agreement on the substantive issue: communicators who cannot be good business people are useless to their organizations. In attempting to parse out what “good business person” means, we’re likely to fall short and breed misunderstanding. More to follow…

  6. A bit more on this — great communications people ought to “work themselves out of a job” by helping the organization develop its communication bone fides. Communication skills enhance any relationship, whether employer-employee or colleague-colleague or parent-teenager. When we aren’t seen as experts in what purports to be our core discipline, we’re in trouble. To your point, Dan, ROI is just one calculation of value — but for so many leaders, it’s the only one that gets notice. Hence the continued and frustrating reliance on advertising value equivalency to demonstrate PR value, and the employee engagement tidal wave.

  7. Mike Klein says:

    Hmm…

    One thing that emerges from this discussion is that while different types of communication measures have their defenders, different types of communication activities are particularly ill or well served by specific measures.

    Change communication, my longtime bailiwick, is particularly ill-served by a focus on ROI. If an organization is willing to bet a billion on new structure, infrastructure or acquisition, forcing the comms folks to make the case why their $500,000 comms budget will produce $550,000 (or, worse, forcing them to gear their comms plan to maximise ROI versus minimizing program risk) is the height of insanity, IMHO.

    Social Media–lots of companies and communication pundits are burbling about “Social Media ROI”, such that it gets put ahead of “Social Media Strategy” and more to the point “Comms Strategy” and “Business Strategy”.

    Certainly, communication has to contribute to business objectives. ROI is a significant business objective (and to some, the only one that matters, values, vision, purpose and ‘engagement factors’ not withstanding). But the demand that communicators must make immediate and linear connections with ROI at best leads to warped strategy. At worst, it leads to a lot of unnecessary risk, particularly in conjunction with the big-ticket items we often work with.

  8. Communication is clearly a critical element of risk management, but I agree with Dan that its role goes beyond just risk management. However, I think Dan should stick to communications and not try to run technical industries: I find the way he demonizes outsourcing to be rather alarming. I happen live with someone who works in one of the “outsourced” segments of the petroleum industry (in this case geophysical prospecting via data capture and analysis). The division of labor in this highly technical industry allows for a higher level of technical expertise through the effect of clusters/economies of scale. Claiming that it was irresponsible for BP to employ a specialist service provider to do the drilling instead of having its own engineers do it is tantamount to saying a communications firm can only be responsible by owning its own printing press. It’s the process and procedures that are in place for control that matter, not who actually owns the printing press.

    • Dan Gray says:

      Fair point, Kristen, if perhaps a little over-zealous in the making (how 10 words of opinion on the specific case of BP can be taken as demonising an entire industry is beyond me!).

      I take it we’d agree that, whilst you might outsource the provision of a service, what you’re not doing with that is outsourcing the responsibility. Ultimately, the buck still stops with you.

  9. Dan, agreed. Never said you demonized the industry…just outsourcing by such an industry.

  10. Sean Trainor says:

    On BP – “Never outsource a problem” is my strong belief.

    On risk frameworks – I’ve had experience of how it can be used to great effect.
    In general, comms can be very reactive and, in part, this can be down to the attitude of the people doing the job. The need for recogniton, the lack of confidence etc. Another factor is the sexy nature of issues and crisis management compared to risk management. Lot’s of people prefer firefighting to fire protection. By definition, an issue is a risk with a probability of 1 and a crisis is an issue with a more negative impact. I once worked with a comms manager that was hoping a national union ballot led to strike action as it “would be great for her CV” ironically, she went on to work for the Department for Trade and Industry. Maybe BiS will be getting some BA comms folk soon?
    The risk frameworks I’ve worked with all include “stakeholder risks” (which includes employees). If used properly it can be a great way of getting visibility of the business, acountability for mitigating interventions and recogniton at board level.
    Also, governance structures I’ve worked with have been centred around vision, values and business principles which have a large overlap with the activities in IC.
    One other advantage of effective risk frameworks is the inclusion of opportunities, i.e. a risk with a positive impact.
    In summary, risk frameworks can be great for driving a higher degree of functional integration, more effective decision-making and proactive comms across your business

  11. […] biggest piece of greenwash ever? Take a look at my contribution to the latest round on the CommScrum. I’d be really interested to hear other people’s views on BP and whether anyone can […]

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