"It's My Way or The Highway" - An Inward Case Study

It's always at this time of the year where I reflect on the year's best examples of companies that have set (or tried to) implement strategies based around internal branding and team alignment. Even though this year we saw some big names take on tough internal branding issues, one of the best examples that keeps coming to my mind was one which we reported on 2 years back at Ford Motor Company. Although it involves the actions of a CEO who is no longer serving that role, the principles behind the story hold true for many companies today. In case you missed the original report, here's a copy below.

Also, I want to take this opportunity to wish everyone a very happy holiday from all of us at Inward Strategic Consulting. We wish you peace and prosperity in the New Year and hope to work with you soon.

-Allan Steinmetz

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An Inward Strategic Consulting Case Study Example:

"It's My Way or The Highway"

Ford Motor Company CEO Bill Clay Ford tells employees he's serious about changes, but is this the right strategy to get your employees enrolled and on board with a company's new vision? Inward Strategic Consulting takes a closer look at the actions and reactions of this aggressive strategy.

Last week, William Clay Ford Jr., sent a company wide email and voice mail to all employees stating that those who could not support the company's drive for innovation should find something else to do.

"Anyone who thinks or attempts to convince you that it's business as usual at Ford is wrong and would best serve us all by pursuing their interests elsewhere," Ford said in an audio e-mailed message. Ford continues in the email message, "Our heritage of innovation must be reclaimed and renewed or the greatness of our company will become part of our past. It's that simple."

According to Bryce G. Hoffman of The Detroit News, which first broke the story, Bill Ford has said he wants to marshal all of the automaker's manpower and resources to transform it into a more innovative and environmentally friendly company.

But will he encounter some skepticism from employees who have been through numerous restructuring efforts already?

Let's look at the premise, action and reactions of this aggressive strategy:

Premise:

• Ford Motor Company is going through a major restructuring, and they need to have everybody on board.
• Bill Ford's comments come as the automaker prepares to eliminate 4,000 salaried positions by the end of March.
• Mark Fields, recently promoted as head of Ford's Americas division, sent an internal message to employees calling on staff members to fall in line behind Bill Ford's banner of "innovation".
• In the accompanying e-mail, Bill Ford told employees Monday that the message was the first in what will be a series of less formal communications he has dubbed "Ford on Ford."
• In the message, Ford stressed that the company's efforts were not a case where it would "quickly declare victory and move on." Nor was the effort simply a marketing campaign, said Ford, who talks about the push to be innovative in the company's latest television ads.

Actions by management:

• "Getting the right people working together as a team will be one of my first priorities," according to Mark Fields. "The most successful businesses in the world have a group of individuals that know how to create as a team."
• Bill Ford also announced a new Web-based system that allows employees to submit ideas directly to his senior management team. It asks employees to classify their ideas as technical innovations, business improvements, operational efficiencies, competitive advantages or ways to improve relations between the company and its workers, suppliers or customers. Some industry insiders report that the Web site also asks employees to rate the potential impact of their ideas. Are they on par with the sort of innovations that made Ford great? Will they change the lives of consumers? Will they open new markets? Will they lead to industry-firsts or improve Ford's competitive position? Ultimately, employees reach a screen that lets them type in an outline of their proposal or submit a previously prepared document.

Reactions:

• According to David Cole, chairman of the Center for Automotive Research in Ann Arbor, these dispatches from the top are seen as "a renewed attempt by the great-grandson of Henry Ford to assert control over the company that bears his name."
• Creating a system that allows employees to directly submit ideas to senior management can have obstacles. "Sometimes our bureaucracy can be ponderous and not always receptive to a different approach," Bill Ford said.
• "The bureaucracy at any company is a tremendous challenge. You want to shake it to the roots in a period like this. That's what he's saying: We're going to change." said David Cole.

My question, "Is the Ford Motor Company doing and saying the right things?" A good part of my professional life was tied to the Ford Motor Company when I was a Senior Vice President at Y&R Detroit working on the Lincoln-Mercury and the Ford corporate advertising accounts. I have great affinity for their management and products and believe it is in our economy's interests for them to be successful.

So I decided to offer some observations, advice and insights from our seven years of change management experience to guide Ford go down this new path.

Personally, I think they are on the right track. However, like any good change management initiative, they need a framework and process to manage this communications dilemma.

• First and foremost, Ford is correct in having their CEO, William Clay Ford Jr. lead the initiative and be the internal and external spokesman. This strategy demonstrates internally that the senior management is engaged, serious and involved in this change and has not abdicated or delegated the task to more junior executives. As a result, employees will view the change as more substantial, real and endorsed by management. However, sometime in the future Ford employees should take over from the CEO and become the spokespeople both internally and externally.
• It is not enough to simply inform employees that the company is going through change and is embracing a new strategy focused on innovation. The next step is for Ford to have a four step sequential communications plan and change process in place that goes from:

1. It starts with informing the employees (which they have already done), through effective internal communications. Basically, the CEO has went public first and told the employees second. If this is what he has done, it may have been a mistake. The CEO should have communicated to the staff first to tell them what the company was doing, why it was important to the company's future and what it means to the individual employee in broad terms. He should have gone public only after he has informed his own people. Going public first and then internally second generally causes mistrust and skepticism, that the change is just another marketing campaign. This may explain why his statements were so strong on Monday, perhaps to address some of that skepticism.
2. The next step of the process is educating employees as to why this change is important for the company and to them as individuals. This requires different communications techniques such as experiential communications, training/workshops and events. Often it takes time and is too slow which is why many corporations skip this step. It would appear that Ford has taken the quick route and may have skipped over this step too. We advise clients that sometimes you have to go slow, so that you can go fast later. That is what communications process and discipline bring to the table.
3. The third step in the process is motivating people to change their behavior and embrace new activities that support the change. This is achieved by articulating what you want them to do differently. After all, if you don't tell them how to change, people won't when left to their own volition. Bill Clay Ford Jr. has come out strongly in this regard by outlining the consequences of not changing. Public firings go a long way at demonstrating that the company means business. Also saying clearly what behavior/actions will not be accepted or tolerated makes it very clear what behavior is within the scope and which is outside of the scope. It also creates peer pressure momentum to act accordingly and do the right thing and be a team player.
4. The fourth step is to establish a program for reinforcement and recognition. As people embrace the change, adopt new behavior and contribute to the results the company aspires to, it is imperative that the company recognizes and rewards these individuals and results through celebratory encouraging communications. At Ford, that means changing the incentive compensation system to support innovation and new ideas, promotions and advancements should be based on performance and individuals contribution to innovation. Best performers should be recognized publicly with proclamations and spot bonuses. Recognition and rewards should not be done arbitrarily, but rather, in a systematic drive and communicated fashion so that people understand what they need to do to meet these new evaluation criteria.

• Next major area to consider is having a message architecture, which means saying the right thing to the right people at the right time. Anything the company says should be timed to the sequence of the overall framework. Here are the four types of messages:

1. Informing messaging should be general announcements such as what the company is planning and why and when the change will occur and end. (Value Message)
2. Educating messages should be thoughtful and provide explanations and details in regard to what is in store for the company, the group/division and for the individual. (Benefit Message)
3. Commitment messages should specifically tell people what behavior is expected to help contribute to the change and what behavior will not be tolerated or accepted. (Attribute/Action Messages)
4. Reinforcement/Reward Messages should be celebrations and demonstrate the logic and provide answers to why the company is doing this, why it is important to change, here is what people are doing to embrace the change and this is how we are recognizing people for their support. (Full statement messages)

• William Clay Ford Jr. and the management team can't achieve their goal on their own. They need to build an employee's movement that empowers peer pressure to support for his agenda. Establishing a change ambassador group that represents a cross section of people around the world that has the responsibility and authority to become champions of change do this. These are the people other employees come to get answers to their questions, who are opinion leaders and respected by their peers. The faces of these employee champions should be the ones delivering the message internally and externally after the CEO.
• Not so long ago, in 1980, Ford launched another major change initiative to improve quality of its vehicles, which were rated poorly in comparison to imports at that time. In fact, I remember hearing focus group respondents say that FORD was an acronym for Fix Or Repair Daily. The company launched a new mission to improve quality and make it their number one priority. They first met with employees, UAW representatives, suppliers and dealer groups to make them aware of the problem. Next, they had seminars and workshops with employees to instruct them on how to improve quality on the assembly line and at the dealership. They were made accountable with new metrics and quality performance standards.

After Ford started seeing real improvements in quality and felt confident it would continue, they launched a very engaging corporate advertising campaign with a slogan "At Ford, Quality is Job1". It showed employees on the assembly line and dealerships saying that it was their responsibility to insure that quality was the company's top priority with the rallying cry, "Quality is Job1". The entire change effort worked. It improved quality in reality and perceptually. The lessons of the Job1 effort should be applied today to Ford's innovation mission. Start with your people, inform and educate them about the problem. Capture their hearts and commitment to change and reward them for their hard work. Then tell the public what you have achieved. You have to win your own people over, before you win the public over.

I can go on and on but time and space does afford me that luxury. If you would like to know more about what Ford or your company should be doing to drive a major change initiative, drop me a line or give me a call. I would be happy to give you some additional ideas and insights. I think the Ford Motor Company is trying to do the right thing to remain relevant to our lives and economy. It would be a shame if they failed because of ineffective internal support and adherence to the status quos. Let's hope that does not happen.

Learning From AdAge

Last year, I was leafing through Ad Age. Four stories grabbed me. There was enough content for me to pontificate on for a whole year. Beside the stories they told, the articles also revealed interesting themes. They all support the idea that our industry is in transition, and that ad agencies, PR agencies, marketing consulting firms and clients need a new way of thinking. I still think these ideas are very relevant today; Let me share with you some of what I wrote.

• Nike CEO William Perez (former CEO of SC Johnson) was fired after only thirteen months on the job. The headline read: "The CEO forgot: Ads Rule at Nike." The subhead explained:"...behind the scenes: Perez viewed ads as expense, and it cost him his job."

Here's my translation of this event...culture is everything. Perez failed to understand that ads had built the aura and the brand which Nike stands for. Phil Knight was not about to allow someone to play with his passion. This wasn't about money savings or efficiencies: At Nike it's about "doing it". Perez underestimated both the nature of the Nike culture and its power when he made his cost-cutting moves. At Nike, management is a team sport, and consensus, buy-in and enrollment are imperative if change is to happen.

The Second Story...

• "Ford Motor Company engaged the consulting firm Accenture to conduct a far reaching media optimization and media measurement program that could greatly influence its ad launches, spending and media mix. The program could potentially affect the type of work Ford's agencies do." (As it happens, I used to be the Director of Worldwide Marketing at Anderson Consulting, Accenture's predecessor).

I can see it now...Ford's ad agency staffers at Y&R, JWT and Ogilvy are probably panicking, running through their hallways shouting, "That isn't fair...we should be doing that work!" The fact is, they are right. Perhaps the ad agencies should get the work. But there's a good reason why they didn't. They just don't provide the same rigor and the same process methodology that a consulting firm does. Agencies should be asking themselves why they aren't getting opportunities like this. WPP's CEO, Martin Sorrell's nightmare, of agencies losing ground to consulting firms, is coming true and picking up momentum. I think it can only get worse for the agencies--unless they rethink what they do, what type of talent they hire and where they add value beyond creating advertising.

Now for the next story...

• "Jim Heekin, newly installed CEO of Grey Advertising, is dismantling Grey's old systems. He's installing critical account planning to be on par with creative and account management. This represents a marked change for Grey." Good for Jim! The article goes on to tell us how Grey's strategy had little clarity, how they would often waste the time of creative teams hunting for a creative strategy insight. Guess who paid for that wasted time?

I have always endorsed the idea that creatives should be focused on creative ideas not on the message or the strategy. Creatives just don't have the training for that; after all, they are art directors, writers and designers, not strategists, analysts or researchers. McDonald's calls it a "Framework for Freedom." They say, let the client management, researchers, and strategists come up with the key messages, target audiences and buyer motivators. Then let the creative teams get on with their job-creating the design, sound and motion around the idea. That way the creative output is more focused and compelling.

I would go one step further. I say that the agency should take the leadership role. Agencies need to become facilitators, working side by side with the client's management, marketing and sales teams, together with the ad agency's team of media, account management, creative, planning and production departments. Everyone should be collaborating, all together at one time at one table. This saves time, ensures buy-in and produces better ideas.

Nice going Jim. Keep stirring up the pot...change in the ad agency world is good. One caveat, one piece of advice...move the culture along with you...don't let it bite you in the rear the way it did Bill Perez at Nike. Win over the clients, and win over the internal agency staff. If you don't believe me just look what happened to your counterpart Ann Fudge at sister WPP agency Young & Rubicam. Internal politics, a strong insular culture, fear of change and being an agency outsider prevented her from being successful in the job.

• The last piece..."Ford is putting the consumer at the center of their rebirthing marketing program with hopes of turning around the company fortunes." Ford had no choice, we're told, but to change to meet the demands of the market rather than the other way around.

This is news? Where have they been for the last twenty years? The Ford Motor Company I knew and worked for from 1981-1991 (when I was a senior ad executive at Y&R) always put the customer first. It was about Quality is Job #1; Lincoln - What a Luxury Car Should Be; and Have You Driven a Ford Lately?Those were consumer insight campaigns. They answered consumer questions and they helped satisfy the buyers' needs and wants with products that they wanted to drive. Remember the Mark VI, the XR4Ti Merkur from Germany and the Mercury Sable and Ford Escort? Wonderful cars, terrific insights and great market successes. I'm glad to hear Ford is finding its way back to the insights that contributed to its most recent glory days. But, as the company has said, Ford must also win over its own people in order to lead the market. Ford's employees need to become educated, motivated, inspired, and enrolled to recognize what the pursuit of a consumer driven strategy can yield in the way of success and market leadership. I hope they get it straight. I want them to succeed.

So what's the common thread to these stories?? What key messages can we learn from them? I see many lessons here.

Sharing Strategic Marketing Responsibilities. The ad industry (and some clients) still doesn't recognize that marketing should not be centered just on the creative product. Focus should be the shared collective responsibility of the client, the agency, the sales channel and the customers. Together they can create products, marketing strategies and award winning advertising that will meet the needs and wants of the market and present the right message and image. No one group should abdicate its role to the other. This work needs to be done together.

Rigor, Process and Methodology. In a world of investment bankers, strategy consultants, and greater value accountability to shareholders, agencies have to step up to the plate and incorporate new rigor, methodology and process into their planning and accept their responsibility for results. The old way just doesn't work, and neither will moaning about the loss of consulting assignments and revenue. Agencies must go way beyond planning the new ad campaign and refashion themselves to gain deep analytical understanding of their client's business operations and challenges. They need to get themselves invited to the board room table out of respect for their strategic insights and counsel and the confidence they convey, not just to get approval for their new ad campaign.

Culture. Everyone involved in marketing has to recognize the power of culture and the power of the employees when it comes to embracing a new strategy or marketing initiative. Company culture does matter. Respect it, and make it work in your favor by helping the internal constituencies become educated and informed. Help them become motivated and inspired and--eventually--enrolled and engaged. This will take time, patience and process, and the knowledge to do it right. Don't leave this important task to chance. Deploy change management experts who have methodologies and processes that can help.

Abundant Mentality. Marketing people on both sides of the table need to embrace the notion that a great idea can come from anywhere. What's more, when everyone adds to an idea, it can only get better, brighter, more compelling. Every great idea is a shared responsibility based on an abundant mentality about solving consumer problems with compelling solutions that grab people's imagination and attention.

Leadership. Current advertising models fashioned back in the sixties and seventies are not relevant today. The marketing industry needs fresh ideas, new approaches and leadership to recognize that. The industry needs leadership that recognizes a need for new, outside-the-box business models. Marketing people need to rethink old management structures--incorporate new media, the internet, buzz marketing and 1to1 marketing--and establish new metrics and accountabilities so clients will value what they do. Leadership should come from both the clients and their agencies, both immersed in freshness and innovation, not stuck on a single idea. Leadership needs to re-examine everything: compensation, accountability, media optimization, market research methods and integrated strategies and costs.

So. What I garnered from reading my four Ad Age articles can be summed up this way: Our business is changing. We can react and let it change us, or we can take the lead and we can change it.

What do you think?

Happy Halloween!

-Allan

Save a Seat for Marketing at the Table: Avoid a Merger and Acquisition Blind Spot

Over the Summer, I read a wonderful article in The Wall Street Journal, in the "Business Insight Journal Report." I was excited after reading the piece because it validated many of the tenets upon which I founded our firm nearly nine years ago. The article was entitled, "M&A Blind Spot. When negotiating a merger, leave a seat at the table for a marketing expert." Unfortunately, this rarely happens.

The article talked about the integral role of marketing in securing and consummating a deal through internal acceptance by the organization. It reminded me of a statistic I heard nine years ago to explain M&A failures. Dr. Michael Hammer said "that 80% of mergers and acquisitions fail and that 50% of the reasons that they fail are due to personality and culture clashes between the companies and their leadership." This is just as true today as it was a decade ago.

In my opinion, marketing and branding are lynchpins of a successful merger and acquisition. All too often, however, marketing is just an afterthought. Bankers, lawyers, and accountants have a place at the M&A table to ensure that the deal lives up to its potential in regards to risk minimization, asset evaluation, and legal due diligence. But where are the marketing experts? They should be at the table as well to ensure that the organization embraces the merger, positioning it with positive benefits inside and outside the company. Effective communications and messaging can win over all the critical stakeholders and ensure success.

Ensure success with marketing and branding

Find me a lawyer, accountant, or banker who can manage all this:

1. Vision and direction

• The company must have a clear sense of direction and vision after the M&A plan is laid out. The vision should be in simple language (with examples) so employees can relate to it and understand the benefits for themselves and their company. Marketing departments and their leadership are trained and experienced at creating this kind of messaging.
• Creating a new, combined vision is clearly the role of marketing. Imposing one company's vision on two merged entities often alienates half of the people the instant the merger is launched.

2. Overcoming uncertainty through employee engagement

• Without doubt, uncertainty is the number one issue after announcing a merger or acquisition. Overcome it by enrolling the staff through relevant messages and experiential communications programs.
• Marketing professionals understand consumer insights and motivations that translate into actionable tactics and communications. With knowledge and understanding, employees gain motivation. After internalizing the merger value proposition, they finally gain inspiration. They will be engaged and enrolled.

3. Understanding where your employees stand on issues

• Companies should segment their employee audience the same way they segment and analyze their external audiences to measure their acceptance of change and learn the best ways to communicate with them.
• These are the types of questions that marketing will answer:
  - What motivates employees?
  - What inspires them?
  - What are their opinions of management and the corporation?
  - How do employees relate to management and management communications?
  - What forms of communication do the employees prefer?
  
• Marketing professionals are analytical. They are in constant search of insights and buyer values that can be deployed toward an internal employee audience as well as an external one.

4. Experiential communications

• Particularly in an M&A situation, old forms of internal communications are no longer relevant or successful alone. New and more creative methods, with involving and entertaining communications, are more appropriate for adult learning.
• Media should vary by audience: video games, gadgets, viral campaigns, role playing, one-on-one meetings with senior folks, skits, outings, company-wide challenges, events, internal trade shows, a staff radio station, a webcast-whatever draws them in. The key idea is to engage the employees to participate in the exchange and learning.

5. Developing the message

• Like any other marketing campaign, internal branding starts by understanding the change readiness of the organization, followed by developing messages that are relevant and meaningful at all levels-corporate, team and department, and individual. The company needs a clear positioning and sense of what it aspires to be.
• The messages should be presented by the leaders of the organization who know their business and the marketplace best.

6. Establishing brand ambassadors

• Seek out the critical internal stakeholders and opinion leaders for their support and help first, then build consensus within the organization.
• Involve the full spectrum of employees. Ask for their input into the program-they know the customers and the business from all angles.

7. Project management, not ad hoc effort

• Treat the plan like a program-management launch. Assign a great program manager and allocate the proper monetary and HR resources for the effort to succeed.
• Reinforcement is critical. Your employees need to see the message all the time, in lots of different media via different channels. You can emblazon it on a lapel pin, a parking-lot sign, a redesigned uniform, or a lunchroom banner. Or anywhere else that it makes sense to remind people.

8. Measurement and Feedback

• Take measurements and make adjustments. The campaign will need fine tuning as it gains momentum. Gauge how the organization's culture is receiving the message and reacting to it. Then modify your emphasis as needed.
• Budget for post-campaign analysis and an audit of effectiveness. Conduct before-and-after employee surveys to measure business literacy, brand awareness, and awareness of M&A messages and corporate initiatives.

In the end, what matters is an educated and aligned workforce motivated to get behind the sale, acquisition, or merger. You want your people to be inspired to work for your firm. They should be proud of what it stands for and what they do. If they care about being part of the process, they will spread the word to your clients and to each other. By enrolling your employees, you will accelerate the changes you have planned and get down to business faster, with fewer internal squabbles, and with a steady stream of re-energizing successes that will sustain itself over time.

Is your company facing a merger or acquisition, or just going through major changes such as ERP implementation or re-engineering? Don't forget to reserve a place at the table for professional marketing counsel. With marketing present as an equal partner with the lawyers, bankers, and accountants, you will ensure success of the merger and win over your employees, who are ultimately responsible for making it all happen.

Give us a call and let us describe how we help companies as they face acquisition or sale.

PS, Click here to enjoy the WSJ piece the way I did.

Happy Reading,

-Allan

Effective Communications: A Leading Indicator of Financial Performance 2005/2006 Communication RIO Study

As the Summer winds down and we enter the Fall season, many companies begin to examine their financial results in anticipation of those December year end result reports. This is a good time to examine your communications programs in an effort to help increase financial performance. Effective communications is the lifeblood of any successful organization. This statement is a mantra in companies of all sizes. They use it to explain their improved financial results.

Now we have solid proof that it's true. Watson Wyatt, a major and respected HR consulting firm, recently conducted a revealing study that links effective communications to financial performance. The results of their analysis are staggering, a must-see; and critical information for every CEO and CFO.

Companies that communicate effectively have a 19.4 percent higher market premium than companies that don't.

At Inward Strategic Consulting, we have always believed that effective communications, through internal branding and change communications campaigns, creates more educated and motivated employees. They embrace change and adopt new behaviors to support it. The findings of this 2006 study substantiate our claim: they amplify the call for internal branding efforts, employee communications and the use of staff to create team alignment and awareness.

We have taken the liberty of summarizing some key findings to share with you. If you would like a complete 20-page PDF of the Watson Wyatt Report (a $45.00 value - sold online), just write me back and I will be happy to send you a copy for free.

Three amazing conclusions:

• Companies that communicate well have a 19.4 percent market premium over companies that do not.
• Communications effectiveness is a leading indicator of financial performance.
• Firms that communicate effectively are 4.5 times more likely to report high levels of employee engagement than firms that communicate less effectively.

Study Highlights: What characteristics define effective communications?

• Helping employees understand your business
• Educating employees about your culture and value
• Sharing financial information and objectives
• Exhibiting strong management leadership during organizational change
• Alignment of employee practices with customer needs
• Explaining and promoting new programs and policies, i.e., employee integration.

What the study found:

Link to shareholder value: Companies with more effective communications experienced a 57% higher total return to shareholders over a five-year period than those with less effective programs.

Increase in market premium: Communications effectiveness is associated with a 19.4% overall increase in market premium.

Effective communications is a leading indicator of financial performance: If a company invests in communications and implements or improves its communication practices, it can expect up to 20% higher financial returns.

Reduction in reported turnover: Companies with high levels of communications effectiveness are 20% more likely to report low turnover rates than their competitors. Lower turnover translates to improved continuity, better understanding of the business and less need to train and re-educate staff.

Practices at highly effective companies:

• Communications programs are in place and ready to support organizational change efforts when needed
• Documented internal communications strategy in place
• Open communications with employees about events that affect them and the reasons for major decisions
• Sharing business plans and goals with employees
• Linking communication objectives to business objectives
• Linking pay and benefit programs to achievement of the business strategy
• Treatment of managers as a key audience, and sharing advance information with them
• Regular transmission of communications counsel and insight to the CEO and senior management team
• Eliciting the support of senior managers, and engaging them in the communications process
• Effective coordination of internal and external communications

What areas could you improve?

Every organization always has room for improvement. More and more organizations are starting to improve their communication processes, but look at these trends:

• Less than 50% of high effectiveness companies (only 25% of low effectiveness companies) do any proactive communications planning. Some companies are reluctant to plan far ahead given the current pace of change. But where no plan is in place, firms typically lose sight of the big picture.
• Less than 1/3 of companies actually give employees the ability to add their insight and input to decisions. Companies must educate their employees on how to communicate effectively and develop channels for two-way communications.
• Over 60% of companies have an intranet enterprise portal, yet companies need to document their electronic communications strategy. Use emerging technologies such as blogs and wiki's to get the message across.
• Global communications is still North America centric! While 60% of companies surveyed in this study have international operations, the study found that few companies really communicate effectively with employees and business units around the world. You can improve this area by integrating the global communications plan into the company's overall communications strategy. Form a global advisory group to identify local needs, customize messages and secure international buy-in at the micro level.

Conclusion: The elements of effective communications

The study identified characteristics of organizations with successful communications programs, using a comparative index of successful communications policies, programs and behaviors from various organizations.

If you're interested in improving your communications, consider the following characteristics of the high performers:

• A comprehensive communications program is an essential part of the organization's business strategy.
• Senior management bases its communication efforts on a clear, well-defined communications strategy.
• Communications programs are developed proactively rather than reactively.
• The organization has a well-defined, two-way communications philosophy.
• Employees are kept in the loop about how their firm is doing at meeting its goals.
• Employee communications programs focus on helping employees understand the business.
• Employee communications programs focus on providing information and feedback to motivate and improve job performance.
• Managers at all levels are rewarded for communicating effectively.

The essential message of the 2005/6 Communication ROI Study is clear: financial success does not lag far behind when senior management takes the time to plan, identify and reward effective communications, Thoughtful strategic planning and development of internal communications initiatives correlates directly with financial success.

Please don't hesitate to contact me if you would like to discuss how an effective communications plan can help improve your organization's financial performace. I'd be happy to share some insight, tips and best practices on how we have helped many companies improve their bottom line.

About the study:

The 2005 Watson Wyatt Communications ROI Study visits the relationship between an organization's communication practices and its business performance. The study's goal was to identify where communications practices have the highest returns.

Its 335 participants came from large companies across North America. (The average participating company has revenues of $3.9 billion and 13,000 employees.) Survey questionnaires included questions about employee engagement, global communications, and the relationship of the communications function to senior management and emerging technologies.

The study was broken out into two separate parts, each with its own findings. The first shows, basically, that companies with effective communication practices can earn a significantly higher market premium over their competitors. The second part concludes that effective communications practices can earn a market premium for the organization and can identify the key metrics for instituting an effective communications program.

Here's to a profitable Fall season!

-Allan

Internal Branding? What Is That Exactly?

Everyone knows what a brand is, and everyone knows what advertising is. Some of us may be confused about promotion and merchandising but most have a basic idea, at least, of what they are.

Lately, a lot of people have been asking me about internal branding. What exactly is internal branding? It's definitely a hot topic, on which seminars and workshops are offered all around the country. By my count, seven major internal branding conferences were held over the past year and a half, and we participated in four of them, and even chaired the American Strategic Management Institute's Internal Branding Summit last year, where we heard some outstanding presenters address the topic.

It's hot, but what is it? Very little is written that defines internal branding; so as one of the pioneers of this new branding phenomenon, I decided to pound a stake into the ground with my definition. We have earned the right to do this, because, for six years and more, since we started our firm, we have been promoting the power of internal branding with our Inward Marketing Methodology: we really are the internal branding company.

Before I explain what internal branding is, let me clear up some misconceptions. It is NOT letting your employees know about your new advertising campaign. It does not consist of handing out t-shirts and baseball caps to announce a new strategic initiative, name change or company vision statement. Really, it is not anything remotely like these things.

So what it IS internal branding? Why is it important? When should I do it?

Here is Inward's definition: Internal branding is a cultural shift within an organization, where the employees become more customer focused and more business focused. You achieve this by an organized, communications and behavior driven process, which leads to a desired end state. Meanwhile, at all levels in the company, one big question is answered - "What's in it for me?" After they hear and learn about the internal brand initiative, every single employee should understand what job behavior you expect from them, and how they contribute to the company's success. You need to reinforce the behavior you want, and bring it into line with HR policies, internal communications and corporate marketing efforts and strategy.

Effective internal branding brings huge benefits. Companies whose workforces understand how they operate and make money perform better. Committed employees provide stronger performance and higher customer satisfaction.

Important data that supports this connection between understanding and internal change was released recently. This study (produced, much as I hate to admit it, by our competitor, McKinsey) concludes that change-management programs succeed only when employees at all levels-senior managers, middle managers, and the front line-share the will and the skills to change. McKinsey studied change programs at forty organizations, and found a strong correlation between good skills for managing change and the value an organization carries away from these programs. These skills, I would add, are the product of effective change communications and internal branding programming. The more knowledgeable, convinced and supportive the workforce is, the faster you can implement change. Strongly accepted change is sustainable, and that saves both time and money.

When all is said and done, successful internal branding lifts brand equity, customer focus and ultimately shareholder value. One of our high tech presenters at the April conference shared startling numbers that demonstrated a powerful correlation between internal branding efforts, external branding efforts and shareholder equity. It's all about the facts, the data, the metrics and accountabilities.

So the question becomes, "How should a company do internal branding or Inward Marketing?" Here are some of key elements/best practices we've gathered from studying this topic for the past seven years.

• A brand is a process driven, long-term proposition. Not a deliverable! And so is internal branding.
• Internal branding follows a sequential process; through which employees achieve internal brand success. There is a difference between communicating a message, getting it understood, and changing behavior.
• You must have senior leadership participation and involvement throughout the process of internal branding. You can't delegate this or let the managers drive it.
• Start with a clear company vision and purpose. If you don't have one, work with the senior team to establish one and communicate throughout the company by both words and action.
• Set clear objectives and well-defined roles at the outset, and revisit them throughout the process.
• Consider assigning dedicated people to internal change communication and internal branding. Let them create a sense of such urgency that staff see no alternative to change.
• Conduct an audit of the enterprise understanding of the business objectives and strategy so you can address areas where people don't "get it".
• Internal branding, done well, allows employees to transition from being "Informed," to "Understanding" the information, to becoming "Committed", so that they "Change Their Behavior' in support of the company goals. As a result they should "Receive Recognition & Rewards" and positive reinforcement for changing their behavior.
• Recognize the importance of the customer and all their points of contact with your company: call and service centers, sales associates, statements/invoices, advertising and more.
• Align your brand externally & internally. Let your inside be like your outside: what you say externally should be the same thing you say/do internally.
• Go for participation, consensus and employee dialogue. These work better than edicts and policies that travel down the hierarchy.
• Having "Employee Brand Ambassadors" is critical--involve a cross section of employees from all levels, who will promote the brand internally through experiential communication.
• Obtain metrics and measures before, during and after program implementation. Research your employees regularly and track their progress over time.
• Hard, Simple, Easy - Work hard to make complex concepts and ideas simple, so they are understood and communicated easily.
• Seek outside help from experts and consultants in the field - this is hard work, but with help in methodology and process, it can be done effectively.

If you are thinking about an internal branding program, or need help to create internal support to initiate a program, let us assist you. We have proven methodologies, delivery teams and the thought leadership to lead your company to a much better place. We will also be very appreciative if you share our ideas with others who may be thinking about internal branding, or send them to our website.

Enjoy the rest of the summer!

-Allan

Culture Clash

A while back I read a shocking piece of business news in the Boston Globe, which I was reminded of today.

The article reported 81% of executives surveyed believe their people work in isolation from the rest of the company because of negative manager attitudes that cause friction between departments.

Why is this a surprise? Anyone who has worked in a large cross-functional organization knows this is the way it is today.

The American Management Association, who sponsored the study, went on to report that:

• 59% blamed their corporate culture for preventing departments from working together
• 50% said some units place their own priorities ahead of employees goals, resulting in friction
• When asked what the most pressing problems they have faced because of isolations; 74% mentioned wars between managers, 72% pointed to lack of cooperation, 60% said power struggles, 51% said putting unit goals ahead of company goals.
  

I believe this cultural clash, a direct result of senior management mistakes, causes loss of productivity, reduces employee retention, contributes to loss of profits and efficiency, and ultimately produces poor customer experiences.

Why does this occur? Because management takes employee commitment for granted. They expect employees to act and behave in accordance with the interests of the company, but it does not work that way. In fact, according to recent Gallup survey, 80% of employees are minimally committed to their company's goals.

So what should companies do about this epidemic problem? Here are our specific actionable solutions.

• The senior management team must articulate the culture and behavior that is expected within the company through a process called Visioneering. It starts with personal vision that grows into a team vision and blossoms into a corporate vision, with defined action steps and deliverables. (Take a look at our site for details or give us a call)
• Management must reinforce the behavior with personal, team and corporate accountability for their actions. Deviant behavior and lack of collaboration should never be tolerated. The credibility of the company is at risk and is more important than individuals.
  Inward Marketing is necessary to communicate the change experientially so that employees see the message as relevant to their jobs. They need to understand what the consequences of effective cultures can achieve.
• Recognition and Reward programs that celebrate successes. Celebrate actions that focus on customer interaction, positive experiences and wins. Do not focus on internal strife and negative cross-functional behavior.
• Measure behavior and actions through employee research with the help of Inward's ChangeFX. It will illustrate success and failures by different employee groupings and offer prescriptive diagnostics for improvement.
• Segment your employee populations just like you would an external marketing campaign. Do not allow the message and the medium to be the same for everyone. People react differently and comprehend messages in their own way.
• Plan, execute and reinforce the program in thirds. Spend a third of your time and budget on planning the strategy for your culture; a third on rolling out the communications so people understand what it means; and the final third reinforcing the message for several years so that it takes hold. All too often, this final reinforcement if overlooked and results in lost spending.
  

What would you rather have: a company that is focused as a unified team on the customer and trying to displace the competition or dysfunctional silos of people working against each other and fighting turf wars where little ever gets done?

If your company is dealing with a culture clash, please call us. Or forward this email to others in your company who may find this information beneficial (CEO's, HR Directors, VP's of Strategy, VP's of Marketing, VP's of Communications or Branding). Help us spread the gospel. At the very least, visit our web site to view our white papers and case histories on these topics.

As always, we would appreciate any referrals. If you know of other organizations or associations who could benefit from our approach in marketing/branding, change management, HR communications, team alignment and market research please pass our name to them. We promise to provide the very best service and support.

I hope you are enjoying the summer,

Allan