Culture change: Management agendas are starting to reflect the need for
well organised internal PR
Electronic media: New software systems challenge magazines and
newsletters for message delivery
training: Reacquainting the current generation of managers with face-to-
face, two-way communication
The need for good internal communications has never been more crucial.
Companies which invest in communicating with their employees usually
outperform their rivals.
The RSA (Royal Society for the encouragement of Arts, Manufacture and
Commerce) left little doubt about the value it places on employees when
it published ‘Tomorrow’s Company’, its damning report on the health of
The RSA’s June 1995 report found that the UK has proportionately more
poor performing companies which are vulnerable to competition, through
low investment in best practice, than elsewhere in Europe.
It warned of the dangers of not communicating with employees as well as
other stakeholders, such as customers and shareholders, or, worse,
communicating inconsistent messages.
‘The company whose communication with all of these groups is not rooted
in consistent values will expose itself to a lack of credibility, loss
of confidence and damage in reputation,’ it reported.
The report stated that companies which invest in their staff out perform
the national average on a range of financial measures, such as return on
capital, pre-tax profit margins and sales per employee.
There is also a growing body of evidence which shows that there is a
close correlation between customer loyalty and employee satisfaction.
Companies which keep their staff longer, also keep their customers
longer, and customer loyalty is recognised as one of the best predictors
It is little wonder then, with so much evidence pointing to the value of
communicating with employees, that internal communications has started
moving up the management agenda. ‘Companies are realising that they can
be differentiated through their people, not just their products, and
that people do make a difference,’ says Colette Dorward, managing
director of communications consultancy Smythe Dorward Lambert. The
growing awareness of the importance of internal communications has also
stemmed from the massive structural changes that many companies have
undergone, which have been largely brought about by technological
Many of these change of management and re-engineering programmes have
involved massive staff redundancies and often relocation and,
consequently, completely new ways of working.
Communicating the reasons for the changes to employees and motivating
them in the wake of the upheaval is crucial to the success of change
programmes, as a survey by management consultant PA Consulting Group
‘Our survey found that 91 per cent of quality and re-engineering
programmes failed because of bad communications,’ says John Stephens,
PA’s director of Communications Strategy, a division of PA Consulting
Group which sees through the implementation of communication strategy,
and operates as a public relations company with its own clients.
‘Communications can help handle the hangovers of all these changes,’ he
Those hangovers include making sure staff, which remain after
downsizing, are motivated and fully understand the reasons for the
changes within a company.
Poor motivation can result in high absentee levels and, consequently,
low productivity levels. But, as Sir Anthony Cleaver, chairman of the
RSA inquiry pointed out, ‘there is wide gap between companies’
intentions and actions’.
This is often because they are driven by short-term financial
imperatives in their quest to satisfy shareholders and the City.
Ironically, the fact that shareholders, customer and employees are often
one and the same is often overlooked.
As interest in internal communications has increased, so too has the
number of companies offering internal communications solutions.
Whereas a few years ago there were only a few communications
specialists, such as Smythe Dorward Lambert, management consultancies
and large PR companies have started muscling into the field.
Internal communications strategy now accounts for the lion’s share of
business for the ITEM group, one of the longest established
The group, which began as an education and training publishing house, is
now talking to companies about setting up an internal communications
benchmarking network. According to chairman David Clutterbuck, the
network, ‘would enable the companies involved to compare best practice’
while also providing valuable ammunition in terms of comparisons on PR
managers past performance.
The growing number of management consultants working in this area is
hardly surprising. It is a natural next step on from helping a company
with the strategy for its change programme.
‘With internal communications you have to be focused on what the
business is trying to achieve, so you have to understand the different
market drivers and what is being forced upon a company.
‘This is why management consultancies are coming at it from the most
powerful position,’ says Stephens.
‘At PA we can draw on the expertise of our human resources, individual
sector skills, people skilled in project management and communications
skills,’ says Stephens. But not all management consultancies offer the
type of communications team which PA does.
As John Orme, a director at Countrywide Communications, points out, many
management consultants bow out when the solution, or the strategy for
change, has been prescribed.
‘They don’t follow through. They may suggest reporting structures be
changed but they won’t stay and look at how it should be changed and
then implement it,’ says Orme.
Countrywide, which has a separate internal communications unit, is one
of a growing number of larger PR companies which finds it is being
invited to handle more internal communications work.
Some clients prefer to turn to PR companies, which they know have
experience in implementing strategies and have the practical
communications experience to be able to advise on the right channels for
Anita Hunt, communications manager at Tioxide, a subsidiary of ICI,
hired Countrywide Communications after it pitched against three other PR
Hunt wanted a jack of all trades - a company which ‘could help us in all
areas’. That meant conducting a communications audit through to the
implementation of an internal communications programme.
But some within the PR fraternity feel that internal communications is
not a consultancy issue, but very much an in-house one. Indeed, the
Institute of Public Relations has just set up a new internal
communications special interest group, in recognition of its growing
The first meeting on 24 October was chaired by Mike Maryon, employee
communications manager at Bass Brewing, who has been involved with his
company’s own internal communications revamp (see panel overleaf).
Maryon believes that the IPR, rather than the PRCA, is the rightful
place for the group because of its wider appeal to in-house PRs. He has
a valid point.
While public relations, communications and management consultancies each
have particular offerings to bring to the corporate table,
responsibility for internal communications ultimately rests within a
So to whom should internal communications be entrusted to ensure it is
dealt with properly? Human resources? Corporate affairs? The board?
As companies flatten their management structure and move away from
having a centre, does it need to be the responsibility of any one
particular department? Consultants in the field, both management and PR,
find it a difficult issue to resolve.
‘It should be handled within corporate affairs, because the whole idea
of internal communications is a misnomer,’ says PA’s Stephens. ‘Once you
say something to someone in the company, it is then an external issue.’
Dorward argues there doesn’t need to be an internal communications
function because ‘if it’s working it don’t need a centre’.
‘I think it’s closer to management development than to public relations.
It’s not so much about being a broker as about establishing
communications objectives,’ says Dorward.
There has been a trend in companies revamping their PR departments,
which were externally focused, as communications departments with a
wider remit to ensure that there is consistency in all the company’s
messages to all its stakeholders.
Doing away with the centre is, essentially, the goal for many
Instead of internal communications being about handing down edicts from
above, the objective of many internal communications programmes is to
ensure that information flows freely around a company as it becomes a
two-way process between managers and staff.
Asda Stores controller of public relations Alan Preece refers to the
internal communications process as encouraging ideas which should
‘reverberate around the company’.
While there is still a need for information to cascade down from the top
levels, of equal importance is ensuring that employees at regional
levels have information that is relevant to them.
This throws up a whole raft of issues related to changing attitudes,
training and the use of technology (see panels on previous pages).
Internal communications may have made it on to the management agenda,
but there is still a long way to go before it receives the attention it
In-house news: Electronic expediency vs direct contact
Are in-house publications being threatened by technology? The increasing
use of computer networks by companies for disseminating information is
casting fresh light on the role of in-house newsletters and magazines.
Unlike newsletters and magazines, which are often outdated by the time
they are published, or superseded by the ‘grapevine’, computer
technology can provide fast access to information at a keystroke.
Not surprisingly, companies are increasingly turning to electronic mail
and fast electronic news systems.
A recent survey undertaken by ION International, distributors of on-
screen publishing software E*News and Designer, revealed that 70 per
cent of the 200 corporate and marketing communicators questioned will
budget for an electronic newsletter as part of their internal
communications programmes next year.
Instead of pumping the same material out to all staff, information can
be edited and distributed to suit particular needs without the cost of
issuing ‘regional editions’ of newsletters.
More importantly, they offer a quick feedback mechanism. But while
technology undoubtedly has advantages over the printed word, it is not
set to replace it.
Many communications consultants comment that technology is making
companies rethink the style and content of their publications, with many
becoming more businesslike.
They stress that publications come into their own when information has
to be explained, rather than just conveyed. It gives employees something
to take away, to keep as a reference for facts and figures.
Smythe Dorward Lambert managing director Colette Dorward argues there
will always be a need for a publication as it ‘sums up a company’s
And Anita Hunt, communications manager at ICI subsidiary Tioxide says
print will remain invaluable as not all the company’s staff, in all the
countries it operates, will have access to networked computers. But the
real issue for internal communications is not about technology over
print, but the rise of face-to-face contact.
Companies are recognising the value of meeting their employees and many
top managers now spend a considerable amount of time each year on a
roadshow visiting their employees.
Michael Peters, chairman of ‘identity and innovation’ consultancy
Identica comments: ‘One person told me he misses the breathing of
perfume through his PC. I’m a great believer in the use of technology,
but there is no substitute for the chairman walking around the company
so that you can breathe the person and get a real sense of a person.’
Hedron partner Helena Memory also stresses the importance of direct
contact: ‘It is only through two-way dialogue and genuine discussion and
involvement between management and employees that you get understanding,
commitment and motivation - all the things that companies tell us they
need to be successful,’ says Memory.
Training: Learning how to make dialogue happen
Media presentation training courses may have been de rigueur in the
1980s, but in the 1990s the emphasis has shifted.
The increased emphasis on face-to-face communication within companies
has highlighted a need to develop a whole new bag of management skills.
Essentially, people need to be taught not just how to communicate, but
how to manage communications.
‘Most CEOs and boards don’t know how to address communications over and
above the more mechanistic ways of communicating,’ says Helena Memory, a
partner at communications and change consultancy Hedron.
‘There is too much information and not enough communication. The
information needs to be managed and communicated in a way that makes it
Face-to-face, two way communications is a whole new ball game for many
Not surprisingly, consultants recommend that they undergo training in
how to recognise and understand the different types of behaviour needed
to make dialogue happen and how to manage the process.
Crucially, they need to learn how to convey information down through the
company and then how to encourage a response that can be fed back up to
PA Consulting sends clients to its Sundridge Park management centre. The
training focuses on team working and helping people manage after their
company has gone through the re-engineering process.
At Sundridge there is an emphasis on learning how to motivate people -
which is crucial - if there has been a period of significant change
within a company to ensure it doesn’t lose employees -, and on measuring
Smythe Dorward Lambert managing director Colette Dorward adopts a less
formal approach to traditional training sessions.
‘If you label it training it doesn’t always work. The shift is towards
putting people in situations where they are encouraged to be part of a
‘It is less about putting people through courses, and more about upward
appraisal,’ says Dorward.
She dismisses suggestions that it sounds like a soft approach to a hard
‘I don’t think it’s a soft approach. It’s about having to be much better
at the management process. What’s soft is talk about empowerment and
devolving responsibility that doesn’t feed through,’ says Dorward.
In-house magazines: Somertimes is a staff success
Supermarket chain Somerfield launched its quarterly staff magazine
Somertimes in 1994. It was a replacement for a previous family-oriented
magazine which had ceased publishing around two years earlier when it
was replaced by the quarterly staff video, Somerfield Television.
Somerfield decided to reintroduce the magazine because it found that
staff missed it.
The magazine and the video are now produced in a cycle which ensure that
staff see either the magazine or the video every six weeks.
Although the original publication was written internally by the
communications department, Somerfield has now contracted it out to Brass
Tacks which also publishes its customer magazine The Somerfield
The 12-page magazine is sent to Somerfields’ 30,000 employees who are
aged, on average, between 18 and 24, many of whom work part-time at the
firm’s 650 stores.
Somertimes is a bright colourful publication which keeps employees in
touch with company news and views and encourages two-way communication.
Communications co-ordinator Mandy Phelps says the style was adopted
because readers didn’t want anything too heavy and 12 pages appeared to
be the right length.
Phelps said staff felt the lack of an employee magazine indicated a lack
of company concern.
The summer issue featured a full breakdown of the company’s profits and
expenditure and an explanation of their implications in straight talking
and accessible language. The magazine invites comment from its readers
with the promise of pounds 20 for every letter published. A regular
feature is the ‘Dear Exec’ page where a letter directed to the executive
committee is printed with a reply.
It also has its light-hearted side with competitions, crosswords,
special offers, news of fund-raising events and personal interviews with
high profile company employees.
Each issue is funded by a single advertiser which allows Somerfield to
offset its costs.
Video-conferencing: Nissan cuts down on travel
Nissan was having problems linking design engineers and technical
experts at its Cranfield centre with production engineers at the
company’s UK manufacturing plants nearly 250 miles away in Sunderland.
It found it necessary to operate a shuttle bus service three days a week
between the two sites - a four hour journey - so that key decision
makers could meet.
In 1992, Nissan installed BT’s VC5000 video conferencing system at
Cranfield on a trial basis. It has now become permanent and has allowed
problems which require input from both sites to to be quickly resolved
while maintaining the all important face-to-face communication.
The system meets two requirements necessary for successful video-
conferencing between the two plants. It is capable of exchanging high
resolution graphics and engineering designs and it can also provide
face-to-face communications for up to 12 people involved at either end
Video conferencing has already been invaluable for the car manufacturer.
When a technical problem occurred, the production team made a cutaway of
a fuel tank with the assembly in place, took it to the video conference
room and used the high resolution camera to show designers the problem
using the close up and zoom facilities on the system’s document camera.
A solution to the problem was shown to the production team in a process
which took less than an hour. Without the video-conference a four hour
drive would have been required before all else.
Nissan is also able to use the system to talk to its operations around
Case Study: Bass Brewers keeps staff informed
Bass Brewers, the brewing subsidiary of Bass, underwent a change
management programme three years ago when the company restructured in
the wake of the Government’s Beer Orders, which capped the number of
pubs a brewer could own.
It reduced its workforce by a third to around 4000 employees and reduced
its core functions.
Before the shake-up, the company’s PR had been externally driven, with
internal communications as a secondary, or bolted on, function. But in
1993 Bass Brewing set up its communications department, which includes
public affairs, internal communications and media relations. Only
specialist brand PR was kept separate.
One of the communications department’s key roles was to ensure
information about the changes, and how they would affect employees,
cascaded down through the company, ahead of the ‘grapevine’.
Line managers were given responsibility for communications and four
weekly team meetings were introduced at which staff were updated on the
changes. Reaction was fed back to the top of the company.
The four weekly meetings worked well but after a period of time became
stale. The grapevine still appeared to be working strongly and line
managers often struggled to find fresh information to include in the
The next stage was the introduction of the fast electronic news service
(Bass Brewers FENS). The Microsoft Windows based application was aimed
at keeping line managers up to date with information.
FENS, like a newspaper, covers job vacancies, new customers, press
releases, product development and marketing.
Line managers could call up the three paragraph stories which they
believed were relevant to their areas. A contact name and number is
provided at the bottom of the story if further information is required.
FENS did not replace weekly team meetings, but was regarded as an aid to
Line managers could download the information for use in team meetings,
for posting on notice boards, or for use in one-to-one sessions when
they have decided who the information should be cascaded to.
They were trained by the communications department to write their own
three paragraph copy so that the service can be devolved away from the
FENS is now being made available to all 3,200 of Bass Brewing’s 4,000
staff who have access to a computer.
The communications review is now continuing with a review of the
company’s bi-monthly tabloid newspaper.
Despite the reliance on FENS, Bass is also committed to face-to-face
communications which it regards as ‘the prime communications mover’.
Senior management visit all its regions at least once a year to talk to
The communications department now has nine staff, down from 13 when it
was set up three years ago.
Its role has changed as the company has evolved and internal
communications has been devolved.