MARKET FOCUS: INTERNAL COMMUNICATIONS - Internal comms move from HR to PR. In a fast-moving world, companies are turning to communications experts in PR firms and departments to fashion strategies that will keep their employees on the job. Michele Foster

Corporate America is witnessing a revolution in internal communications - and PR firms are right in the middle of it.

Corporate America is witnessing a revolution in internal communications - and PR firms are right in the middle of it.

Corporate America is witnessing a revolution in internal

communications - and PR firms are right in the middle of it.

The major PR agencies are building internal communications practices to

assist their clients as they struggle to retain employees and remain

competitive in a changing marketplace.

Even consultancies that always specialized in internal comms, such as

Sheppard Associates (now part of Ketchum), are emphasizing strategic

communications more, instead of the relaying of information about

employee benefits.

The tight labor market, combined with the fast pace of change

characteristic of the ’new economy,’ has brought a need for a much more

strategic approach to employee relations than ever before.

While as little as five years ago, internal communications was most

commonly the bailiwick of the human resources department, it is

migrating to corporate communications. A 1994 Watson Wyatt study found

33% of companies housed the function in HR, 29% in corp comms. In last

year’s survey, 46% had it in corp comms and only 22% in HR.

This movement recognizes the strategic nature of internal communications

and, thus, the need for it to be entrusted to communications


Rob Duboff, partner and director of marketing (internal and external) at

Ernst & Young and coauthor of the book Market Research Matters, notes

that during the 20th century companies focused on a variety of areas

including mass production, distribution and supply chains, cost

economies and downsizing, branding, growth and customer loyalty. In the

early 21st century, he says, they will concentrate on their


What are the marketplace dynamics fueling this trend? To name a few:

globalization, the tight labor market, changing workforce demographics

and competitive pressures.

Gary Grates, president of GCI Boxenbaum Grates, says, ’The whole

landscape has changed: global marketplace, new technologies ...

Employees need to know how they fit into the company, in a continually

changing environment.’

Notes Roger Dunbar, professor of management and organizational behavior

at New York University’s Stern School of Business, ’Things are speeding

up; there is more going on. As a result, there is more awareness of -

and less tolerance for - mixed messages.’

Transformed employees

Amid all the change, the workers themselves have been transformed. The

wave of corporate downsizings, followed by the Internet and the ’new

economy,’ have made today’s employees different from the generation

before them.

’Employees recognize B.S. now,’ observes Jeff Levy, VP of the internal

communications practice of TSI Communications in New York. ’They have a

’show me, don’t tell me’ attitude. You can’t just give lip service to

’employees are our most valuable asset.’’

According to Grates, ’Today’s employees want facts, want to know how the

company is doing and how committed the leadership is. They are saying,

’What kinds of opportunities are there for me while I’m here?’ There is

no more true loyalty - the current competitive model doesn’t allow it.

There’s no more womb-to-tomb mentality.’

Another factor contributing to the increasing importance of internal

communications is the fact that the economy today is largely

service-oriented, which depends heavily on the quality of people. ’The

last bastion for competitive advantage is people,’ Grates notes.

The revolution in internal communications also stems from a change in

its role and objective. While before, the goal of employee

communications was making sure workers understood company policy, the

goal now is behavior change.

’Internal communications was in HR in the first place because

communications was HR programs: benefits, learning and development -

fairly tactical, not a ’communications’ specialty,’ says Max Caldwell,

chairman and CEO of Banner McBride, Hill & Knowlton’s workplace

communication division.

’Now, the role of internal communications is viewed as more

business-focused than people-focused - as a way to improve the

performance of the business.’

In fact, internal comms is now seen more like an internal application of

marketing communications - the same tools are used on employees as on

customers and other external audiences. Research, branding, campaigns,

loyalty programs and other communications tools are being used inside

the company. For example, Banner McBride has been working with Delta Air

Lines to align employee attitudes and behavior with the promise of its

new passenger-focused brand-identity campaign, unveiled in March.

Ernst & Young’s Duboff predicts that the emerging trend towards using

established marketing tools and techniques internally will only continue

to grow.

’PR firms are a natural fit for internal communications because they’re

also doing external communications,’ he remarks. ’Further, part of PR

firms’ value in employee relations is that they have seen best


So, they could be extremely helpful in strategy. Also, their knowledge

and experience may complement the company’s internal talents. They are

also good for designing specific campaigns, just like they do external

PR campaigns.’

NYU’s Dunbar offers additional reasons PR pros are valuable to a company

needing to improve employee relations: ’The important thing is, they

know how to ask the right questions. They actually ask the question,

’What is it that you want to communicate?’ Bringing in outsiders to talk

to your own people may not be the best, but PR firms know how to ask

these questions, and that’s very important.’

Dunbar adds that communications consultants also perform the important

role of packaging employee feedback in a way that upper management will

find palatable and usable. Mostly, he says, the goal should be to link

an employee’s work in a local area to its importance to the overall


’It’s important that these links get made, no matter who does it,’ he

says. ’The companies that can’t do it themselves really have to go

outside for help. A wonderful outcome is if the company can say to the

consultant, ’We all see this issue now and can talk about it. We don’t

need you anymore.’ The dilemma is when management leaves the problem

with the consultants.’

Internal or external?

For the most part, it appears that companies are not, in fact, leaving

the problem with the consultants - or at least not with the PR


The timing and the duration of PR firms’ internal communications work

seem to be circumstantially driven.

’Half the time, companies use outside consultants when going through a

change or transition, or face competitive pressures. This is the source

of most of our business,’ says Mike Fox, VP and director of the

workplace performance group at Ogilvy PR. ’These are normally

18-to-24-month projects.

Companies generally don’t retain an internal communications firm like

they would an external communications firm and just have them there.

Specific circumstances drive the need.’

For example, Ogilvy is handling both the external and internal

communications surrounding the recently announced name change of gas

giant BP Amoco to BP. And, 18 months after its merger with another

company still wasn’t going well, a consumer products company brought in

Burson-Marsteller to help build a shared culture, including a united

leadership team focused on driving one agenda. A year later, research

indicated improvements across the board, including in areas identified

as key for business success: innovation, leaders ’walking the talk,’

two-way communication and reward and recognition.

Internal communications practice sizes vary across agencies. Some have

several specialists, like Edelman’s team of six pros. Others have dozens

of internal communications specialists, such as Burson-Marsteller’s team

of 40. While some firms are better at implementation, most firms seem to

believe that PR’s best value is in strategy. For example, Ogilvy’s

workplace performance group has 12 pros who provide strategic counsel to

clients, and the implementation phase normally involves the client teams

in the respective practices. Some agencies work with the client’s

vendors to coordinate the implementation of their strategies.

While most agencies prefer not to cite revenues from their internal

communications practices, Fox assures that ’we’re having no problems

getting companies to pay for it. Communications are very strategic to a

company. But it’s still an area in which we’re testing our credentials

as professionals.’ Edelman’s employee engagement practice bills about

dollars 2 million per year and is indicative of the potential this area

holds for PR.

There’s a variance of opinion on the question of how directly PR firms

compete with management consultants in this area. Michele Galen,

managing director of Burson-Marsteller’s change communications practice,

says her agency does compete directly with management consultants. Other

agencies see the roles of each as more complementary than competitive.

Nick Kalm, SVP of Edelman’s practice, suggests that ’companies should

hire change management (management consulting) firms to develop the

corporate design (structure), then hire a PR agency to communicate it

and tell employees what role they can play in the new process.’

In the near future, internal communications will probably look a lot

like today’s external marketing. Observes Duboff: ’Internal

communications is still undiscovered territory. More and more,

management will realize the talent of their people. Companies have

started to realize that internal marketing is just as important as

external marketing.’

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in