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
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
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.’
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
’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
’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
’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
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
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