Communication Director 03/2015 Sample

COMMUNICATION DIRECTOR the magazine for corporate communications and public relations

eu ropean issu e

Number 3/2015 www.communication-director.com

Pleased to meet you?

Strange bedfellows

The strategic art of stakeholder engagement

Learning to manage super stakeholder groups

Getting traction, being believed Brand, browsing and beyond Driving engagement with data-driven personalisation

Building partnerships through corporate diplomacy

Think you did excellent communications work this year?

Then convince our Jury.

Florence Ranson Director of Communications, Food Drink Europe, Chairwoman

Marc-Oliver Voigt Publisher, Communication Director, Chairman

Martin von Arronet Senior Vice President Corporate Communications, Electrolux

Brian Bannister Head of Global Communications, KPMG International

Markus N. Beeko Director Campaigns & Communications, Amnesty International

Pascal Beucler Senior Vice President & Chief Strategy Officer, MSL Group

Luca Biondolillo Chief Communications Officer, MSC Cruises

Robin Boon Head of Corporate Communications, Aegon N.V.

Salvador da Cunha CEO, Lift Consulting

Yasemin Erdemir Kristina Ebenius Global Communication Director & Healthcare and Event Manager, Practice Leader, JKL Group/ MSLGROUP, Turkish Airlines Nordics

Jeremy Galbraith CEO EMEA/ Global Chief Strategy Officer, Burson-Marsteller

Pierre Goad Global Head of Communications, HSBC Holdings

Clarissa Haller Head of Corporate Communications, Credit Suisse Group

Herbert Heitmann Executive VP Corporate Brand, Communications and Government Relations, Bayer

Chris Huntley Senior Vice President Communications, Tetra Pak Group

Hans Koeleman Director of Corporate Communications, KPN Royal Dutch Telecom

Ulrich Lissek Communications Director, Nord Stream

Cecile Missildine EVP & Regional Director EMEA, Text100

Michael Murphy Senior Partner, Michael Murphy & Ltd

Rose de la Pascua Chair of Spain & Executive Vice President Europe, Weber Shandwick

Catalina Rousseau President and CEO, BDR Associates

John Saunders Elisabeth Schick Regional President Senior Vice President EMEA, FleishmanHillard Communications & Government Relations, BASF Group

Peggy Simcic Brønn Professor, Dpmt. of Communication and Culture, BI Norwegian School of Management

Michael Stewart President & CEO, Europe & CIS, Edelman

Chris Talago Executive Vice President, EMEA, Waggener Edstrom Communications

Núria Vilanova Giralt Martina Tydecks Executive Director, Inter- President, Grupo national and Member of Inforpress Global Leadership Team, APCO Worldwide

Edward Walsh Senior VP, Global Integrated Communications, Royal Philips

Charlotte Lindsey-Curtet

Director Communication and Information Dpmt., International Committee of the Red Cross

Wolfram Winter Executive Vice President Communications, Sky Deutschland

Andres Wittermann Executive Vice President, EMEA & APAC, LEWIS PR - Global Communications

ENTRY DEADLINE: OCTOBER 2 ( L AT E D E A D L I N E : O C T O B E R 8 )

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EDITORIAL

Welcome, Among the usual line-up of articles on all aspects of the communicator’s job portfolio, this issue of Communication Director looks at stakeholder engagement. It’s a popular buzzword, but what exactly is stakeholder engagement? We’ve defined it as the proactive integration of feedback from those impacted by your organisation’s operations. In other words, putting a human face on your business.

The next time your company find itself in a stand-off with a hostile party, invite them to pull up a seat and talk it over. By emphasising the things we have in common rather than our differences and by acknowledging that no-one is perfect, we can step outside our preordained roles and work together to find common ground. Stakeholder engagement means working towards trust, even (especially?) among those with different views: Left and Right, corporations and NGOs, employees and management.

It means reaching out before problems arise, rather than after, it means listening as much as talking, explaining with humility rather than boasting or finger-pointing.

It’s not surprising that several of the companies most invested in stakeholder engagement operate in industries that directly impact the quality of life of so many people – a fact reflected in the line-up of authors that write about their direct experiences in this issue. I’m certain you will find that their insights prove that stakeholder engagement is more than just a buzzword: it’s an invitation for all of us to do business, better.

MARC-OLIVER VOIGT

Photo Private

Publisher

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3/15 70

ISSUE FOCUS

Strange bedfellows Companies may not always agree with their stakeholders, but respectful engagement, guarantees mutual benefits

Stakeholder engagement

82

The sixth sense To craft messages that fully engage all receptors, communicators themselves have to step outside the ordinary

74

So what’s the deal with data?

More than just a strategic asset, data can help drive engagement

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The key to corporate diplomacy

Establishing a corporate embassy A Brussels representation can align public affairs activities to the company strategy

Listening to the demands of different audiences can be frustrating – but vitally important

8 • RISK

22 • BRAND

Risk and reputation

The case for rebranding Greece

In an age of disruption, businesses are faced with new reputational risks

The need for nation branding has rarely been so urgent

14 • PR ESSENTIALS

26 • DIGITAL

European Communication Monitor

A world connected by dots

Selected findings from the largest annual survey worldwide in the field

How the Pareto Principle applies to digital communications

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CONTENT

48 • POLITICAL

The results are in…

30 • INTERNATIONAL

Communicating calm after the storm The evolution of Japanese corporate communications

34 • FINANCIAL

A case of distortion When approaching financial reports, you are advised to leave your rose-tinted glasses at home

Full of sound and fury, the UK general elections signify several surprising communication lessons

52 • CRISIS

Crisis communications á la russe From corporate to political, Russia is rich in crisis best (worst?) cases

56 • HR

64 • INTERVIEW

Putting gender on the IT agenda

Jim Wilkinson

Breaking down the barriers between women and the IT industry

Head of international corporate affairs at Alibaba Group on the Chinese giant’s global ambitions

60 • SKILLS

90 • COMMUNICATION READER

Relax – the future’s visual

Books

Photos www.thinkstock.com; www.alibabagroup.com; Mr. Prezident

A new raft of cutting edge tools are bringing a whole new dimension to presentations

A selection of recent and forthcoming titles for the communicator’s bookshelf

40 • CAREER

92 • ASSOCIATION

Building soft skills in a flat world

European Association of Communication Directors

In a connected world, soft skills are all-important differentiators

The latest developments in the EACD

44 • HISTORY

98 • QUESTIONS TO

The House of European History

Communicating with a passion

A new museum promises to bring clarity to Europe’s convoluted narrative

Why Claire Warmenbol wants to conserve nature for the next generation

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RISK

Risk and reputation

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usinesses are exposed to an increasing number of disruptive scenarios stemming from today’s interconnected corporate environment. Although traditional industrial perils, including natural catastrophes and fire, continue to head this year’s Allianz Risk Barometer rankings, businesses are also concerned about the increasing impact of a number of non-property damage risks – such as cyber and political risks which can impair both balance sheet and reputation, the risk barometer shows. Collaboration and communication have a vital role to play in improving mitigation and risk management of these corporate risks.

The Allianz Risk Barometer is an annual survey that quizzes over 500 risk managers and corporate insurance experts from more than 40 countries.

In the 2015 barometer – and for the third year in succession – business interruption and supply chain risk ranks as

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In an age of disruption, businesses are faced with a whole new array of risks to their reputation. Communication can help manage these risks.

BY GREG DOBIE AND HEIDI POLKE

the top peril with almost half (46 per cent) of the responses rating this as the most important risk for companies, up 3 per cent year-on-year. Natural catastrophes (30 per cent) and fire/explosion (27 per cent) rank second and third and are also the major causes of business interruption companies fear most. Cyber (17 per cent) and political risks (11 per cent) are the most significant movers in this year’s barometer.

Yet although awareness increases – with accounts of cyber attacks seemingly in

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the headlines every day – cyber still ranks as the top peril underestimated by many companies, the risk barometer shows.

Political risk is also a much bigger concern for businesses. More and more countries are experiencing political situations which pose a huge challenge for companies’ people and assets. Country risk levels change more often and more frequently than they did in the past, which makes risk assessment more volatile and businesses more vulnerable.

RISK

Business interruption impact outweighs physical damage Business interruption and supply chain risk ranks as the top peril in all three regions surveyed for the 2015 risk barometer: Europe, Middle East and Africa (EMEA), Americas and Asia Pacific.

This topic will naturally concern communications professionals who are only too aware of the reputational damage arising from a major service disruption.

It is interesting to note that the impact of the subsequent disruption potentially affecting a company, its suppliers and customers often outweighs that of the physical damage. At $1.36 million, the average business interruption insurance claim is 32 per cent higher than the average direct property damage claim ($1.03 million), Allianz research shows. Such business interruption claims do not include the cost of

“Cyber risks is the big mover in EMEA’s top 10.” reputational damage – a growing concern for risk managers. In recent years, insurers have responded with an increasingly sophisticated approach to reputational insurance, including for the impact of cyber attacks, yet best practice suggests that a combination of pre-loss risk management plus post-loss insurance coverage and loss mitigation remains essential.

According to responses natural catastrophes (58 per cent), changes to the political environment (53 per cent) and the impact of globalisation, including increasingly specialised global suppliers, (41 per cent) are the main risks that can lead to supply chain disruption, with these also identified as the top trends that will in-

crease the threat of business interruption in future. However, the increasing impact of digitalisation, including internet-based supply chain management, is identified as an emerging risk in both of these categories.

More severe implications Adequate mitigation of contingent business interruption – which is when a business is unable to operate because of an event that damages one of its suppliers – and business continuity management remains a gap in many multinational companies’ supply chain risk management programmes.

Interdependencies between suppliers are often a big unknown. Many businesses still do not have alternate suppliers.

At the same time the greater interconnectivity of the global economy is manifesting itself in increasingly more complex production processes with higher economic values resulting in possibly more severe business interruption implications. Therefore businesses need to better analyse their production processes accordingly.

Collaboration between different areas of the company – such as purchasing, logistics, product development and finance – is necessary in order to develop robust processes which identify break points in the supply chain. Supply chain performance management analysis can enable early warning systems to be created.

Many of the major causes of business interruption identified in the risk barometer relate to the rising impact of non-physical damage events such as the impact of a product quality incident (24 per cent), a cyber attack (17 per cent), civil unrest (11 per cent), loss of talent (7 per cent) and particularly the impact of failure in service delivery by a supplier (35 per cent, ranked third), reflecting the added complexity of business interruption risks.

Non-damage business interruption is becoming a much bigger issue as companies look to protect against a range

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of different exposures, such as strikes, a government authority closing down an area linked to an outbreak of disease, or civil commotion and/or riots.

Loss of reputation main cost in event of cyber attack Cyber attacks are increasing, both in number and sophistication. One recent study estimates cybercrime now costs the global economy in excess of $400 billion a year. Therefore it is unsurprising that cyber risks is the most significant mover in the top 10 global business risks, moving up three positions year-on-year, ensuring it enters the top five risks for the first time.

In 2014 it ranked eighth and in 2013 just 15th in the risk barometer. All industries surveyed found cyber risks to be a greater concern than last year. The financial services, manufacturing, power and utilities and engineering sectors were the most influential in ranking cyber risks higher.

According to responses, loss of reputation (61 per cent) is the main cause of economic loss followed by business interruption (49 per cent) and damages paid due to loss of customer data (45 per cent).

The almost automatic blow to a company’s reputation following a cyber attack can have a dramatic impact on balance sheets. According to the Edelman Privacy Risk Index 71 per cent of customers say they would leave an organization after a data breach. Companies must be aware of such potential reputational risks and analyse them, making sure they assign values to the possible scenarios to minimize and assess the residual risk.

Meanwhile, data theft and manipulation (64 per cent), reputational loss (48 per cent) and increased threat of persistent hacking (44 per cent) are the scenarios businesses fear most.

However, companies should also not underestimate the so-called “human factor”. Employees can cause large IT security or loss of privacy events, both inadvertently and deliberately.

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PR ESSENTIALS

Insights and experiences Presenting 10 starting-points for discussion in this year’s European Communication Monitor

BY R A L P H T E N C H A N D A N S G A R Z E R FA S S

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apid changes in the communication environment challenge organisations around the globe.

Many claim that mass media are losing their leading role in shaping public opinion and new approaches like content marketing are propagated. However, there is little evidence that this helps to support organisational goals. Looking further, there is no compelling answer at all to the overarching question of how communication creates value for organisations – instead, various rationales like building reputation, managing relationships, avoiding crises, securing legitimacy, identifying opportunities or supporting sales compete with each other both in theory and practice.

These and other questions are explored in this year’s edition of the European Communication Monitor. This survey provides a clear view and understanding of the mindset of today’s European communications leaders and in this article we look at the standout findings of this year’s report.

Future relevance of mass media Communicators in Europe predict a tectonic shift from the predominance of mass media to owned media (which used to be called “corporate publishing”) for shaping public opinion. They intend to spend less on advertising, while they see a strong rise in the use of unpaid interactions with mass media and even more for strategic partnerships with the mass media. Nevertheless it would be premature to predict the death of the traditional mass media: nearly three quarters of the respondents use mass media to monitor news and public opinion, and more than two thirds

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PR ESSENTIALS

ABOUT THE EUROPEAN COMMUNICATION MONITOR 2015 In July this year, the European Public Relations Education and Research Association (EUPRERA) and the European Association of Communication Directors (EACD) published the results of their ninth annual study on the state-of-the-art of communication management and trends within the profession across Europe. The European Communication Monitor 2015 is based on replies from 2,253 communication professionals in 41 European countries. The monitor is the largest annual empirical survey in the field worldwide; it provides country-specific analyses for 20 key markets across the continent. The ECM is supported by partners PRIME Research International, a global leader in strategic communication research, and Communication Director magazine. Authors of the study are five university professors representing leading academic institutions in the field, led by Professor Ansgar Zerfass from the University of Leipzig. A wider board of professors and national research collaborators ensure that the survey reflects the diversity of the field across Europe. A free PDF report with full results as well as a YouTube video with the highlights is available at www.communicationmonitor.eu

evaluate media coverage of the organisation, its products and services. Besides these inbound uses of the mass media, communicators still extensively use mass media for outbound reasons: more than seven out of ten respondents spread information about the organisation, its products and services through mass media and more than half use them to influence gatekeepers, the media agenda and stakeholders.

Integrating communication 85.6% of respondents believe that there is an overall need to integrate communication activities which affect all functions. The reason why: many believe that all communication functions nowadays use the full range of instruments online/offline, sometimes only under disparate names. But comparison to the 2011 Monitor shows that there is hardly any progress in integrating communication by intra-organisational collaboration: ties between functions have not been strengthened during the last five years.

Content strategies Researchers are sometimes slow in addressing new concepts of content strategy, brand journalism, content marketing and native advertising, as if they are only passing hypes. Communicators in Europe, however, perceive these concepts as very important: content strategy, content marketing, brand journalism, and native advertising, with strong gaps when compared to their actual usage. There are significant differences between countries. For example, content marketing has high usage in the United Kingdom and Finland compared to Slovenia and Croatia, who are slow movers in this respect. Major differences were also found for the usage of content strategy as well as brand journalism – the latter practice being very popular in Danish, Dutch and British organisations. Marketing, brand, consumer and online communicators are more in favour of these concepts than media relations and strategy and coordination people. There seems to be a defensive and conservative tendency at work here involving “traditional” public relations functions (e.g. media relations): many seem try to preserve their turf in what is a diminishing territory.

Strategic issues “Linking business strategy and communication” continues to be the most important issue for communication management in Europe, leading the list of top issues for the third year in a row.

This finding reiterates that the profession is continuing to strive

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BRAND

The case for rebranding Greece Sustainable nation branding is paramount to economic recovery and should be high on the Greek agenda.

B Y STAV R O S PA PA G I A N N E A S

B 22

etween 2009 and 2011, Greece went from being seen as a stable eurozone member to Ground Zero in the Nation Brand Index, the concept of measuring global perceptions of countries across several dimensions such as culture, governance, people, exports, tourism, investment and immigration.

The impact of the global financial crisis of 2008, in combination with deplorable state management during the last 35 years, a huge debt, punitive austerity measures, popular anti-austerity protests and the demonisation of the country by

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European media, was devastating. In particular, the anti-Greece campaign of mainstream European media took on grotesque proportions., seeming to push public opinion to conclude that the only solution to the problem is a Grexit because the whole country is populated by lazy and corrupt people.

A headline in the Dutch newspaper De Telegraaf on 19 May 2011 is characteristic: “Kick them out of the eurozone. Our citizens no longer want to pay for these wasteful Greeks.” Germany’s best selling tabloid Bild Zeitung was the champion of

BRAND

the Greek-bashing campaign, constantly referring to irresponsible practices of the past. In February this year the tabloid launched a new hate campaign with front-page headlines urging its readers to say “No” to “more billions to greedy Greeks”. Bild readers were invited to print a huge NEIN, take a selfie with it and e-mail it to the newspaper. It was not the first Bild Greek-bashing campaign and will probably not be the last one.

Media credibility in question Many European politicians used the Greek crisis to monopolise the debate, changing the subject from job creation and investments to panic-driven austerity. EU member states from the north imposed their doctrine of cuts to countries like Portugal, Spain, Italy and Ireland. Most of all the German government forced other countries to follow policies that weakened their economies and their democracies. When citizens vote for a change of policy, especially those affecting their standard of living, but are told that these matters are determined by the eurozone or that they have no choice, both democracy and belief in the EU suffer. “Swiftboating” (the American term for unfair or unfounded political attacks) Greece became a common practice against the country.

The role of the Greek media – especially private television and radio channels – also contributed to the worsening of the country’s image. It showed a malformed image of Greek society at home and abroad. One could wonder, for example, why so many Greeks voted No

“The role of communications in developing brands is essential.

Classic corporate branding is based on a combination of image, cause and effect, expectations and realities.

It can successfully be adapted for nation branding as well.”

at the last referendum, while 99 per cent of main stream media was in favour of a Yes vote. In Greece, media has traditionally been dominated by a group of business tycoons, with significant investments not only in media and publishing, but in sectors such as shipping, banking, oil, construction and insurance. Media owners have used their power over the 35 last years to wield major political and economic influence through the broadcasting of exaggerated pro-government propaganda and through the promotion of their own interests. Therefore the results of the 6 July 2015 referendum were remarkable for the current government, which has only marginal access to a traditionally hostile mainstream media. The exaggerated propaganda-style news coverage created a boomerang effect. Take for example the coverage of the two ral-

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lies for Yes and No on 3 July 2015. Greek media reported about 20,000 participants for Yes and 25,000 participants for No. However, aerial photographs reveal that the No rally was at least five times bigger.

Therefore the credibility of mainstream media in Greece is quite low.

After the rejection of proposals on austerity measures by the creditors of Greece in a referendum on 5 July 2015 the country lost its last credibility. It is crucial in the current situation and after the bailout deal of 13 July 2015 for Athens to find a way to accelerate the economic reconstruction and boost the country’s image.

Nation branding During the past decade, nation branding has become a popular concept, studied by experts from multidisciplinary areas like communications, political sciences, diplomacy and international relations.

So how to rebuild the image of a state in such a deep crisis? Great brands are mostly built through public relations, not advertising. The role of communications in developing, disseminating and preserving brands is essential. Classic corporate branding is based on a combination of image, cause and effect, expectations and realities. It can successfully be adapted for nation branding as well.

Let’s take a look at two interesting national cases which, though not exactly similar with the Hellenic case, nevertheless give sufficient insight into how nation branding works In Hong-Kong in 2003, 299 people died from Severe Acute Respiratory Syndrome (SARS). The city was perceived as the center of the global fight against the virus with serious consequences for local business and tourism. While global attention focused on fighting SARS, Hong Kong authorities and the private sector joined forces to prepare the post-crisis phase, promote economic recovery and prepare a post-SARS return to economic growth.

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A world connected by dots Wake up to the world of today, where the digital connections that bring people closer together allow for extraordinary brand and engagement opportunities.

BY DORIS CASARES

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DIGITAL

internet now facilitates the worldwide democratisation of information. Before the arrival of the world wide web (after the internet was born from ARPANET, the primary precursor network, in the US, it was Switzerland who gave birth to the world wide web at the acclaimed CERN research institute outside Geneva), it was extremely difficult – not to say almost impossible – for many people without resources to access education and information in so many countries across our planet.

Picture www.opte.org / Barrett Lyon / http://creativecommons.org/licenses/by-nc/4.0/

This image shows a map of the internet in 2015 created by The Opte Project.

It is the first major release of the internet map since 2010.

North America is represented by the colour blue, Europe by green, Latin America by purple, Asia Pacific by red, Africa by orange, and "Backbone" (highly connected networks) is white.

See www.opte.org/ the-internet

O

ur world is changing – and so are we.

Almost everything today is becoming digital, and that includes not only the way we communicate but also our behaviour as human beings.

I once saw a very interesting interview between Bill Moyers of the PBS show World of Ideas and Isaac Asimov, one of the forefathers of science fiction and author of more than 500 books. In it, Asimov reflects on two essential concepts of the new “digital economy”. The first is the universality of information in a society increasingly connected by dots. The second is the way in which we access this information. As many researchers and thinkers have already highlighted, the

Just one click away

“Try to speak less about yourself and more about others and you will gain a lot in terms of reputation, credibility and authority when referring to social media and building a strong community of followers.”

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Today, the situation has changed radically and new communication channels have opened a window onto a huge and exciting world of concepts, human stories and ideas that can be easily and comfortably accessed from our screen in the comfort of our homes. As Google likes to state, we are all one click away from our competitors, and this is an incredible advantage for all marketing and communication professionals: if we know how to use the tools effectively, they allow us to stay ahead in the new innovation era, where all of us are connected by dots.

I still remember how, at the 21st annual conference of the European Generic and Biosimilar Medicines Association in Berlin, our president began his opening speech by posing this question to the audience: “Do you remember what you were doing when you were 21?” This might sound like a light-hearted question, but, as I listened to the speech, I realised that, at 21, I was sending my first email to my parents from Washington DC, where I used to work at the correspondent office of the biggest daily Spanish newspaper.

I looked back in time and recalled that not so long ago, communication was still perceived as having a big gap between one side of the ocean and the other. But today you can be comfortably seated in your couch, sending the latest report to your colleagues in South America so they

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INTERNATIONAL

Communicating calm after the storm Japan is upping its communications game: a series of crises have led to better communication strategies and greater use of professionals.

Picture Wikimedia Commons / Unknown Japanese copyists after Katsushika Hokusai

BY JASON KEN DY

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esterners give Japan a lot of heat for its perceived inability to change. I would, however, argue that Japan has changed more over the past 20 years than, say, America has over the past 50. While change comes slowly here, it is constant and considerable over time.

One notable ongoing transformation is in the world of corporate communications. The once maligned in-house corporate communications department – far from decision making and influence – is rising within the Japanese corporate structure as boardrooms learn from failed attempts to independently manage crises.

So what does Japanese communications look like in an old-school Japanese firm?

Orbiting the sun For decades, one of the least influential and rarely tapped resources within the traditional Japanese company has been the communications team.

I like to imagine the typical Japanese corporate structure as something like the solar system. At the center is the all-powerful sun – huge, warm, life giving. This is the president’s office, or shacho shitsu, and boy it burns bright. Though we hear a lot about flat structures and consensus building in Japanese society, don’t take that too literally. The sun makes decisions, crafts messages, chooses directions, and commands everyone. (He – and yes it is almost always a he – goes around later building consensus that certifies his original decisions.)

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Orbiting very close to the sun are frighteningly powerful departments like human resources, corporate planning, administration and sales. These people are in on everything and if you want to live you never cross them.

Where does corporate communications sit in this structure? Imagine Pluto. Far, in the cold outer reaches of the galaxy, is a small rock that does what it is told. It is staffed by company men and women largely on three- or four-year weigh station assignments until they move on to any number of other postings along their generalist career paths.

For instance, you often find people in the “PR department” who have worked in unrelated positions in legal, the Osaka Branch, the manufacturing facility, or any other posting you can name. (Example: I once was asked to visit a newly appointed head of communications at a major Japanese bank to talk to him about the public relations industry.

Fresh from his latest assignment running a small branch in Kagoshima, he began by asking me, “what is PR?”).

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FINANCIAL

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FINANCIAL

free for all, a smorgasbord of choice, for company managers. Beware: if the text is from an annual report, it may not be covered by the auditor’s report whose scope is generally narrowly restricted to the audited financial statements. Impression management happens in many domains, such as job interviews, politics and marketing. Impression management in corporate reporting is the practice of covertly manipulating material in corporate documents to distort the perceptions of audiences. For example, the language used to describe the company’s financial performance may be expressed in glowing terms, while the underlying numbers in the audited financial statements may tell a different story.

Management discussion of company performance is ripe for distortion. However, companies can use impression management to distort other aspects of their business. For example, companies may want to portray an impression that they are operating in a legitimate manner, abiding by social norms and expectations of society concerning their social practices, environmental issues, and so on.

Photo www.thinkstock.com

Enron No article on financial reporting is complete without some reference to the most infamous financial reporting fraud ever. Enron, the seventh largest US corporation, collapsed suddenly in October 2001. Example 1 reproduces extracts from Enron’s Letter to Shareholders published in February 2001 shortly before the collapse. This text (I have underlined some key words) creates the impression of a hugely successful company when we now know the underlying facts were the complete opposite.

Example 1: Letter to shareholders (extract) Enron’s performance in 2000 was a success by any measure, as we continued to outdistance the competition and solidify our leadership in each of our major businesses…

Our results put us in the top tier of the world’s corporations. We plan to leverage all of these competitive advantages to create significant value for our shareholders. (Source: Enron Annual Report 2000)

How one letter can make all the difference The next example of impression management and distortion is taken from a note in the 2007 audited financial statements of the Irish Nationwide Building Society. Inclusion of the letter ‘s’ created the wholly misleading impression that there were a number of pension schemes for a number of employees, when in fact there was only one pension scheme of €27 million for one person, the chief executive officer, Michael (‘Fingers’) Fingleton. As this text comes from the audited financial statements, one wonders how the auditors allowed such misleading material to get by them.

Example 2: Notes to the financial statements (extract) The obligations under one of the groups [sic] defined benefit pension schemes, operated by the Group, was settled on 12 January 2007 by transferring outside the control of the Group the assets and obligations of the scheme to another retirement benefit scheme.

This represents full and final settlement of the Groups [sic] pension obligations to the members of the scheme. (Source: Irish Nationwide Building Society Annual Report & Accounts, 2007)

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Impression management strategies There are a number of ways in which the words and numbers in corporate reports can be distorted for the purpose of impression management. In discussing these, I have assumed the financial performance of the company is what is being distorted.

• Readability: Bad news can be distorted by making it hard to read. Research has found good news to be easier to read than bad news.

• Rhetoric: The way in which language is used can create a distorted impression of the underlying truth. The rhetorical device of repetition is common: for example, good news being repeated but not bad news. In September 2014, UK retail giant Tesco plc revealed a £250 million hole in its profits arising from accounting irregularities. But if you read the rhetoric in the chairman’s 2013/14 statement (Example 3) you would get the impression that accounting irregularities are an impossibility. We now know the rhetoric distorted the realities. Was the distortion deliberate? Yes, on the part of the chief executive and chief financial officers who knew of the accounting treatment recognising revenue too early, although the board as a group may not have known.

Example 3: Chairman’s statement (extract) Our accounts as a whole have been considered by the Board in the light of the new test to be “fair, balanced and understandable.” We have taken seriously the spirit as well as the letter of the new Regulations, which are seeking to build trust between the corporate sector and society generally through levels of transparency and disclosure which are undoubtedly now world-leading. (Source: Tesco PLC Annual Report and Financial Statements 2014)

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CAREER

Building soft skills in a flat world

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COMMUNICATION DIRECTOR 3/2015

CAREER

In our new world of connectedness, every company employee is a potential spokesperson – so why not equip them to do that job?

BY MARK SHEEHAN

Photo www.thinkstock.com

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ow can we build communication to achieve strategic outcomes and what is the role of the public relations practitioner in making sure our communication matches our intentions?

For a long time we held the view that if you had a particular skill – such as accountancy, trades, engineering, IT, management – all you needed to make a success of life was to learn some “soft skills”. These soft skills included communication, presenting and speaking and team building For example, a belief that we are all much the same and are all connected can increase your confidence and effectiveness when presenting to others. Awareness of constant change makes your communication flexible and adaptable.

Understanding how we all depend on each other transforms your leadership style. Expecting obstacles means you are ready to find solutions while others are still resisting the change.

Out of India came the expression “flat world”, the new world of IT where we are all connected and opportunities to cooperate and thrive abound. In this flat world investment brokers in Mumbai can be pitching an initial public offering to Sydney-based clients while

another broker in Singapore is exploring the market potential for the same product with support from London-based lawyers. Skills and technology are increasingly global – so today’s point of difference has to be “people”.

The author of The World is Flat, Thomas L. Friedman, says in the conclusion of that book: “You can flourish in this flat world, but it does take the right imagination and the right motivation.” Soft skills can help us all flourish, but only if

“The flat world means that everybody is in communication.

If you cannot communicate, you miss out on providing content, context, connection and community.”

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they are supported by imagination, motivation and the best attitude.

In 2012 author and public relations practitioner Steve Manallack recognised the confluence of these two cultural strengths; a combination of India and the west created the ingredient for success in the new world – soft skills for a flat world. It was Manallack who recognised the different approach taken by successful Indian business leaders who, through their ability to give top priority to their attitude to life and their best attitude to people, created real energy and direction for soft skills.

Winning through content With the arrival of the internet age driven faster each day by mobile technologies, it has become essential to develop content, provide it in context, allow creation of connections and finally to build opportunities for customers and prospects to join your community.

This is good news for those who are in the communication business – you win in this flat world through content. For so long we recognised the cliché that “content is king” but we overlooked the depth contained in that statement. Content

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HISTORY

“The study of history is the beginning of political wisdom” Jean Bodin

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HISTORY

The House of European History (pictured left) is a unique museum project that communicates the chequered past of this conflicted continent.

B Y TA J A V O V K VA N G A A L

Photo E.Young / AACMA-JSWD

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like to compare the academic project team, which has been working over the last four years to put together the House of European History, to a runner who is reaching the last third of a marathon.The team has already covered so many kilometres, but there are still so much more to cover before reaching the finishing line in spring 2016.

A project of the European Parliament, the creation of the House of European History in Brussels has been debated since February 2007, when the then president of the European Parliament, Hans-Gert Pöttering, launched the idea in his inaugural speech: “I should like to create a locus for history and for the future where the concept of the European idea can continue to grow. I would like to suggest the founding of a House of European History” he said, setting off a process that was embraced unanimously by the executive bureau of the European Parliament.

The following year, a committee of experts consisting of historians and museum experts drawn from different European countries, was charged with

drawing up the concept for the House.

Their final report, entitled the Conceptual Basis for a House of European History, runs to 116 articles, the first 26 of which provide a solid basis for the creation of a contemporary museum in all its breadth and complexity.

The house that history built According to the Conceptual Basis, the narrative of the House of European History is to create a place where people from all across Europe, with different levels of knowledge and from different age groups, can learn about the ideas, processes, phenomena and events which have created the Europe of today.

To a large though not exclusive extent, the museum’s permanent exhibition will focus on the 20th century. The creation and development of the European integration process will be portrayed within this overall context, it will be placed within a broader time frame and be physically exhibited within a modern exhibition, documentation and information centre.

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Although the House of European History is an initiative of a political institution (the European Parliament), its academic independence and the objective portrayal of history is paramount. As with all museums, the House will serve as a bridge between the academic world and the general public as well as being tailored to the needs of its visitors. For this, the bureau of the European Parliament appointed a board of trustees and an academic committee to oversee the project.

For the academic project team that began work early in 2011, the stipulations in the Conceptual Basis that the permanent exhibition would not portray the individual histories of European states but rather focus on European phenomena, that its offers (exhibitions, programmes and so on) would be available in all of the languages of the European Union, and that the House of European History should build up its own collection, were all important starting points.

A unique project Before the team – initially formed of historians and museum practitioners – had been recruited and had begun the work of developing the narrative for the permanent exhibition, the building that would house the new museum had already been designated by the European Parliament. Just behind the campus of the European Parliament in the Parc Léopold, the Eastman Dental Clinic for poor children had been established in a building dating from 1934 that carried the name of its philanthropist founder. Later turned into a building that housed offices and the European Parliament’s staff nursery, this was the location selected for the future museum.

In spite of its varied and interesting historical past – and its perfect location – this former clinic nonetheless required thorough renovation. In 2009, a tender for its upgrade and expansion was launched, and in spring 2011, the French architectural practice Chaix & Morel and

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POLITICAL

The results are in‌ The 2015 UK General Election was a polarising event. But what communication lessons can it teach us?

BY DA N I E L VA L E N TI N E

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resenting a consistent image over time through the UK’s famously trivialising, variety-seeking, sceptical and antagonistic media is not easy for any organisation.

Now imagine that your organisation is not a corporation but a political party, and that every message you broadcast will be relentlessly scrutinised by commentators with long memories, attacked by well-funded lobby groups, criticised by factions within your own party and ridiculed by dedicated opponents. This might give you an idea why political communications is often at the cutting edge of communications practice. Here

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are a few lessons from the recent general election campaign that produced a shock Conservative victory on 7 May 2015.

Elections and lessons 1 Write your opponents history, and your own. Watch carefully how your opponents speak of your past. Guard your legacy carefully. Interpretations of the past are very important. The Conserva-

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tives were determined to fight the 2015 election on the economy and the economy alone, so they set to work to craft their own interpretation of the final years of the last Labour government. The result was rather clumsy but would be surprisingly effective. The Conservative narrative of Labour failure would eventually become received wisdom and even the Labour leader Ed Miliband was led into a progressive denunciation of the economic record of the Labour government of 2005-2010. This was to prove a costly mistake, since both he and his shadow chancellor Ed Balls had been involved in that government. The Conservative strategy had worked.

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Buy the best talent you can afford. The Conservatives had long worshipped the Australian campaign supremo, Lynton Crosby. UK political parties are accustomed to getting talent on the cheap, but they made an exception for Crosby. In 2005, they had engaged him for their election but brought him in too late. In 2010 they had made the same mistake, and so they were determined that he would be involved from the start of the 2015 campaign. Crosby was retained by the Conservatives in January 2013. They also retained the services of another heavyweight, Jim Messina, who had masterminded Obama’s 2012 re-election campaign, called the “most technology-heavy campaign in history”.

Repeat, repeat, repeat. Once you have found your killer issue, incessant repetition is essential. Whilst this repetition will very likely make for a boring campaign, embrace the boredom by prefacing every announcement and every response with this core message. The media hate repetition but you must persist. The 2015 Conservative campaign was deeply boring and remarkably effective.

3 Find a key differentiator. The Holy Grail is to find a killer issue that connects to both your core vote and your swing vote, and that the opposition is weak on. If you find an issue like this, test it thoroughly and then plug it relentlessly in every statement, in every response. For the Conservatives this was the economy and they worked hard to create a sense of economic peril in the public’s mind and to portray the Labour Party as economically inept.

4 Test everything. Tony Blair may have been mocked for introducing the focus group into UK politics after observing them in use by Bill Clinton in the 1992 US presidential campaign but polls and focus groups remain crucial to testing messages to ensure that they penetrate the right groups and don’t cause problems with other groups. The economic theme gave good results in both private polling and focus groups, and so the Conservatives believed they had found their armour-piercing issue.

6 Talk about the biggest issue. Elections are often fought over a single issue. Making your party’s strongest policy into the lead issue of the campaign is a major goal, but it is also important to accept reality if you fail to do this. Labour badly wanted to make the election about the National Health Service (NHS), but neither the media nor the public were receptive to the issue as the Conservatives had successfully protected themselves against this predictable Labour attack by ring-fencing health spending in 2010. David Cameron had illustrated his personal commitment to the NHS by frequently presenting the story of the NHS care that his disabled son received. Labour, however, seemed reluctant to accept defeat and to move their attention onto the issue that the media were centred on, economic competence and deficit reduction. Labour wasted many of their media appearances by trying to trigger public concern about the NHS despite it being clear that the NHS would not be a dividing issue in the campaign.

7 Concentrate resources for the ground war. The media war ran in tandem with a ground war in the constituencies. All UK political parties suffer from the problem that most of their activists are concentrated in their safest seats;

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hence safe seats tend to stay safe and marginals tend to stay marginal. The Tories created a mobile workforce of young activists called Team2015, led by the party chairman Grant Shapps, who were transported around the marginal constituencies.

8 Speak in code that only your supporters will understand. It is essential to be aware of the full tool-box of communications tactics so that you can spot them, defend against them, and even occasionally deploy them! The “dog-whistle” tactic is now so well known that its value is diminished. Lynton Crosby first used this in the UK in a rather coarse way in the 2005 election with the “are you thinking what we’re thinking?” adverts. But look out for more subtle use of language like the use of the word “compassion” by Liberal Democrats and Labour to mean “welfare”. The “hard working families” phrase adopted by Conservative was much mocked for being vague but it was effective because almost everyone identifies themselves as being included within it. To Conservative voters it implied that they support tax-breaks, therefore it has appeal to the right without being an open goal for criticism from the left. Labour wisely responded by quickly adopting the same phrase.

9 Find common sense defences for controversial policies. One of the cleverest coalition policies was to cap welfare at £26,000, the average household income.

The new limit seemed natural and gained the eventual support of Labour. It actually represented a huge change, with 33,000 families experiencing a cut in their welfare payments, but the linking to the average household income gave it a robust logic, and connected with the “hard-working families” theme.

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CRISIS

Crisis communications á la russe A vast and complicated country, modern Russia presents several fascinating case studies for crisis communications: behind the salacious headlines, public relations and spin are never far away.

BY VI KTOR ANOSH KI N

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ussia is an important case study for crisis communications specialists, facing challenges in areas ranging from politics to corporate scandals. As a rule, local public relations agencies publish briefs that unanimously say: ‘we manage crisis communications’. In reality, there is a lack of

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expertise in this important area of corporate communications. One reason for this is the relationship between media and newsmakers: editors (especially in the regions) prefer to ink long-term agreements with companies to place any news stories about them on a paid basis. Media outlets see the publication of stories about companies as a form of advertising and a source of income. Another reason is that corporate communications departments do not generate truly informative news about themselves and so fail to attract serious newsmakers.

CRISIS

Photo: Wikimedia Commons / Mitya Aleshkovsky / CC BY-SA 3.0

THE YUKOS CASE

However, the most attractive subjects for media outlets in terms of generating interest are the crisis situations that occur in companies from time to time. Global statistics shows that practically every mid- or large size company suffers a crisis every three years.

Being able to deal with crisis successfully is an essential part of every press service or corporate communications department. Every public relations specialist knows this, but they rarely manage to live up to it. That is why the Kremlin press service did not react on time when Vladimir Putin “disappeared” from public sight for four days, provoking rumors about a new baby, plastic surgery or ill-health. And that is also why, after Russia’s dispute with ex-oil giant Yukos ended in a $50 billion verdict in favour of the company shareholders, the wave of comments by different state bodies was so inadequate (for more information on this story, see text box on right).

Depending on the case, such reactions to crisis situations ultimately impact the national image, corporate image or the image of high-profile individuals.

The Moscow-based oil and gas company Yukos was acquired from the Russian government by oligarch Mikhail Khodorkovsky’s Bank Menatep during the controversial “loans for shares” auctions of the mid1990s. In the period 19962003 Yukos became one of the most successful Russian companies, producing 20 per cent of Russia’s oil output (as much as Libya or Iraq), and Khodorkovsky became an advocate of democratisation, international co-operation and Russian reform. In October 2003 Khodorkovsky – by then the richest man in Russia – was arrested, and the company was forcibly broken up for alleged unpaid taxes and declared bankrupt in August 2006. Courts in several countries later ruled that the real intent was to destroy Yukos and obtain its assets for the government. In 2014 the largest arbitration award in history, $50 billion (EUR 37.2 billion), was won by Yukos’ former owners against Russia.

Source: Wikipedia

Mikhail Khodorkovsky in 2013 after his release from prison

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Western companies try to be very carefully when operating their business in Russia but some do not have sufficient understanding of the Russian mentality.

In 2013, Louis Vuitton placed a giant suitcase in Moscow’s Red Square as part of its brand promotion in Russia. Through its Russian partner, Louis Vuitton had all the bureaucratic permissions for this advertising performance, but it could not predict the ensuing wave of public protests that forced them to quickly remove the suitcase and pay a fine to the Moscow authorities.

Procative vs reactive: who shot first?

Meanwhile, Russian companies sometimes occupy proactive (or even aggressive) public relations positions in order to protect their business interests.

In June this year, anti-missile producer Almaz-Antey held a press conference claiming that last year’s Malaysia Airlines Boeing 777 crash in Ukraine was not caused by a rocket produced by their company. During almost three hours a company spokesman used infographics to try and convince the journalists that the company was not the culprit in the tragedy. Earlier, Almaz-Amay has been placed on European sanctions list and lost many contracts with western partners.

In many cases Russian corporate communications experts make crucial mistakes in their handling of crisis communications. They depend on many factors in their work: how to attract media, how to persuade their bosses to choose the right tactics, how to meet authorities’ expectations, and so on. As a result, they often lose valuable time in providing relevant information in the initial crisis period to win points in battles with media outlets.

When a Russian-made Soyuz cargo spacecraft crashed back to earth only a few days after its take-off in May this year, the state-controlled agency Roskos-

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HUMAN RESOURCES

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HUMAN RESOURCES

Putting gender on the IT agenda A new four-step recruitment communication model could help information technology firms finally crack the code to attracting more women.

BY LAURA EARLE

Picture www.flickr.com / The U.S. National Archives / CC BY 2.0

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n ageing workforce and an insufficient number of graduates studying science, technology, engineering and mathematics (STEM) are fuelling a labour shortage in the information technology (IT) sector.

Given that women and minorities are underrepresented in the field, many experts have proposed increasing the participation of these groups as a solution to this skills crisis. Despite many attempts to attract more women into the technology world (for example, Apple and Facebook are offering to freeze eggs for their female employees, and Cisco invites girls into its offices to give them hands-on exposure to its latest technology), Silicon Valley’s tech giants are still struggling, as the graph on page 48 shows.

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A synthesis of the academic literature on women in IT and recruitment communication suggests that the under-representation of females in IT is a communication challenge. Over the past four decades, the roles in IT organisations have predominantly been filled by men and, as these companies have traditionally sold to male customers and have not been obliged to publically disclose their diversity numbers, facilitating dialogue with females to encourage them to enter the industry has not been a priority for them. As a result, women have come to understand the industry as one in which you need to study STEM-related subjects at all stages of education to enter a male-dominated and engineering industry that is “chilly” towards women. Drawing on James A. Anderson’s definition of communication, the under-representation of females in IT is a communication challenge because technology companies have not prioritised “understand[ing]” women.

The IT landscape is currently witnessing an unprecedented transformation due to three major market disruptive events: the collapse of the global economy, the popularity of cloud computing and the release of Apple’s iPhone. As a result, business users are taking control and starting to make their own IT decisions, asking IT firms to deliver business outcomes. Today’s technology companies don’t just need STEM talent; they also need increasing business skills to enable them to make this transition. This is a fantastic opportunity for technology companies to attract more women, given that women form around 48 per cent of employees in developed countries and more women are heading to business schools than ever before.

Technology companies need to take a number of steps to address this communication challenge. The first step is to define their employer branding: who they are as an organisation, the values they stand for and the “package of psychological, economic and functional benefits” they will provide to their employees (to quote Ralf Wilden, Siegfried P. Gudergan and Ian

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The visual on the left shows talented law students a metaphor for their possible career; the visual below is taken from a press conference introducing the renewed San Fransisco Museum of Modern Arts.

Relax – the future’s visual A brief prediction for the near future of corporate presentations.

BY PIETER BOSSCHAART

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report titled Fast Forward 2030: The Future of Work and the Workplace by realty consulting firm CBRE and China-based Genesis provides us with an interesting insight.

About 50 per cent of all occupations we know today will no longer exist by the time we raise our glass to celebrate the arrival of the year 2025. It’s a no-brainer that the pale computer hacking boy who used to live next door is who you should blame and artificial intelligence is what you should blame.

As a communications professional, do you need to worry about this? Not per se. “New jobs will require creative intelligence, social and emotional intelligence and ability to leverage artificial intelli-

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gence. Those jobs will be immensely more fulfilling than today‘s jobs,“ the report says. This means that communications professionals are safe as long as both sender and receiver are made of human DNA and as long as the occupation does not just involve a single way of transmitting information.

Visual storytelling After letting these results sink in and projecting them onto today’s communications, we must admit the trend of storytelling is here to stay. Future communications will be about sending and receiving emotions, which requires social and emotional intelligence. We all know that visuals, film

SKILLS

footage and audio are the best carriers of stories and thus messages and emotions.

At this point we are all stuck in-between a generation that grew up with books, radio and television and a generation growing up with the internet. In a short while, it will be just the “internet-only” generation running the show, demanding a far greater amount of visual communication. Therefore, is visual storytelling the language of the future? You might consider the popularity of media like infographics, Instagram and YouTube as the first indicators of what it takes to captivate the next generation.

This internet generation, the generation Z, doesn’t really care about grammar, doesn’t really care about what app to use today (or tomorrow) and they do not care about information other than the actual message, emotion and social status they receive. This doesn’t make them, our future communication professionals, less eager or smart. In fact, this trend might allow them to get even smarter and more efficient when it come to processing and sharing information.

From the classroom to the boardroom A revolution is happening in education and it all comes down to more visuals and the access and individualisation of information. A lot of tech visionaries are aware of this evolution. They are developing intuitive and strongly visual tools to help students collect, process and share information and ideas. Learning in the future means making sure to avoid an information overload by using technology as your personal bouncer.

Educators either embrace or ignore new technologies and communication principles, but in the end all their students will adopt innovation. Just like they will continue to take innovation and new ideas along with them through colleges and universities, straight into their cubicles and boardrooms. That’s when fundamental change occurs.

metaphor is often the road to simplicity and strong visuals. Next, try to make use of your resources when it comes to the execution. Find tools that might help you or ask a designer to create the visuals for you. In all cases, mind the quality of the execution: a messy visual is very distracting and it might hold your audience back from sharing or even understanding your message. If necessary, ask various groups of people for feedback. The following shortlist of trends and tools might help you see how versatile, limitless and easy your solutions can be, now and in the near future.

From small helpful tools to big disruptive trends - A shortlist of visual game changers that should be on your radar.

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A police officers gear is visualised as well as all elements within an officers life we can track and store inside the cloud. All images by Mr.Prezident

So what does it take to engage people visually?

You can usually tell whether or not a visual is well thought through. The complexity of information doesn’t necessarily affect the level of skills needed to come up with the actual creative concept. It’s about taking a step back and trying to figure out how you can explain the main message to a random outsider.

Writing down your first visual story and the main structure of your story is the key to generating your first ideas. Skipping the details and/or coming up with a

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All things VR and augmented. Sitting in a Brooklyn sports bar, drinking a couple of beers with a former MIT-pioneer, left me dizzy for days and it wasn’t the beer. Sceptical as I was regarding virtual and augmented reality, this guy made me see the added value of visual information projected onto our daily lives. “Google Glass was a great way to prepare the masses for what is about to come,” my drinking partner said, “but it didn’t raise the bar technologically neither did it show us the future.” Recently Microsoft showed us the Hololens. It didn’t solve the Glass problem, but the promos did show everybody the impact virtual, augmented and holographic reality might have on our professions and households.

Imagine what it would be like for kids to stand next to a knight in shining armour during history classes.

2 Design-it-yourself tools. ‘Everybody can be a graphic designer’ seems to be the proposition that convinced Silicon Valley-legend Guy Kawaski to help a start-up called Canva take things to the next level.

By providing its users with a user-friendly

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INTERVIEW

Celebrations for Alibaba Group’s 10th anniversary in 2009

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INTERVIEW

“A chance to test some of that new international ambition.”

Jim Wilkinson, senior vice president, head of international corporate affairs at e-commerce giant Alibaba Group, explains why the Group has a front-row seat on China’s vital changes and how he is helping Alibaba achieve its global goals.

Photos www.alibabagroup.com (2)

INTERVIEW BY DAFYDD PHILLIPS

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ISSUE FOCUS

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ISSUE FOCUS

ISSUE FOCUS

Stakeholder engagement 70

Strange bedfellows Companies may not always agree with their stakeholders, but respectful engagement, guarantees mutual benefits

By Sally Susman

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So what’s the deal with data?

More than just a strategic asset, data can help drive engagement and impact the bottom line

By Stephane Pere

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Establishing a corporate embassy 78

The key to corporate diplomacy

Public affairs at the heart of Europe brings companies closer to important decision makers

By Marie-France van der Valk

Listening to the demands of different audience can be frustrating– but is absolutely worth it

By Richard Morgan

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The sixth sense To craft messages that fully engage all receptors, communicators themselves have to step outside the ordinary

By Richard Kylberg

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