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The Power of Integration:
Building a Corporate Communication Function
That Is Greater Than the Sum of Its Parts Introduction 3
Integrated Communication Best Practice: The New York Times Company 12
Integrated Communication Best Practice: FedEx Corporation 18
Additional Resources on Integration 24 Notes on Sources 25
Paul A. Argenti, Professor of Corporate Communication, the Tuck School of Business
This white paper was made possible through a grant from NIRI’s Center for Strategic Communication.
The authors would like to thank NIRI for its support of our research.
© 2005 by the National Investor Relations Institute. Al rights reserved.
To be successful in today’s business environment,tions, internal communication, etc.) in its own “silo”
companies need to integrate their communica-
— each with its own agenda and set of messages to
tion efforts. This research, commissioned by
deliver to a separate target constituency set — and
NIRI and based on both extensive interviews con-
interaction among these groups is merely voluntary;
ducted at 10 different companies and subsequently
it does not have an integrated function. Integrated,
published in Sloan Management Review, and two in-
however, does not always mean centralized. As we will
depth case studies of best practices at The New York
see through various company examples, integration
Times Company (“The Times Company”) and FedEx,
does happen in organizations where communication
based on research conducted this summer, provides
professionals reside in various business units, some-
an overview of how investor relations and corporate
times in locations around the globe.
communication activities are integrated at a variety of
More critical for successful integration, however, is
companies. It then offers a detailed look at integrated
that mechanisms and processes are put in place for
communications activities at The Times Company
those professionals to coordinate information and
and FedEx. Material presented in this white paper will feedback, and ensure
next be edited for submission to the Harvard Business that they are con-
Review for possible publication as a “Forethought” stantly speaking in Companies today have article. harmony to all of
Companies today have more arrows in their com- the company’s con- more arrows in their
munication quivers than ever before to get their mes- stituencies — and
sages across to varied internal and external con- also acting in a con- communication quiv-
stituencies. Why then do companies’ communica- sistent manner. ers than ever before
tions still miss their mark? Our primary research, con- With an integrated
sisting of over 50 interviews with CEOs, CFOs and communication func- to get their messages
senior investor relations and corporate communica- tion, companies can across to varied
tion professionals from a wide array of industries, respect different con-
indicates that, more often than not, companies fail to stituency viewpoints, internal and external
recognize the importance of an integrated corporate concern, and “hot constituencies. communication function. buttons” while still
In this white paper, we will define integration, dis- ensuring consistency
cuss catalysts for more integration of communication
in message content. As Russell Lewis, former presi-
activities, describe some of the approaches to integra-
dent and CEO of The Times, explained, “The under-
tion that we observed at a variety of companies,
lying strategy is one message. This message may take
explain the benefits of an integrated function and,
different intonations when speaking to different con-
finally, offer a way forward for companies looking to
stituents.” Lynn Tyson, vice president, investor rela-
integrate communication activities. We will then pro-
tions and corporate communications at Dell,
vide a more detailed description of how The Times
explained that Dell’s investors focus primarily on the
Company and FedEx have integrated their own com-
company’s enterprise business, which is less familiar munication activities.
to consumers but a significant source of company rev-
enues, while the media are more interested in the The Meaning of Integration
consumer segment of the business. The company’s
communication efforts take these preferences into
To explain what “integrated” means, we can start by
account while still speaking consistently about the
looking at what it does not mean. For instance, when
business to all interested parties.
a company places each sub-function of the corporate
communication area (investor relations, media rela-
NIRI CENTER FOR STRATEGIC COMMUNICATION 5
The Integration Imperative: Catalysts for
stituencies can see what amounts to an X-ray of your Coordination
organization, uncoordinated communications are
While integrating corporate communication has
easier to spot than ever. This environment has put
always been a good idea, certain catalysts in today’s
increased pressure on CFOs and other professionals
business environment make it more of an imperative
within corporations to hone their communication
than an option. Some key catalysts for integration
skills. Alan Graf, CFO of FedEx, explained that “in include:
today’s world, CFOs have to be communicators, or they will fail.”
The legal and regulatory environment: In recent
Sophisticated, overlapping constituencies:
years, several trends in the regulatory environment Today
for business have altered the landscape for communi-
many of a corporation’s employees are also share-
cation. With the passage in 2000 of Regulation Fair
holders. At JetBlue, for example, 90% of employees Disclosure (Reg FD),
own stock in the company. And the “democratization” companies were prohib-
of investing in the 1990s means that more of a com- When constituen- ited from disclosing any
pany’s customers now are also shareholders. material nonpublic
Starbucks is an example of a company that not only cies can see what information to the
recognizes this dynamic, but positions itself to benefit amounts to an investing community
from it — for example, by including a card with a that had not already
credit toward a purchase at any of its stores in its X-ray of your been disclosed to the
annual report and training employees to recognize organization, general public. One
holders of this card as owners of the company. immediate effect of this
In addition to this morphing of constituency cate- uncoordinated legislation was to
gories, we also see a trend toward more sophisticated communications require much closer
constituencies who are more information-hungry coordination between
than in the past, and also more discriminating in are easier to spot IR and the other corpo-
their analysis of information that companies provide than ever. rate communication
to them. Individual investors, for instance, once a sub-functions, such as
“silent majority” (versus their institutional counter- media relations.
parts), increasingly assert themselves in proxy votes
The attention that both New York Attorney General
and other matters of corporate governance. With
Eliot Spitzer and the Securities and Exchange
access to an unprecedented amount of information
Commission (SEC) have focused in recent years on
thanks to the Internet, Reg FD and other factors,
everything from illegal fund trading to executive pay
individual investors are a constituency group to which
practices has served as an additional driver behind
IR professionals must pay greater attention than
the need for more coordinated communication activ- ever before.
ities for many financial services companies. Many
In addition, investors are increasingly interested in
firms, suffering a reputational “contagion effect”
nonfinancial metrics and characteristics of companies
from other companies within the industry accused of
such as the company’s strategic direction, relation-
wrongdoings, are finding they have to work harder
ships with customers and suppliers, and other intan-
than ever to craft messages that distinguish them
gibles such as brand equity. A study in 2002 by Ernst from their tainted peers.
& Young’s Center for Business Innovation revealed
The regulations, lawsuits and significant media
that as much as 35% of investment decisions are
interest related to numerous high-profile corporate
based on nonfinancial factors, including the com-
scandals have called for more transparency regarding
pany's quality of management, strategic direction
the inner workings of corporations. When con-
and relationship with its customers.i Investor rela- 6
NIRI CENTER FOR STRATEGIC COMMUNICATION
tions is not just about the quarterly numbers, and Approaches to Integration
much more collaboration is necessary across all parts
No matter what the catalyst might be, organizations
of the organization to deliver a more holistic message
can integrate their communication functions in a
about the company’s current state and direction.
number of ways. How integration takes shape is a
function of several factors, including the organiza-
Organizational growth and complexity: As organi-
tion’s size, geographic scope and culture. Some
zations grow in size and complexity, the corporate
approaches to integration are detailed below.
communication function must adapt accordingly.
When Textron made the strategic move from a “port-
Achieve through reporting relationships: Com-
folio of businesses” to an integrated organization, for
panies can approach integration through either a
example, the company’s communication strategy had
centralized or decentralized reporting structure, or
to shift, as well. Companies with numerous and far-
some combination of the two. In a centralized struc-
flung operating divisions — essentially “organizations
ture, all communication sub-functions report to one
within organizations” — often require coordinated
senior officer at headquarters. For example, at The
communications efforts to get employees within indi- Times Company, the func-
vidual operating companies to even consider how tion reports to the CFO.
they fit into the greater organization. In a decentralized approach, Companies can
Growth through mergers and acquisitions also communications profession-
requires a concerted effort to integrate communica- approach inte- als are nested within individ-
tion activities as the combined organization has to ual business units. This gration through
present a unified face to the world. And companies often works well in large,
with a large proportion of employees working in geo- either a central- geographically dispersed
graphically disparate locations — across time zones organizations. Johnson & ized or decen-
and cultures — face a further set of communication Johnson, with over 100,000
challenges when it comes to creating and disseminat- tralized report- employees dispersed across ing consistent messages. over 200 operating com- ing structure, or panies in more than 50
Technology: The increasing sophistication of front- countries, uses this struc- some combina-
end communication technology (e-mail, instant mes- ture. tion of the two.
saging) means messages can travel virtually instanta- Some companies, such
neously within an organization — and beyond its as Textron, blend both a
walls — further increasing the need for coordinated
centralized and decentralized approach, combining a
and consistent messaging. Internal memos, for
core corporate team with individuals responsible for
instance, can be e-mailed by employees to friends or
communication within the business units. In a simi-
colleagues outside the company, including investors
lar vein, Cendant organizes its corporate communi-
— or worse, posted to a blog — just seconds after
cation staff using a “matrix” approach. Public rela-
they reach their intended internal audience, even
tions heads in various Cendant companies, for
when the company does not plan to communicate a
example, report to both the company’s manage-
given message or initiative to the outside world at all
ment and Cendant’s corporate communication
at least until several hours, or even days, later. The
team. Any press release sent out by an individual
Internet not only has had a significant effect on the
company must be reviewed and approved by
speed at which information travels, but also on the
Cendant’s corp comm team, which will review it
accessibility of information to virtually anyone with
with an eye toward detecting any possible conflicts access to a computer.
it might entail with other Cendant companies.
NIRI CENTER FOR STRATEGIC COMMUNICATION 7
Create informal communication councils: Com-
tion in 2003 much more seamlessly than would have
panies can further enhance coordination through the
been possible if communication had still been frag-
use of informal councils that draw key executives mented.ii
from various areas of the business to make sure every-
one is “on the same page” at the highest level. As
Leverage technology: Just as technology has forced
Catherine Mathis, vice president of corporate com-
companies to deal with a proliferation of new com-
munications for The Times, explained, “One of the
munication channels and challenges, it has also pro-
purposes of The Times’ communication council is to
vided opportunities for enhancing integration. E-mail
ensure that everyone is singing from the same song-
group lists, intranets and enterprise software, for
book.” Dell also convenes such a council, led by Chief
example, have made it much easier for communica-
Marketing Officer Michael George, quarterly to
tion professionals (and employees in general) around
develop critical messages for the company’s internal
the globe to stay tapped into what is going on in the
and external audiences and to formulate communi-
organization. Satellite broadcast systems such as the
cation strategies around them.
digital FedEx Television Network (FXTV) are anoth-
With such a structure, a press release about a sup-
er powerful communication channel to reach
plier problem that one of the company’s business
employees around the world. Companies can also cre-
units may want to issue for the benefit of customers
ate online or networked libraries of communication-
can also be evaluated in light of how the investing
related materials for employees to access from any-
community will interpret the message — and be posi-
where. Harley-Davidson’s Lawler, for instance, creat-
tioned accordingly. Such councils can be valuable
ed a company message library that various depart-
“sounding boards” for management as messages are
ments could turn to for key corporate messages.iii
being formulated and delivery mechanisms dis-
Technology can also be a critical tool for measuring
cussed, providing valuable feedback from business
the effectiveness of communication or communica-
unit and regional office leaders on potential sensitivi-
tion programs: Through online employee surveys or
ties or concerns they foresee with particular con-
audience response system (ARS) polling, for exam- stituency groups.
ple, companies can quickly determine whether a par-
ticular message has been heard and understood by
Create a “communication integration manager”:
employees so that they can recalibrate messages or re-
Another structural option for integration is to create communicate them if necessary.
a position designed solely to oversee the integration
In the end, the success of one integration model
of communication messages across departments and
over another largely will hinge on corporate culture.
audiences. Harley-Davidson’s vice president of com-
Where communication, collaboration and informal
munications, Kathleen Lawler, did precisely that
networks are prevalent, a decentralized structure
when she appointed the company’s first communica-
might work well, but in most other circumstances, a
tions integration manager. Prior to integration,
centralized approach might be better. The key to suc-
employee communication was handled by human
cessful integration is aligning the right integration
resources, and the marketing department dealt with
model with how your organization works.
PR and product communication, with little coordi-
Culture also plays a significant role in the extent to
nation across groups. Lawler united all communica-
which a company’s communication is integrated.
tion sub-functions under one umbrella and subse-
Organizations with strong cultures built on widely
quently created the integration manager post to fur-
understood and widely practiced values have a “head
ther ensure coordination and consistency of messag-
start” on integration because their employees have a
ing. She credits integration with allowing the compa-
common set of guiding principles. Many point to
ny to plan and execute its 100th anniversary celebra-
Johnson & Johnson’s handling of the 1982 Tylenol 8
NIRI CENTER FOR STRATEGIC COMMUNICATION
cyanide contamination scare that led to the deaths of
Jackson, vice president, corporate communications
seven people as a textbook example of crisis man-
for FedEx, explained, “We are a service company, and
agement. From the swift recall of tens of millions of
employees are a critical part of FedEx. They are our
bottles of Tylenol from store shelves across the coun-
product, the essence, the brand. If they don’t get it,
try to the personal visits to hospitals and pharmacies
the external world doesn’t get it. If you want the cor-
by thousands of J&J employees, the company’s reac-
rect takeaway externally, you have to get it right inter-
tion to the crisis exemplified decisiveness, care and
nally.” In a similar vein, corporate reputations can concern.
also benefit from an integrated approach to commu-
How did the company mobilize so quickly to handle
nication. Michael Dell spoke of the communication-
this crisis, and why did it go to these lengths? Despite
reputation link as follows: “Ultimately [reputation is
its decentralized structure, Johnson & Johnson’s man-
the] result of a lot of communication — clearly
agement is bound together by a document known as
expressing values and beliefs, and sticking to those
the “Credo.” A companywide code of ethics created in consistently.”
1935 to boost morale during the Depression, the
Credo acknowledges: “We believe our first responsi- Weathering crises: In
bility is to the doctors, nurses and patients, to moth- times of crisis, speaking
ers and all others who use our products and services.” with one voice is perhaps A strong brand is
The principles of the Credo guided the company’s more critical than ever. a consistent
actions during the Tylenol crisis and helped J&J react Johnson & Johnson serves
to the tragedy without losing focus on what was most
as a “best practice” case in brand — one that important. this regard. On the other is coherently rep- end of the spectrum, when The Benefits of Integration KPMG, the accounting and resented and professional services firm,
Integrating corporate communication brings several communicated to was accused in 2003 by the benefits to organizations: U.S. Department of Justice al of a company’s
Preserving the corporate brand and enhancing of “demonstrating a con- constituencies. reputation: certed pattern of obstruc-
A strong brand is a consistent brand — tion” in relation to ques-
one that is coherently represented and communicat-
tionable tax shelters and advice, the absence of inte-
ed to all of a company’s constituencies. Integrated
grated communication proved damaging. Its actions
communications can help companies ensure this type
following the accusation included withholding and
of consistency, enhancing the strength and clarity of
delaying the release of documents related to the
their corporate brand. Martha Lindeman, senior vice
probe and obscuring its role in advising its clients on
president for corporate communications and investor questionable tax shelters.iv
relations at Playboy Enterprises, Inc., said, “[We inte-
Given the Arthur Andersen accounting scandal and
grate] because we’re concerned with maintaining the
the negative environment for accounting firms,
integrity of the [Playboy] brand. The brand means
KPMG should have developed an integrated
different things to different people, and we don’t
approach to communication and specifically crisis
want counterproductive moves or multiple divisions
preparation. The company should have known that
pitching to the same media.”
obstructing an IRS investigation could lead to serious
Additionally, when communication is integrated, a
reputational damage. KPMG should have seen this
company’s employees can effectively become its
risk as a priority, cooperated with authorities immedi-
“brand ambassadors,” reinforcing the company’s
ately and communicated proactively to all con-
desired brand image with the outside world. As Eric
stituents via an integrated communication approach.
NIRI CENTER FOR STRATEGIC COMMUNICATION 9
When communication is integrated, on the other
understood. To this end, he used audience response
hand, corporate communication professionals don’t
systems at the company’s Global Leadership Meetings
have to make decisions with blinders on when a crisis
to assess whether internal constituencies had under-
hits — their awareness of what is going on across the
stood the vision and strategy for the company that he
entire organization and industry becomes a critical
and his team laid out. In addition, Campbell formed
tool for managing communication when the pressure
a group called TRACTION (for “Transformation
is on to provide explanations and information in
Action”), made up of representatives from a cross-sec- short order.
tion of Textron’s businesses and given the charge of
delivering feedback from the businesses — e.g., what
Optimizing business outcomes: Companies suc-
messages were being heard and what messages were
ceed when communication emanating from their var- resonating — to the TLT.
ious business units are not only consistent but also
Textron experienced initial restructuring savings
aligned with and supporting the company’s overall
of $154 million in 2001 alone and expected that total
strategy. This success comes in the form of achieving
savings from the four-year (2001-2004) program
desired business outcomes — from specific organiza-
would total over $480 million.v “The only way to do tional goals to the
this,” said Campbell of communicating during enhancement of share-
change, “is with passion — face to face, all the time, When communi- holder value. with the same message.” As an example, shortly
Integration clearly brings many benefits. But what cation is inte- after Lewis B. Campbell
do you risk by not integrating? Retailing giant Wal- grated corporate was appointed chairman
Mart provides one example. It took the company and CEO of Textron Inc.,
years to respond to attacks about its labor practices, communication he began work on a new
and when accused of illegally using foreign workers to professionals strategic framework for
clean its floors, Wal-Mart claimed that subcontractors the business, designed to
had actually hired the workers. These labor issues, don’t have to enhance the company’s
and Wal-Mart’s less than exemplary response to make decisions performance in strong
them, caused the company to suffer reputational economic times and shield
damage that one could argue it should have seen with blinders on it further from market coming. when a crisis downturns. This involved
Organizations with cross-functional communica- pulling Textron’s many
tion teams often can determine in a brainstorming or hits. operating companies into
workout session what the key reputational risks are one integrated enterprise,
for individual business lines, then create an approach
an endeavor that would require significant change for
to “managing” those risks and working toward pre-
the organization and its employees.
venting problems before they even happen.
Subsequently, Campbell established Textron’s
Transformation Leadership Team (“TLT”), including
Conclusion: Integration — the Way Forward
senior executives from Textron and its various busi-
At best, the lack of an integrated communication
ness units, to lead and manage the company’s trans-
effort can mean missed opportunities for companies
formation initiatives. Campbell recognized the
— opportunities to reinforce a consistent corporate
importance of communicating clearly and consistent-
brand or realize certain strategy objectives, for
ly both within and outside the company about this
example. At worst, it can lead to crises that adverse-
fundamental strategic shift — and of ensuring that
ly affect market share, competitive positioning and
messages about the transformation were heard and shareholder value. 10
NIRI CENTER FOR STRATEGIC COMMUNICATION
Many catalysts — from the changing legal and Have a Plan
regulatory landscape to the increasing sophisti-
When it comes to executing your company’s vision of inte-
cation of a corporation’s constituencies — have
gration, it’s best to work from a detailed plan, in writing, that is
made integration more of a necessity than an
shared throughout the organization, clarifying the goals, tac-
option in today’s business environment.
tics and proposed metrics for success of your integrated
Organizations have a host of choices when it communication platfor m.
comes to choosing how to integrate.
Companies should select the structure — cen-
An integrated communication plan should include:
tralized, decentralized or some combination of
the two — that works best with their corporate
• An overarching objective or
culture. And when it comes to successful inte-
set of objectives for integration
gration, our research revealed that informal
• A clear link to the firm’s
networks can also be very powerful. overal strategic plan
A further observation from our research was • A definition of and business objectives
that the involvement (and level of involve- what constitutes
ment) of the CEO in communication and com- success
munication strategy sends a signal to others Integrated
within the organization about its importance. Communications
Of the companies we studied with the most Plan
robust and well-integrated communication
infrastructures, nearly all had a CEO or other
key senior executive who recognized the
importance of and/or was intimately involved • An approach to measure • Clearly defined roles
with communication. Michael Dell is one the ef ectiveness of your plan and responsibilities for al
example of such a business leader. members of the corporate
“Communications are an essential part of what communication sub-functions
[companies] have to offer,” he explained.
“They are an integral part of operations, from
strategy development to marketing and sales.
Even if the plan is not immediately implemented in ful , corpo-
Communication has to be in the center to be
rate communication groups will benefit from its creation by 1) optimally effective.”
moving the integration concept from the realm of the desir-
Indeed, new product offerings or strategic
able into the realm of the realistic through careful y crafted
shifts in and of themselves do not enhance an
tactics; 2) generating buy-in and support from the firm’s sen-
organization’s success unless and until they are
ior executives by presenting a plan that ties into the firm’s
communicated to the relevant constituencies
strategic objectives and is focused on business outcomes;
within and outside the organization. As
and 3) providing a reference that ensures that everyone is “on
Michael Glenn, executive vice president, mar-
the same page” with regard to roles and responsibilities.
ket development and corporate communica-
Finally, measurement is an area that will become increas-
tions at FedEx, put it, “You can’t execute it if
ingly important in years to come. Efforts are under way to find you can’t communicate it.”
approaches to measuring the effectiveness of communica-
tion activities in terms of business outcomes. Successful
approaches to measurement will change the nature of how
corporate communication activities are managed and inte- grated in the future.
NIRI CENTER FOR STRATEGIC COMMUNICATION 11