Internal Communication Function

The Pulse © Melcrum Publishing 2006

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The internal communicationfunctionThis chapter takes a detailed look inside internal communication functions worldwide.How are they structured and how many employees work in the function? How has thischanged over the years and what are the trends driving future changes?

Chapter Contents

2.1 Overview .............................. 12

2.2 Structure of the internalcommunication function......... 12

2.3 Internal communication staffheadcount ............................ 18

2.

Structure of the internal communicationfunction


The internal communication function

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2.2

• The most popular area of the business for the internal communication function to beplaced in is corporate communication, with 44% of respondents selecting this option (seeFig 2.1, below).

• In 2003, just 28% of respondents selected this option, indicating a rise of 16% (see Fig2.2, right).

• Eighteen percent of respondents said their internal communication function sits within HR,a rise of 10% on 2003 figures.

• The areas that are now less popular include housing internal communication withinPR/Public affairs (down from 15% in 2003 to 8% in 2006), marketing (dropped from15% to 9%) and within the office of the CEO (from 12% to 4%).

• Where respondents replied “Other” many did so because the function was shared between

OverviewThis chapter takes a detailed look inside internal communication functions worldwide. How arethey structured and how many employees work in the function? How has this changed overthe years and what are the trends driving future changes?

2.1

Fig 2.1 Where does the internal communication function sit?

a number of other business areas. Some typical responses include:“It’s a cross-over function between the CEO and corporate communications”“Combination of PR and Compliance”“Has its own department but sits with media, corporate affairs, marketing, HR, businessdevelopment and volunteering”“Shared by Marketing and Corporate Communication/PR”

• Many respondents who selected “Other” also said that individual business units had theirown internal communicator or internal communication function:“Company wide internal communication is in Corp Comm, but business segments havetheir own Internal Comm.”“The majority of internal communications roles sit in Corporate Communication, butothers are employed within individual business units”“Centrally it sits in Corporate Communication but at Branch level it is located in HR.”



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Corporate communication

Public relations/Public affairs

Marketing

Office of the CEO

HR

Strategy and planning

Organizational development

Legal and corporate affairs

Finance

Other

% of respondents

28%

15%

15%

12%

8%

4%

2%

2%

.5%

13%

Fig 2.2 Where does the internalcommunication function sit? (2003 data)



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EXPERT COMMENTARY: The structure of the internal communication function

It’s good news to see the trend for internal communication moving into either corporate communications or HR(see Fig 2.3, below). Both provide an opportunity to build a more powerful, joined-up proposition – whether aspart of an integrated communication strategy within corporate communications or an employee engagementstrategy within HR.

Since the 2003 survey, the rise of the concept of employee engagementseems to have helped crystallize the business value of having employeeswho are motivated and committed, highlight the role a strong internalcommunication strategy can play and raise the profile of internalcommunications in general.

This is borne out by fact that changes in structure are happening largelybecause organizations are seeing internal communication as moreimportant and want to position their practitioners to be able to add morevalue (see Fig 2.6 page 17).

An ideal home: HR or corporate communication?The question of which of these two areas is the most appropriate home for internal communication alwaysprovokes lively debate. Many internal communicators instinctively resist a reporting line into HR. They see it as afunction that can find itself under fire and undervalued by the business (why should internal communications betarred with the same brush?), sometimes overly focused on process, and less “independent” than a purecommunications team and therefore less able to play the middle person between employees and the business.

However, HR is the home of recruitment and induction, leadership competency frameworks, learning anddevelopment, and performance management – all areas that can help make communication a key part of everyleader’s role and give them the skills tofulfil their responsibilities effectively.Being part of a strong HR team maybring the opportunity to be a part of acompelling, value-adding employeeengagement strategy that combinesevery aspect of the “people” toolkit tohelp shape an organization’s cultureand drive its performance.

The argument against the corporatecommunication function, of course, isthat it owns none of those things. Itmay also be lead by a director or VPwith a PR or public affairs background,who might give more of their time,attention, budget and air-time at boardmeetings to the externalcommunications areas they know best.

But here is an opportunity to be part ofa team where communication is themain order of the day. Your external

“Changes in structureare happeningbecause organizationsare seeing internalcommunication asmore important.”

Corporate communication

PR/Public affairs

Marketing

Office of the CEO

HR

Strategy and planning

Organizational development

Legal and corporate affairs

Finance

Other

28%

15%

15%

12%

8%

4%

2%

2%

0.5%

13%

�

2003

��

�

�

44%

8%

9%

4%

18%

2%

2%

1%

1%

9%

2006

+16%

-7%

-6%

-8%

+10%

Fig 2.3 Where does the internal communication function sit? (2003vs 2006 data)



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communication colleagues are generally experts in their field and you candevelop a joined-up strategy, with consistent messages, for allstakeholders. There is also a less “navel-gazing” feel, as your externally-focused colleagues continually prompt discussions about what the mediaand analysts are saying about the company, what the competition is up toand what politicians and regulators have in store.

Who is valued in yyoouurr organization?At the end of the day, what’s best for your function depends on whatand who is valued in your organization. We all want to work forsomeone who sees the value of internal communication, has influenceat board level, gets you good access to the CEO, and whose function iswell-respected, valued and makes a difference.

No matter where you report, to be effective you’ll need strong working relationships with both the HR andcorporate communication functions. Reporting lines and structures are not barriers to an internal communicationprofessional with a good network, sound relationships and strong influencing skills.

Talking of access to the CEO, one disappointing result is the reduction in the number of internal communicationprofessionals reporting directly to the CEO. Hopefully the other consistent results we see throughout this reportreflecting a growing appreciation of the importance of internal communications mean we shouldn’t read anythingtoo untoward into this, and my comments about networks, relationships and influencing skills style apply. But it’sa bit disappointing to see, nevertheless.

Finding value in a restructureIf you see value in a structural change, the challenge is that you may lose good people in the process.Communications teams do seem to be restructured more than most, and I continue to see organizations losestrong internal communicators who are searching for stability and a company that doesn’t feel the need to keepasking them to re-apply for their job every 18 months. There’s also the risk that you may lose focus on yourstrategy and have to renegotiate and rebuild business relationships.

Do hairdressers have the worst haircuts?Conversely, a restructure brings opportunities to refocus your strategy, bring new energy to the team, sharpenrelationships, and of course makes eminent sense where the business itself is re-organizing. The rules for us arethe same as those we tell our internal customers embarking on a restructure:• be clear about the reasons behind it• paint a clear and compelling vision for the new function;• focus on why your people would want to be a part of it;• make roles and responsibilities clear;• manage stakeholders carefully; and• of course, communicate, communicate, communicate.

It may sound obvious, but then they do say hairdressers tend to have the worst haircuts.

“Reporting lines andstructures are notbarriers to an internalcommunicationprofessional with a goodnetwork, soundrelationships and stronginfluencing skills.”



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Fig 2.4 How is the communication function currently organized and how will it be organized in the next one tofive years?

Note: the survey allowed respondents toselect more than one option for currentand future organizational structure.

Current and future structure of the internal communication function

• A highly centralized model was the most popular choice for the current structure of theinternal communication function (87%). (See Fig 2.4, below).

• However, only 53% of respondents selected this model as one of the ways their functionwould be structured in future, a drop of 34%.

• Unsurprisingly, many respondents said they didn’t know how the function would beorganized in the next one to five years.

• A shared service model was the only option that respondents gave more votes for a futurestructure than a current one (58% currently, rising to 64% in one-to-five years’ time).

Highly centralized

Organized by business units

Shared service model

Highly decentralized

Don’t know

Percentage of respondents

42%

18%

16%

10%

Organized by geographical lines 4.5%

Other 6.5%

3%

Fig 2.5 How is the communication functioncurrently organized? (2003 data)



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Fig 2.6 Primary reason for structural change (all respondents)

Reasons for structural changes

• The majority of respondents (40%) said they plan to restructure in order to become morevalue adding (see Fig 2.6 below).

• Just over one quarter (26%) said they were restructuring to reduce costs.

• Twenty-eight percent said restructuring was planned in line with a wider organizationalrestructure.

• Just six percent of respondents were restructuring for a reason different to the aboveoptions.



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Fig 2.8 How has the number of internal communication staff in your organization changed over the past 12months?

Internal communication staff headcount2.3

Note: see chapter 3, page 24 for more on internal communication budgets.

Changes to internal communication headcount

• Almost three times as many respondents have seen an increase in internal communicationstaff headcount compared to those who have seen a decrease (see Fig 2.8, below).

• Over one-third (34%) of respondents report either an increase or a dramatic increase in

Number of internal communicators compared to budget size

• The overall average number of internal communicators employed by survey respondents’organizations was 13.8.

Internal communication budget Average number of employees in internal communication function

All respondents ..........................................................................13.80 - $100,000 ...............................................................................2.8$100,001-$200,000 ....................................................................4.4$200,001-$300,000 ....................................................................6.6$300,001 - $500,000 ................................................................10.5$500,000 - $700,001 ................................................................17.8$700,001 - $1 million.................................................................19.6$1.1million - $3 million ...............................................................14.6$3.1 million - $5 million ............................................................103.8$5.1 million - $10 million ...............................................................44More than $10 million .................................................................26.4

Fig 2.7 How many employees are there in your company’s internal communicationfunction?



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Fig 2.9 How has the number of internal communication staff in your organization changed over the past 12months? (By region)

Regional changes to internal communication headcount

• Regionally, Asia-Pacific saw the largest growth with 43% of respondents reporting anincrease or a dramatic increase in internal communication headcount (see Fig 2.9,below).

• At the opposite end of the spectrum, UK-based respondents were most likely to report adecrease over the past year, with 18% reporting their internal communication headcountwas less than this time last year (compared to just 11% in North America and 10% inAsia-Pacific and Rest of World).

• In North America, 33% of respondents reported an increase, compared to 31% in the UK.

• The Rest of World region saw most stability in headcount with 61% of respondentsreporting headcount had stayed the same over the past year.

internal communication headcount over the past year.

• Only 12% of respondents say the number of internal communication staff employed intheir organization has decreased over the past 12 months.

Fig 2.10 What is the primary reason for changes to the number of internal communication staff?



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Reason for changes to number of internal communication employees

• By far the biggest reason (45%) for headcount changes is an increased emphasis oninternal communication (see Fig 2.10, below).

• Other explanations given for headcount changes are due to wider organizational headcountincreases (nine percent) or decreases (16%).

• Six percent put headcount changes down to the devolution of communicationresponsibilities to individual business units

• Six percent say the change is due to their company being acquired or acquiring anotherorganization.

• Only three percent say the change is due to decreased emphasis on internalcommunication.

• Of the 14% of respondents who selected “Other,” the majority involved internalrestructuring:“Restructure created additional business units.”“More emphasis on external comms incidentally increased attention to internal.”“Going through a change process - it is recognised that internal communications isunder resourced.”“Structural changes - Internal Communication Unit created within HR department.”“New director who views external comms with a higher importance than internal comms.”

• A significant number also responded that employees had left the function and not beenreplaced:“VP Communication left the company and has not been replaced.”“Departures from the organization. Resources have not been replaced.”“Organizational restructure with members of staff leaving and not being replaced.”



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EXPERT COMMENTARY: The size of the internal communication function

It’s good news to see that so many internal communications functions are growing (see Fig 2.8, page 18), andapparently because of an increased emphasis on internal comms within organizations (see Fig 2.10, page 20).

So why the emphasis? Well, I refer again to the prominence of employee engagement. Not so many years agothe term wasn’t even in our business vocabulary. Now, everyone talks aboutit, and the language is so much more compelling. “Communication” suggests“information.” It’s just about talking to people and sending out e-mails, isn’tit? Everyone knows how to do it. “Engagement” suggests something muchmore sophisticated and value-adding, and there are a range of modelsshowing the link to business performance, employee retention and externalreputation.

Results lead to investmentBut it’s not just about theory and semantics. While I still meet plenty of internal communicators struggling to beseen as more than writers, distributors and conference organisers, where internal communication professionalsare being given the license to operate, we’re making a clear difference to company results.

Senior leaders are seeing evidence that we can add value. For example, at Melcrum’s US Summit1, a CEO and asenior leader from two large global corporations stood up and spoke passionately about the difference effectiveinternal communication has made to their businesses. They quoted impressiveimprovements in revenues, profits and retention rates. I’d defy any seniorteam to listen to the powerful way those two business leaders spoke and notwant to make the investment.

Using research as the foundationThese days we also have sound research into the business value ofcommunication that we can call on to help make our case. From classic casestudies such as the Holiday Inn service-profit chain2 piece, to ongoing studiesinto the impact of communication on performance by companies such as Watson Wyatt, internal communicatorshave compelling data at our disposal to illustrate the value we can add if we’re given the opportunity. And data,after all, is the language of business.

The importance of leadership buy-inIt’s hard to say why the UK has seen the largest decrease in internal communications headcount (see Fig 2.9,page 19). It would be interesting to know how much is down to the type of activity internal communicators arechoosing to focus on (and therefore the value they’re seen to add) and how much is due to senior leaders thatjust don’t see the point, full stop. As that CEO said at the Summit, some leaders will just never get it.

It’s certainly noticeable in the UK how many high-quality communication professionals are choosing to leave theirin-house roles and take the freelance route, where they can decide upon the organizations and the leaders theywant to work with.

Are you really making a difference?All things considered, I firmly believe that what will continue to make the difference, wherever we are in theworld, is demonstrable proof that effective internal communication makes a positive impact on business results.

Are we actually doing the things that make a difference? Do we have the courage to operate as coaches,challengers, and trusted advisers to senior teams? Are we investing in our professional development to

“Senior leaders areseeing evidencethat we can addvalue.”

“We havecompelling data atour disposal toillustrate the valuewe can add.”

�


build our competence? And if we know data is what makes leaders sit up and take notice, why are somany of us apparently not measuring our results? (More of that in Chapter 5, page 45.)

But – it’s great to see that we’re being given the resource and the positioning to make a difference. Let’s showour companies the return on their investment.

References:1. Strategic Communication Management Summit, US, 2006, Melcrum.


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Internal Communication Function

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