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Every stakeholder is affected by economic forces and everyone must contend with the current financial turmoil, but employees may be feeling it most acutely of all. Employees are frightened. They are worried about losing their jobs. They watch as their 401(k) plans shrink daily and their home values collapse. Like all stakeholders, employees have questions that demand answers.
In these uncertain times, communicators can be a valuable asset to organizations by serving as an effective liaison between management and stakeholders. Communication is a critical strategic management tool during these bleak economic times. Communicators can demonstrate their value by enabling credible and timely two-way communication. But communicators must prove their worth with every strategic and tactical action they take, or they, too, may be out of a job.
To be effective, communicators must prepare themselves. Today, it is vitally important that communicators have knowledge of finance, economics and general business administration, as well as the expertise to implement this knowledge in strategic communication planning and management.
Communicators must be able to study complex financial information and translate it for stakeholders, whose knowledge of finance may vary. A fundamental skill of communicators is the ability to distill complex material into simple, clear and concise information that audiences can understand and use. Communicators must constantly explain an organization to its stakeholders and its stakeholders to the organization. A rule of thumb: Never assume anyone knows anything.
Strategic communication skills are a given; the specific skills and competencies that communicators must develop now are about finance and economics. Much of what communicators need to explain to stakeholders is financial or economic in nature.
Communicating about finance
The activities grouped under the term “finance” help organizational leaders make sound business decisions and minimize risk. Often communicators are asked to describe why certain decisions are made and what they mean to the workforce and other stakeholders. Finance controls the flow of money into, out of and through each department of an organization. There are three interrelated areas of finance:
1. Money and capital markets, encompassing securities markets and financial institutions. Important information that communicators should explain includes why interest rates rise and fall, regulations that apply to financial institutions, and various types of financial instruments—such as mortgages, automobile loans and certificates of deposit. Money and capital markets are at the heart of the current financial crisis. A fundamental understanding of money and capital markets is necessary in order to help explain what is going on in your organization to its stakeholders.
2. Investments, including both the decisions of individuals and institutions as they choose securities for their investment portfolios. Many investments are in the news now. Understanding and explaining investments is mandatory if you work for a publicly traded, investor-owned corporation. Communicators must keep up with and explain their company’s stock fluctuations because many employees own stock through 401(k) plans and stock ownership plans. They see the monthly value of these holdings shrink and want straight talk about what is happening and why. But all organizations, including nonprofits, are affected by the stock market, either directly or indirectly. Nonprofits are likely to see a reduction in charitable giving and, therefore, must communicate to all stakeholders what this means to programs and services.
3. Business finance, a term applied to the actual day-to-day management of finances, is integral to all types of organizations. Whether publicly traded, privately held, nonprofit or government, organizations place high value on business managers who practice sound financial management. This includes today’s communicators.
Communicators should understand numerous other financial terms and concepts used today. There are many helpful sources of information. For example, the Associated Press Stylebook has a section called “Business Guidelines and Style.” Online sources include Wikipedia, the dictionary feature in Investopedia (a Forbes Digital company) and the financial glossary on the Yahoo! Finance site.
Communicating about economics
Remember, the stock market and the economy are two separate entities. An “economy” is simply the sum of all the business activity that takes place within a specific geographic area. The measurement of economic activity is called the gross domestic product, or GDP.
Economics is a social science that studies individuals and organizations engaged in the production, distribution, and consumption of goods and services. Economics is a discipline that studies how scarce economic resources are used to maximize production for a society. Managerial economics refers to the application of economic theory and the tools of analysis in order to examine how an organization can most efficiently achieve its mission and objectives.
The state of the economy is described by economic indicators. These are important to business leaders as they direct their organizations through times of change. For example, the stock market is a leading economic indicator because stock prices reflect investor expectations of future corporate profits. Watch the stock market because history proves that it recovers before a recession ends, sometimes as early as four months in advance. Other key economic indicators include:
- Economic growth rate
- Prices and inflation
- Interest rates
- Unemployment
- Consumer confidence
- Housing starts and sales
- Retail sales and new car sales
To help their organizations survive this economic mess, communicators should do what they are trained to do—provide a timely and relevant flow of two-way information between the organization and its stakeholders. But to be the most effective, communicators must have the knowledge to explain what is happening in terms of its effect on the organization and its stakeholders. Employers need knowledgeable and productive employees, just as employees need calm and competent managers who share information with them. Sadly, as employment statistics released just before press time prove, thousands of jobs are being cut worldwide. Communicators must be empathetic and thorough in communicating about reductions to the workforce.
Helping leaders communicate
Here are some concrete tips for how communicators can help business leaders convey information to stakeholders:
- Use a complete media mix—including both print and broadcast. And don’t forget social media—online is divine.
- Communicate regularly, clearly and honestly. Stakeholders, especially employees, need to understand the cause behind the effect. For example, the cause is the economic downturn that is decreasing the number of purchases of your company’s products. The effect is that budgets are cut, bonuses are withheld, hiring is put on hold, or worse, jobs are eliminated.
- Explain what all this means. Remember, stakeholders, especially employees, are concerned with “what’s in it for me?” Don’t just report on the financial situation—put things in context.
- Forget partisan politics; the U.S. election is over. Now watch what happens in terms of economic indicators and how they affect your industry and your organization. The new U.S. administration will likely change tax law and other things through legislation, thereby affecting the economy. The emphasis will be on improving the weak U.S. economy, and it will have worldwide implications.
- Realize that the economy will recover. Typically, the stock market will rebound before the general economy does. Remember, this too shall pass. In the meantime, communicators can help stakeholders cope by providing timely and relevant information, succinct explanations of cause and effect, and tips and techniques for managing personal finances in times of economic difficulty.
Les Potter, ABC, IABC Fellow, is a visiting instructor in the department of mass communication and communication studies at Towson. Potter teaches public relations writing; theory of organizational communication, strategic public relations and integrated communication; public relations for nonprofit organizations; and professional communication competencies in a changing environment in the masters program. In addition, he also serves as faculty adviser to the PR group comprised of PRSA and IABC student chapters. |
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