Report: Communicators must have
business, financial knowledge
For decades, communicators have been able to advance in their careers while avoiding anything to do with numbers and most things having to do with the essence of how business decisions are made. In fact, they’ve been proud of it.
As one PR director told me recently about one of her company’s governmental filings, “We all think a 10-K is a long race.” (More on that a bit later.)
To succeed in the future, this will no longer be the case. A recent series of conversations with 31 chief executive officers for a study conducted by the Arthur W. Page Society revealed that the No. 1 quality CEOs want in a communication chief is a detailed knowledge of the company’s business. According to the CEOs interviewed in the study, that knowledge includes:
- Intimate and detailed knowledge of the company.
- Strong business knowledge (e.g., theory and practice of finance and supply chain management).
- Leadership experience.
- Breadth and depth of internal and external relationships.
In particular, the CEOs indicated that they want communication managers who are able to “bridge the perceived gap between the ‘soft skills’ of communication and the numbers-based performance idioms of the boardroom.” The CEOs also want communication leaders who have “wide business competence” and “quantifiable long-term vision.”
While many communication directors have extensive business and financial knowledge, far too many do not. And there is no doubt that many mid- and lower-level communication team members who hope to assume greater responsibilities lack this knowledge as well. I believe this skill deficit poses a significant barrier for communicators who hope to advance their careers and influence organizational decision making.
Over the years, I have taught the language of business to thousands of communicators and journalists. In general, their skill level can only be described as seriously deficient.
With that in mind, let’s take a closer look at what the CEOs want in their communication professionals, according to the study. First, they want communicators to have “intimate and detailed knowledge of the company.” That means they want them to understand the company’s objectives, its business model, its markets and products, its formal and informal processes, its business environment, its key suppliers and competitors, its key business partners, and a number of other forces.
And where is the best place to find all this information? The aforementioned 10-K, of course (the document, not the race). In the U.S., the 10-K is the annual report that a publicly traded company submits to the Securities and Exchange Commission and is a firm’s most important filing. Unlike the slick and glossy annual report many companies produce, this version follows an SEC format and provides extensive and often insightful information about the company. It also contains the company’s audited financial statements.
Second, the CEOs want “strong business knowledge (e.g., theory and practice of finance and supply chain management).” This means CEOs want communicators to understand the numbers of business. Communicators must be able to read and interpret financial statements. In addition, and perhaps more important, communicators must understand the techniques and role of finance. Therefore, communicators must understand the structure and content of the three key financial statements, which include the company’s income statement, balance sheet and statement of cash flows, as well as important concepts such as earnings per share, free cash and key financial ratios.
The third and fourth qualities the CEOs expect in their chief communication officers are “leadership experience” and “breadth and depth of internal and external relationships.” These requirements can also pose barriers for communicators, since most have relatively narrow skill sets (no financial skills, for example) and tend to focus only on the communication function. This makes it difficult for communicators to get broad leadership experience outside their area. Likewise, since they have such focused skill sets, many communicators are unlikely to receive cross-discipline assignments, which makes it difficult for them to develop a broad array of relationships.
Beyond the four areas discussed so far, the CEOs identified several other new and vital forms of leadership for which no one has current responsibility and which the Arthur W. Page Society says present significant opportunities for chief communication officers in the future. They include:
- An opportunity to exert leadership in “defining and activating values.”
- An opportunity to exert leadership in “building and managing multistakeholder relationships.”
- An opportunity to exert leadership in “enabling the enterprise with ‘new media’ skills and tools.”
- An opportunity to exert leadership in “building and managing trust in all its dimensions.”
Much of the Page report focuses on what the CEOs perceive as a major and disruptive shift in how the public and government view corporations. The CEOs who were interviewed for the report anticipate demands for transparency to be at an all-time high. They also predict a continued blurring between companies’ internal and external actions and communication. This blurring is a result of what the CEOs see as the convergence of three key forces: “the digital network revolution, the reality of globalization and the empowerment of myriad new stockholders,” which is changing the world for business and society.
As a result of these changes, CEOs are looking for leaders who are able to respond to the new reality. And this presents new opportunities for chief communication officers and communicators seeking to develop their careers. But without business and financial knowledge, it will be difficult for them.
For more on the report, see “The Authentic Enterprise.”