Corporate Communications - Positive Impact on Financial Performance
Some ways in which corporate communications can positively impact the financial performance of a company include improving employee productivity through trust and engagement and attracting potential investors through open and quality communication. Below are the findings for this research.
How Corporate Communications affect Financial Performance
- Building Trust And Engagement Through Organizational Communication
- Research suggests that open organizational communication is a significant predictive factor in building trust and engagement among a company's employees.
- Doug Conant, the ex-CEO of the Campbell Soup Company, attributes the increase in employee productivity when he was CEO to the trust that he built within the company's workforce. This, in turn, led to one of the company's highest shareholder returns in recent years.
- A study by Interaction Associates has also shown that high-trust companies are over 2.5 times more likely to be companies with high-performing revenues.
- Open, Quality Communication to Attract Potential Investors
- Corporate communication that deals with updating investors with the status of a company is called investor relations. This includes annual reports, quarterly updates, financial reporting, and even media coverage that the company has received.
- Quality investor relations lead to a company attracting more investors which gives the company more resources for their growth. Furthermore, through investor relations, a company is able to gain investor feedback which they can utilize for managerial decisions.
- Quality investor relations also lead to lower cost of capital which increases the company's value and improves its financial performance.
- Building a Cohesive Brand Image with Corporate Marketing Communication
- Communication through marketing is a type of corporate communication wherein the aim is to put the face on the company's products or services. This is a way of portraying a company's brand.
- Marketing communication can help build a cohesive image for the company which in turn helps build a company's reputation.
- Research suggests that brand reputation contributes about 3-7.5% of the annual revenue of a company.
- Government Support through Effective Relations
- Corporate communication can also come in the form of having an audience with lawmakers, lobbyists, and the government itself. Having an effective relationship with the government is important as certain laws or regulations may have an effect on a company's industry. Effective government relations mean having relationships with key lawmakers and understanding how to work with lobbyists.
- Government regulations have varying effects on different industries in the US. For example, companies in the pharmaceutical industry have often complained that their performance is affected by the Food and Drug Administration's withholding approval of certain drugs and subsequent marketing of others.
- Examples of how effective relations with the government can impact financial performance include how the Small Business Administration helps small businesses improve their performance in a highly competitive environment through grants, advice, training, and management counseling, and how the US Commerce Department helps with the overseas sales of small to medium-sized companies.