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Tuesday, Dec. 30, 2008

CORPORATE COMMUNICATION SYMPOSIUM

Communication key to good corporate management

Public relations becomes vital internal and external strategy for the global economy as companies publicize and inform


Staff writer

Communication with the public and employees is of strategic importance to corporate management today as companies' operations become more global, and people pay more attention to the social responsibilities of businesses, said participants at a recent symposium in Tokyo.

News photo
Masayuki Nakai SATOKO KAWASAKI PHOTOS

Japanese firms are globalizing their public relations operations as they expand their business worldwide while top executives need to make greater efforts at communicating with their employees, they told the audience.

Company executives in charge of PR and other experts were speaking at the Dec. 19 symposium organized by Keizai Koho Center to discuss changing aspects of corporate communication activities.

Kunio Ito, a professor at Hitotsubashi University's Graduate School of Commerce and Management, said Japanese firms must do much more in terms of their PR efforts, although they have made substantial progress over the past decades.

For example, surveys show Japanese companies lead their overseas counterparts in the number of corporate social responsibility reports released every year, but there are doubts as to how widely these reports are actually being read, Ito said.

"As far as I know, many employees do not read the reports and just distribute them to customers," he said.

Ito noted that PR today "is a strategic activity for a company because the company's value will no doubt change a lot depending on its PR efforts."

According to Ito, stakeholders of a company — including its shareholders, employees and members of the local community — will see the character of the company in the way its PR people disclose corporate information and respond to bad news about the firm.

There have been cases in which the reputation of a scandal-hit company rose to levels higher than before the scandal because it handled the situation properly, Ito said.

News photo
Shunichi Nakagawa

The key is not what the companies do in emergencies but what they do before emergencies happen, the professor said. Research shows that among companies hit by information leak problems, the share prices of firms that had disclosed to investors the risk of such problems happening tend to recover more quickly than those that kept mum on such a risk, he said.

Even good news has to be publicized well to win recognition. A Nikkei business daily survey shows that among companies engaged in environment-friendly management, the corporate brand image will vary widely depending on whether such efforts are being publicly recognized, Ito pointed out.

Masayuki Nakai, a managing officer in charge of PR activities at Toyota Motor Corp., said the nation's top automaker faces various challenges in its PR activities as it tries to deal with the radically changing business environment.

Toyota needs to beef up its global PR functions through better coordination with its overseas units and speak as "one voice" anywhere in the world, Nakai said. This is essential now that Toyota builds more vehicles overseas than in Japan and four out of five Toyota cars are sold outside of Japan, he added.

But it is not easy for the more than 300 Toyota PR staff worldwide to overcome national, regional and language differences to share the group's information, Nakai said.

And PR workers cannot just serve their traditional role of spokespersons but need to expand their information-gathering capabilities, he said.

News photo
Kunio Ito

"The first step toward strategic public relations activities is information gathering and analysis, which serve as the basis for planning future PR activities," Nakai said. In this sense, the ongoing global recession offers a rare chance "because in times of crisis, problems that had previously gone unnoticed tend to come to the surface."

And the most important and difficult challenge, he said, is to create corporate value that the company can share with society at large.

As people place more and more emphasis on corporate social responsibility, a company cannot survive unless it becomes a "good corporate citizen" that shares certain values with society, Nakai said. "Through communicating with people outside the company, we need to know the changing values of society, and feed them back to the firm's management so that they can be reflected in our products and technologies," he said.

The broadcasting industry is also increasingly aware of the importance of PR efforts as the influence of TV news coverage has expanded in recent decades, said Kimio Iwata, chairman of the editorial committee at Yomiuri Telecasting Corp.

"How we respond to the social impact of our programming has become a major issue (for the TV broadcaster)," Iwata told the audience.

Shunichi Nakagawa, executive vice president at Kao Corp., stressed the importance of PR efforts directed at the company's employees.

News photo
Kimio Iwata

For a company to make excellent products and services, and win society's respect and trust, the corporate philosophy must be thoroughly shared and turned into action by all employees, said Nakagawa, who is in charge of the company's legal compliance, global communications, information systems and risk management.

"Through such efforts, we try to create an environment where the workers can be proud of their company as they do their jobs," he said. "For that purpose, communication among the employees is more important than ever."

These efforts, which Nakagawa called "internal branding," involve distribution of the statements made by the top management in 10 languages so that they will be read by Kao group employees worldwide. The company also regularly organizes workshops for discussions among workers at each section, which can also provide opportunities for senior workers to pass on the company's code of conduct to their younger colleagues, he said.

Ito of Hitotsubashi University said the key to good corporate management is a company's communication capabilities.

Over the past decade or so, Japanese companies have made great progress in their investor relations activities, improving information disclosure for the capital market, Ito said.

But they have made little headway in promoting communication between the top management and employees, Ito said, noting that there is too little dialogue between the two parties at many Japanese firms.

"Many top executives of Japanese companies are too optimistic about communicating with workers," the professor said. "Because they typically climb the corporate ladder to become president of a company, they believe that they know what the employees think and assume that the employees naturally understand what the president thinks."

It is a challenge for Japanese corporate executives to overcome such optimism, he said.

On the other hand, the top executives of U.S. and European companies, who typically come from outside the company to take up their positions, assume that their thoughts are not being shared by the employees, and thereby make great efforts to have their views understood by the workers, Ito pointed out.



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