Communication Value Circle

Communication professionals use numerous and multifaceted rationales to explain the value of their work. These range from building reputation and brands to boosting sales and fostering employee motivation. However, communicators seldom share a consistent understanding of the multiple dimensions of communication value. In order to foster a consistent understanding, we have developed a new interdisciplinary framework that has successfully been tested and applied in practice.

  • The Communication Value Circle can be used to align communication targets with the overarching corporate strategy.
  • It can also serve as an evaluation tool to verify whether objectives have been reached. 

What are the core values generated by communications?

Map - Hintergrundbild

Employee commitment

is the attitude of employees towards their employer. Typically, employees with high commitment identify themselves strongly with the goals, values, and norms of an organization. Strong commitment relates to increased satisfaction, engagement and motivation, as well as more efficient internal processes and lower employee turnover rates.

  • KPIs: e.g. readiness for change, employee commitment, employee motivation, employee satisfaction, engagement with the company, employee turnover rate, employee loyalty, employee trust, knowledge of the company’s values, advocacy of the organization, emotion towards the company, identification with the organization.
  • Research tools and methods: e.g. employee surveys (e.g. TNS Employee Engagement survey, Communication Satisfaction Questionnaire), focus groups.

Customer

preferences include attitudes or opinions towards a product, service, brand or company held by (prospective) customers. Preference is often based on previous experiences. High customer satisfaction typically leads to customer loyalty and product repurchase. Satisfied customers are also more likely to recommend products to their peers and influence their preferences.

  • KPIs: e.g. customer satisfaction, customer loyalty, customer expectations, word of mouth, cross-buying intention, net promoter score, intention to buy, virality of social media messages.
  • Research tools and methods: e.g. customer surveys (e.g. Customer Satisfaction Index, Customer Lifetime Value), recall and recognition tests, experiments.

Publicity

emphasizes the importance of visibility for any organization. Media publicity facilitates the process through which key stakeholders learn about the organization’s products, services and unique characteristics e.g. as employers. Some organizations might also be interested in staying away from public debates, and so avoiding publicity can be a goal for communications as well.

  • KPIs: e.g. media reach, media resonance, (un)aided awareness, page impressions, conversion rate, unique visitors, visits, likes, shares, followers, tonality, share of voice, message recall, recognition.
  • Research tools and methods: e.g. public opinion polls, media content analyses, social media analyses, big data analyses.

Reputation

is a generalized collective perception of an organization of multiple stakeholders. As such, reputation is formed externally and is based on subjective impressions and expectations about the organization’s future behavior. The corporate image in contrast is more based on a temporary, often intuitive assessment, while reputation is more enduring.

Reputation can have a positive impact on overall financial performance or purchase intentions of potential customers and serve as a buffering shield in crises.

  • KPIs: e.g. reputational capital, admiration of the organization, emotional appeal of the organization, perceived quality of the company’s products and services, perception of the company’s financial soundness, perceived quality of the company’s management, perception of the company’s social responsibility.
  • Research tools and methods: e.g. reputation analyses (e.g. Global Pulse Score, Corporate Reputation Monitor), reputation rankings (e.g. AMAC Index), media reputation analyses (e.g Media Reputation Index), stakeholder surveys, focus groups.

Brands

are mental pictures of an organization or their products/ services held by its stakeholders. They serve different purposes such as identification and differentiation. Brands are valuable immaterial assets and help companies to distinguish themselves from their competitors. Brands engender trust in the consumer, which typically results in brand loyalty and brand preference. Strong brands can command a higher price, boost sales and market share.

  • KPIs: e.g. brand equity, brand image, brand recall, brand preference, brand advocacy, brand mentions, brand identification.
  • Research tools and methods: e.g. advertising impact analysis, brand analyses (e.g. Brand Potential Index, Brand Scorecard, Brand Asset Valuator, Brand Championship, Brand Potential Analysis, Brand Performancer, Interbrand Brand Valuation), focus groups, experiments.

Corporate culture

is a collection of key values, symbols, meanings, beliefs, assumptions and expectations that organizational members share. Culture is how things get done and how employees feel about the company. It is created, sustained and changed by all members of the organization and may be split into subcultures. A strong corporate culture is typically related to higher productivity, lower employee turnover rates, and higher attractiveness for potential employees.

  • KPIs: e.g. communication culture, change culture, culture of constructive criticism, teamwork and collaboration culture, feedback culture, employee awareness of corporate strategy, employee support for the corporate mission, vision and values, employee agility, employee feeling of empowerment, company attractiveness among needed talent groups.
  • Research tools and methods: e.g. employee surveys, focus groups.

Thought leadership

is the practice of positioning the organization as an opinion leader of new, compelling and innovative ideas in a community of interest. Thought leaders provide new information, analysis and insights that help others to make sense of today’s complex world and better understand the future. Thought leadership helps organizations to raise awareness, increase the status of their brand or reputation, and recognition by other influential opinion leaders such as political or regulatory institutions.

  • KPIs: e.g. share of voice, citations or downloads of white papers/studies, backlinks or quotations of voiced ‘thoughts’, participation in thought leader think tanks or groups; visibility on relevant platforms such as conferences or blogs, endorsement by multipliers.
  • Research tools and methods: e.g. trends analyses, opinion leader analyses, network analyses, media and social media monitoring.

Innovation

potential is the ability to identify opportunities for new products and services and understand trends and ideas. These insights can be used in a strategic manner to initiate or support innovative business models and functional strategies. Innovation potential can be fostered by a communication culture that promotes creativity and openness among employees and is capable of coping with constant change. Communications can also support innovation potential by identifying and attracting external partners, e.g. in open innovation processes.

  • KPIs: e.g. staff engagement in innovation processes, an innovation- friendly corporate culture, strategic readiness of employees, employee familiarity with innovation goals, leadership willingness to innovate, employee willingness to participate in team rotations, use of innovation communication platforms, employee willingness to think outside of the box, positioning of innovative ideas in specialist media and platforms, response to open innovation activities.
  • Research tools and methods: e.g. employee surveys, social media and media analyses.

Crisis resilience

is the ability to identify and monitor emergent critical issues, which may threaten an organization’s people, assets or reputation, and utilize these insights systematically for crisis anticipation and prevention. Issues management and integrated monitoring or listening systems help to identify issues at an early stage, whereas crisis management plans enable to respond quickly and effectively to any incident.

  • KPIs: e.g. emergent issues identified, employee awareness of crisis plans, responsibilities and guidelines, employee willingness to take risks, crisis readiness and responsiveness of leaders, number of crisis trainings performed by employees, costs of successful mitigated crises.
  • Research tools and methods: e.g. issues analyses, sentiment analyses, social media analyses, media content analyses.

Legitimacy

relates to the long-term ability of organizations to act in a manner that is consistent with socially accepted norms, values, commonly held beliefs and stakeholder expectations. Organizations that are perceived as legitimate safeguard their license to operate. Their ability to survive critical situations is increased. While reputation emphasizes the differences to other organizations, legitimacy emphasizes the attempt of organizations to resemble societal norms and similarities with other organizations.

  • KPIs: e.g. perceived appropriateness of corporate actions, support from key stakeholders such as owners and governing bodies, confidence in the organization's responsibility for society or the environment, acceptance Quotient.

  • Research tools and methods: e.g. public opinion polls, stakeholder analyses, social media analyses.

 

Trust

is the level of confidence in the organization’s ability to do what it says it will do and that it will act consistently and dependably. Trust is closely related to credibility and integrity. Trust replaces control in an unstable world and is important for future-oriented decisions.

  • KPIs: e.g. credibility, transparency, trustworthiness, authenticity, integrity, competence, dependability, belief in the organization’s promises, perception as a fair organization, confidence in the organization’s concern for people and employees, level of forgiveness in a crisis, stakeholder emotions towards the company.
  • Research tools and methods: e.g. credibility analyses, public opinion polls, stakeholder analyses, media trust analyses (e.g. Corporate Trust Index).

Relationships

are the state or ties that exist between an organization and its key stakeholders and are intricately interwoven with dimensions such as trust or satisfaction. Beneficial relationships with investors, journalists, employees and critical stakeholders may serve as a buffering shield in crisis situations and safeguard the organization’s room for action. High quality relationships with customers are a key success factor, often managed via Customer Relationship Management systems.

  • KPIs: e.g. stakeholder attitudes toward the values of the company, stakeholder satisfaction with information provision, stakeholder perception of control mutuality, stakeholder commitment, stakeholder trust, network quality, customer relationship quality, relationship capital, social capital.
  • Research tools and methods: e.g. focus groups, relationship analysis, (social) network analysis, stakeholder touch points analysis, journalist survey (e.g. Organization-Public Relationship Quality measure).

1) Enabling operations

  • Communication supports business operations, e.g. through stimulating publicity, customer preferences, and employee commitment.
  • By disseminating content and messages and raising attention and awareness for strategic issues, products or services, communication keeps an organization running and enables the creation of material assets.
  • By managing dialogues with employees, suppliers, customers etc. on a daily basis, communication builds the basis for delivering value to key stakeholders.

3) Ensuring flexibility

  • Being flexible as a corporation means having relationships that are based on trust or, at the very least, are based on a perception of legitimacy of the corporation’s values and actions.
  • Communication can build stakeholder networks, which ensure room for maneuver, especially in times of change and crisis. If the license to operate is questioned by relevant stakeholders, every other value dimension will be affected negatively.

2) Building intangibles

  • Communication helps to create intangible assets, such as reputation, brands or corporate culture. Intangibles are part of the overall company value.
  • A positive reputation and strong brands create a strong corporate identity.
  • Integrating the specific culture and history of a corporation into its internal and external communication is a basic task of any communication department.

4) Adjusting strategy

  • Communication supports the strategic positioning by fostering thought leadership, identifying and communicating innovation potential, and building up crisis resilience.
  • This value dimension is based first and foremost on the communication department’s capacity to listen. Systematically monitoring public opinion in the mass media, social media, markets, politics and society helps to adapt strategies to upcoming socio-political and economic developments.

 

Key facts

  • The big picture is missing: A consistent and integrative understanding of how communication adds value to the organization is still missing – both in corporate practice and in communication and management research.
    • A new framework: The Communication Value Circle (CVC) provides a new approach to help communication professionals explain the value of communication more effectively. The twelve major communication goals (outer circle) directly benefit the general corporate goals (inner circle). Thus alignment between business and communication strategy will be ensured.
  • Measurement matters: In order to prove the value-add of communications to value creation, each communication goal in the CVC can be measured using established key performance indicators (KPIs) and research methods.

 

Application

The Communication Value Circle (CVC) can be used to... 

  • Explain the value-add of communications: The CVC provides an overview on the most important value dimensions that can be influenced by corporate communications and that are highly relevant for the corporate success.
  • Derive and align communication objectives: The CVC can be used as an analytical tool. It helps to identify and structure communication goals and align communication targets with the overarching corporate strategy.
  • Testing communication strategies: The CVC also provides a useful tool for testing existing communication strategies. By analyzing gaps between corporate and communication goals, communicators can detect misalignments and refocus their activities.
  • Measurement: The CVC can also be used to match all communication goals with performance indicators. This helps to reflect on existing measurement activities. They can be integrated into a consistent performance management system focused on communication and business objectives alike.

 

Learnings

  • Customized application: Not every single goal is as relevant for each communication department or situation. For example communication goals such as legitimacy are critical goals during a corporate crisis.
  • Reputation as top priority: Reputation is often considered the most important goal for communications – but linking the success of communications to the company´s reputation only is risky due to the fact that reputation is not only driven by communications.
  • Identify unused potentials: Communication leaders often underestimate relationship building and crisis prevention as goals.
  • Communication innovation and thought leadership: Innovations are a central aspect in most business strategies. Yet promotiong innovations and establishing thought leadership are seldom mentioned as communication goals. The same is true for the field of corporate listening, e.g. for monitoring trends.

 

Methodology

As a first step, an extensive interdisciplinary literature review helped to systematize existing academic knowledge on value creation. Publications from the year 2000 onwards were included and account for more than 800 academic pieces in 36 international journals. 

Secondly, empirical in-depth interviews with the CCOs of ten German and international blueship companies were carried out and supplemented by a secondary data analysis of more than 50 internal and external strategy documents, planning documents, and strategy formulations in annual reports of these ten companies.

 

 

Scientific background

Our literature survey across different disciplines revealed that the question of how communication contributes to value creation for organizations has not been answered sufficiently by academia until now.  

  • No interdisciplinary approach: There are various concepts for describing and evaluating the value of communication - i.e. building intangbible assetts, influencing attitudes, etc. However, they lead to different results. A coherent and integrative approach is missing.
  • Soft factors take priority: There is a tendency among professional communicators and in the research community to focus on ‘soft factors’ such as creating reputation, brands or relationships. Other contributions such as issues management, internal communication consulting, mastering crisis situations or providing innovation support are not often seen as a priority.
  • Introducing the CVC: In order to explain the process of value creation through communication more effectively, we have summarized the most relevant value dimensions of communication and developed a new interdisciplinary framework – the Communication Value Circle. It combines and expands on insights from an extensive literature review and expert interviews with the CCOs of global corporations.