Never Leave Internal Communications To Chance In Midsized Companies
July 17, 2014
Internal communications in midsized firms are often irregular or absent, causing bad decisions and bad execution. A Towers Watson study (Capitalizing on Effective Communication – How Courage, Innovation and Discipline Drive Business Results in Challenging Times, 2010) concludes that companies with highly effective communication practices enjoy 47% higher total returns to shareholders compared with the firms that are least effective at communicating.
Here’s a case where poor communications destroyed value. One software firm created an IT development tool (after many months of effort) and pressed it into service for its global development teams. It caused an uproar; most of the teams ultimately refused to use it. Within a few months, the company backed down and had to shelve the tool. What a waste.
Internal communications should be strategic, planned and regular for the growing arms and legs of a midsized company to work in unison. Midsized firms ought to create, publish and execute an internal communications plan so that the right people are communicating in an efficient and effective manner.
Small businesses communicate naturally. With only a handful of people, they all hear about new ideas quickly; as a result, feedback and discussion happen organically. However as companies grow to midsized (generally regarded as $10 million to $1 billion in revenues), work is compartmentalized, employees are housed in many locations, reporting structures are developed that separate people, and ongoing projects are multiplied to the point that the natural flow of communication ceases. Without good communication, leaders make decisions in a vacuum. Crucial input is missing. The people who must execute the decision haven’t been asked for input and consequently haven’t bought in. Their potential resistance and slowed or poor execution all harm results.
Or consider the case of Hurricane Grill and Wings, a franchised restaurant operation based in Florida. Just after acquiring the restaurant, management decided on a limited time offer (discount) and so informed the franchisees (whose profit margins were thus reduced). They pushed back; it took a lot of time and effort persuading them to move forward with the program. Their President Martin O’Dowd said, “We had failed on several levels because we just rolled it out and didn’t pre-sell it. We hadn’t set any expectations.” Hurricane knew they had to change communication procedures.
Internal communications form a crucial element ofleadership infrastructure, the set of people and processes used by the leadership team to create stability and predictability throughout the business. A midsized company ought to design the optimal communications process for their particular business, write it down, then execute it like any other project. For example, in a ten million dollar revenue firm, it might be as simple as weekly 1:1 meetings between the leaders and each direct report, a weekly operations meeting, a monthly business plan review meeting, and a quarterly all-hands meeting. But one solution does not fit all companies. Consider the following approach to constructing and executing a thoughtful internal communications plan.
Start by calling a meeting with the senior leadership team with the sole agenda item: how to optimize internal communication. Display a straw man proposal as to the type of meetings, the frequency of those meeting and who should be in which meetings. Listen carefully to see if there is alignment on a clear path forward. Think about all the constituencies who would be ideally involved in the company’s decisions. Ask each functional leader to construct a similar plan for what they plan to do in their own function.
Hurricane established three standing committees which met on a twice yearly cycle: the food and beverage committee, the marketing committee, and the president’s advisory council (PAC) composed of their top 20 franchisees. In addition to the meetings, frequent communications are ongoing via e-mail and phone when feedback is sought.
Standing meetings form only one element—albeit a crucial element—of your communications plan. Commit your plan to paper, starting at the top with board meetings, cascading down through all hands meetings. Schedule repeat invitations for everyone’s calendar extending out a full year. Use RACI as a framework for thinking about who is essential to the meeting versus who simply could be updated through meeting notes.
Today, when Hurricane plans a limited time offer, it goes through a set of procedures involving both the food and beverage committee and the PAC. O’Dowd says, “When we roll them out now, everyone is already on board. It’s seamless.”
Communicating status updates to the broader team is important too. These might be e-mail updates, video announcements, or even conference calls/webinars. Sometimes a monthly “state of the company” address from the CEO makes a broad and growing team feel included and involved.
Unfortunately, it seems that much of the time internal communications are far too much output and not nearly enough input. Good meeting procedures should include asking for input (especially from quiet people). Another crucial element is the weekly one on one meeting between leader and subordinate where feedback can be actively solicited. Setting aside time for teams to connect informally (read “Social Time”) can be critical as well, but may only happen if it is part of the plan.
Just like anything new, too many communication processes innovated too quickly can backfire. Avoid over-doing meetings! Keep them short, focused,well facilitated, and with as few people as practical for the purpose. The meeting either should be very valuable, or should not happen at all. Giving more time for communications may in certain circumstances only slow things down: generally a bad thing. You can avoid that result by starting projects sooner, and by multi-threading, having a number of projects running simultaneously. With a good project plan and active management, all projects can finish in time. In fact, plan execution will happen more quickly with fewer objections and problems.
Leaders take great pains to develop products, launch sales and marketing campaigns, and serve customers flawlessly. So stop leaving internal communication to chance. Create and execute an internal communications plan that will support a growing midsized company.