Why Person-To-Person Communications Matters In Stakeholder Capitalism

Feb 17, 2021


Communicators over the last year have been whipsawed by a combination of falling trust in organizations together with rising expectations that organizations, including for-profit corporations, do the right thing. For instance, the Meaningful Brands study by Red Havas found 84% of people thought companies should communicate honestly about their commitments and promises, but only 38% felt companies were doing that.

Some distrust is undeserved, according to Red Havas CEO James Wright. He pointed at how many companies have communicated more accurately, consistently and effectively on health issues such as the importance of masking, than not-for-profit entities including, in some cases, government.  “Corporate America really stood up in the last nine to 12 months,” Wright says. “Pretty much all the big businesses were saying what we needed to do.”

Advocating commonsense health practices during a deadly pandemic is one thing. But taking a meaningful stance also means better business performance. That’s according to the Red Havas study, which found that the most meaningful brands significantly outpaced the least meaningful brands on key performance indicators including overall impression, purchase intent, repurchase intent, advocacy and willingness to pay premium price.

Trust isn’t eroding everywhere. Ruth Harper, vice president of global strategic communications for ManpowerGroup, points out trust in managers and employers is at record highs, according to recent studies. “And increasingly companies are responding – they need to position their brand, attract and retain the best talent and the people that reflect their own values,” Harper says.

For a long time, one obstacle keeping communicators from emphasizing purpose over profit has been a perceived conflict between long-term strategies and short-term quarterly earnings. However, according to Wright, that obstacle is crumbling thanks to one simple understanding. “It’s about recognizing that to be successful in the future, you’ll be judged on what you do today,” Wright says. As a result, he says, “medium- to long-range views are being discussed in a more meaningful way than ever before.”

While in some ways the beginning of 2021 is a little-changed extension of the end of 2020, when it comes to partisan control of the U.S. government, the difference is stark. It’s only natural, therefore, that communicators entertain speculation about whether the messaging around stakeholder capitalism will be different under President Biden. Not everyone thinks it will.

The administrations have changed, but the pandemic is still with us. And although Covid-19 unquestionably has wrought profound human destruction, one of its legacies may, paradoxically, be a benefit in the form of greater appreciation of the value that stakeholder capitalism has.

“I think that the pandemic brought into broader relief some of these really systemic problems in our economy and communities with respect to racism, economic opportunities and the need to enable the empowerment of minority-owned and women-owned business,” Paasche says. These problems existed before the pandemic hit, but it brought into full view some of the devastating challenges that some communities and sectors of our economy faced, he added.

Yet another effect of the pandemic is awareness of new applications for owned channels for building engagement around stakeholder issues. “Generally, the trend in the PR world is toward owned channels,” Wright notes, “and brands recognizing that they are now media themselves has accelerated.”

What was new about the pandemic, Wright says, is that brands realized owned channels were particularly effective ways to help their communities while establishing positions as caring and public minded. This was particularly evident when it came to public. “Basic health, social distancing, washing hands, wearing masks –a lot of that was pushed out through their owned channels,” Wright says.

There are lots of purposes, missions, causes and challenges corporations can choose to embody. Off the cuff, Paasche cites economic inequality, climate change, systemic racism, closing the racial wealth gap and supporting small businesses impacted by the pandemic. “I think companies will continue to take those positions and work to fulfill their commitments,” he says.

“It’s all about authenticity,” Wright says. “Hold true to your values. If you have values and a character of your organization that you want to portray, you have to live and breathe it. If you don’t, you’re going to get held accountable for it.”

By Mark Henricks (Provoke)

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