Page 148 - Corporate Communication

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136 Corporate Communications in Practice

the responsibility for marketing communications, can be seen as rational in that ‘the
process of grouping activities, roles, or positions in the organization [serves] to coordi-
nate effectively the interdependencies that exist … the implicit goal of the structuring
process is achieving a more rationalized and coordinated system of activity’. 19
3. Economies of scale. A third and final explanation is that there is a certain
economic rationale behind bringing disciplines together into departments.The point
here is that it is relatively expensive to have stand-alone units for different commu-
nications disciplines, as it raises the costs of coordinating tasks and responsibilities. In
contrast, when disciplines are taken together into one or a few departments, it may
not only enhance the functional expertise and skills base of communications profes-
sionals within those departments,but it may also ease coordination and minimize the
necessity and cost associated with cross-unit interaction.
As a result of these economies of scale, a discipline will normally only be
separated out and organized as a separate unit when it is of critical and growing
importance to a company, and comes to engross a critical mass of communications
practitioners as a result.This happened, for instance, with the discipline of investor
relations in large US corporations, which, given the importance of informing share-
holders (who can make or break a company) and the financial community, came to
incorporate more staff, and was in many companies eventually split up and depart-
mentized as a stand-alone unit. A study by Rao shows that of all the Fortune 500
industrial companies only 16 per cent (84 cases) had investor relations departments
in 1984, but that by the end of 1994 they had spread to 56 per cent (270 cases) of
the sample. 20

Reporting relationships

Different communications departments and units may have different reporting
relationships. The manager of a communications services unit may be found, for
instance,to report to the head of the marketing department,whereas an investor rela-
tions unit may, for instance, have a dual reporting relationship to the finance and
communications departments. Such reporting relationships are of course largely
determined by the departmental arrangement of communications – that is, where
communications disciplines (as a separate department or unit, or as subordinated to
another department) are placed within the organization’s hierarchy. Academic
research in this area has been particularly concerned with identifying to whom the
communications department reports:whether directly to the CEO and senior manage-
ment team, or to another department at a lower level in the hierarchy.
The guiding idea in this regard was that a direct reporting relationship to the
CEO may be seen as an indication that there is indeed a broad, growing recognition
among corporate executives and corporate boards that the ability to succeed will
depend upon the corporation’s ability to communicate effectively with its stake-
holders,and that therefore the communications function is recognized as an absolute,
integral part of the top management function. White and Mazur add that such a
direct reporting relationship is also important as it leads to excellent communications
management as senior management is counselled on issues, and stakeholder and