Brunswick Review Issue 13

Translating transformation

Employee engagement and innovation are two sides of the same coin for business leaders around the globe

Effective internal corporate communications isn’t about information – it’s about mobilization of overall strategy. This has always been the case, but never has it been a more important point than it is now. Digitalization is making permeable the border between “inside” and “outside,” increasing the number of touchpoints between organizations and the public. In this landscape, defined by gray areas more than bright lines, internal communications plays a powerful role in shaping organizational capabilities and outcomes.

Five hundred years ago, the German Bible empowered average citizens to play a greater role in the structure of the Christian church. That transformation inspired German society and Christianity as a whole and led the way for similar reinvention across Europe.

Today Twitter and other digital communication platforms are creating similar upheaval, empowering each individual to play a greater role in every organization. For businesses, the words and actions of leadership are not enough. Every employee is now a brand ambassador. 

This is double-edged. A rogue employee on social media can jeopardize a company’s reputation. But employees who are engaged and motivated by a company’s mission and values can supercharge reputations and profits.

The simple one-way or even two-way communication patterns between leaders and stakeholders are no longer as useful as they once were. Given the nature and pace of our globalized economy, loose networks are more agile and effective than traditional hierarchies. The art of leadership is quickly being redefined as the continual orchestration of those ever-changing communication networks.

Two qualitative studies among German DAX 30 companies and Germany’s “hidden champions” (market-leading SMEs), based on in-depth interviews with their leaders and the heads of communications, illustrate strong interdependencies between internal communications and the transformational capabilities of organizations. The first is from Ludwig-Maximilians University (LMU) in Munich, which explains the behaviors companies should aim for to transform themselves. Building on this research, a second study by Brunswick Insight finds the best practices for internal communications to support those capabilities.

The LMU study identified six categories needed for effective transformation: holistic thinking, ethical conduct, democratic understanding, paradoxical thinking, interaction competence and agility. The subsequent Brunswick Insight study shows what internal communications can do to contribute significantly to these capabilities.

Holistic Thinking Create an understanding of complex interdependencies.

Ethical Conduct Align corporate purpose and values with behavior.

Democratic Understanding Embrace controversial opinions.

Paradoxical Thinking Allow the freedom for new approaches rather than enforce strict guidelines.

Interaction Competence Pursue a network orientation for a free flow of ideas and feedback.

Agility Establish flexible structures and horizontal leadership.

These goals also demand the involvement of the business leaders themselves. We see the following practices as success factors for an organization, supported by internal communications: Outside-In Unite the messages and goals of external and internal comms.

Top-Down Have a clear set of objectives, transparent to all stakeholders.

Bottom-Up Facilitate an enterprise-wide discussion of and agreement on corporate values. Walk the Talk Unify the message across all media and ensure company behavior demonstrates that.

Benefit from Conflict Don’t shy away from controversy. Explain your motives and be clear about the trade-offs necessary in addressing all stakeholder demands.

Enable Empower managers to employ broader goals in communications channels, rather than simply providing information.

Emphasize Digital Platforms A thoughtful use of a variety of available media can benefit these goals.

These factors force an organizational learning that is future-oriented. They are challenging, but without strong leadership principles and clear directives, organizations pursuing transformation are at risk of getting overstretched. To survive, businesses must be prepared to learn to live – and to thrive – in a climate full of ambiguities.

For businesses, the words and actions of leadership are not enough. Every employee is now a brand ambassador

For many corporations in the US and Europe, employee engagement has moved from the sidelines to become a core structural concern. However, in China, the concept is still relatively new. A recent global survey by Steelcase and IPSOS  found that only 33 percent of Chinese employees feel engaged in their current professional roles; 41 percent feel neither engaged nor disengaged.

As China shifts from manufacturing to a consumer- and innovation-driven economy, that ambivalence becomes more of an obstacle and worker engagement plays a more crucial role.

Millennials are helping to drive this growing consciousness. A recent Brunswick Insight survey found Chinese companies still typically place more value on compensation than job satisfaction or enjoyment. However, employees aged 18 to 29 are more interested in enjoying what they do and less concerned about long-term stability or status. Keeping these employees engaged and motivated requires a special effort that includes communicating a clear sense of mission and responsibility to society as well as cultivating a supportive work environment.

Several companies are leading this trend. Since its founding in 1999 in Jack Ma’s living room, Alibaba has evolved from a start-up with 18 people to a global e-commerce giant with over 50,000 – in large part due to its corporate culture. Rather than following a traditional hierarchical ownership and leadership structure, Alibaba maintains an open, entrepreneurial and collaborative environment reminiscent of the company’s humble beginnings.

“Aliway,” the company’s internal communications platform, allows employees at all levels and across departments to discuss projects and products. This provides valuable feedback before launching services and products externally and helps bring employees on board as supporters. Ma himself uses Aliway regularly to gauge employee response to a wide variety of internal issues and business topics.

Since October 2011, a series of programs have given employees access to personal loans, often difficult to secure from the nation’s banks. According to the company’s internal data, by April 2014, a total of 3,852 employees were provided with over RMB 150 million ($22.6 million) in loans. Financial assistance programs, the “iHope Rainbow Plan” and “iHelp Dandelion Plan,” provide company aid to employees encountering substantial hardship.

The Suning Commerce Group, one of the largest household appliance retailers and e-commerce platforms in China, also operates flagship employee assistance programs to help with common financial challenges. Its housing loan program seeks to provide 500,000 housing loans for employees – approximately RMB 600 million.

Suning also helps those who deliver its products; the company established resting stations where couriers can enjoy meals and free water in between stops. In 2017, company President Hou Enlong launched an annual festival celebrating the hard work and dedication of delivery industry workers.

Many other Chinese companies will need to follow the lead of Alibaba and Suning to attract and retain an increasing Millennial workforce motivated by values and a sense of purpose. Financial incentives alone can no longer hope to ensure top talent – companies must demonstrate their commitment to employees, and the broader roles they play in advancing positive changes in society. 

Maximilian Wagner is an Account Director and Katrin Meyer-Schoenherr is a  Partner in Brunswick’s Munich office. 

Dr Lu Jianzhong is a former Partner in Brunswick’s Shanghai office.