Why it pays to be open about your business goals

A recent study commissioned by PR firm Burson-Marsteller highlights the importance of being open about your business aims and values. The research looked at how businesses communicated ‘corporate purpose’, which included their business strategy. The exact components of ‘corporate purpose’ are broken down in detail in the bar chart below.

Source: Communicating corporate purpose survey

The research showed that being open about your business helps to increase profits. In fact, communicating about your business matters more than its size. The writer of the report, Dr Tania Braga, CSM senior sustainability analyst at international business school IMD, says: “We find that among large European companies, effectively communicating corporate purpose is more positively associated with higher financial performance than company size is. This enhances not only economy-wide financial performance but also relative financial performance within industries.”

Looking at the types of messages corporations are putting out, a large percentage concerned financial results/shareholder value. Customer-focused messages accounted for a quarter of external communications.

 
Source: Communicating corporate purpose survey

Finding the right tone is important when communicating to customers and other stakeholders, as getting it wrong can be worse than not communicating at all.  Braga says: “The decision to actively communicate on purpose is not straightforward. Managers have good reason to see it as a double-edged sword. On the one hand, it can build, sustain and increase trust. On the other hand, many stakeholders perceive it with mistrust and scepticism since they feel it can open the door to accusations of cynicism.”

The benefits of using PR and other marketing tools to communicate with customers are made clear by the study – by talking about your business you help it to stand out, plus you increase customer loyalty. Two factors that account for why good communication leads to healthier profits. Jeremy Galbraith, CEO Burson-Marsteller EMEA, explains: “Companies articulate and communicate on corporate purpose with the ultimate aim of building and sustaining reputation and trust. Communicating purpose in a way that is consistent with corporate action can boost differentiation, strengthen reputation risk management and build additional competitive advantage.”

Methodology

The report was commissioned by Burson-Marsteller as part of a joint venture project with the Center for Corporate Sustainability Management at IMD Business School on the subject of corporate purpose in organisations. The research is based on a quantitative study of 213 European companies and interviews with a selected group of 27 of those companies. The interviews and survey were followed by an analysis of expressions of purpose on the companies’ websites and in their annual reports. Companies whose online purpose statement did not correspond to the one obtained through the interview/survey process were excluded from the study.