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[Argentine Association of Internal Communication]

RESEARCH

The Role of Internal Communication in Argentine Companies during the Global Financial Crisis of 2009

About the Asociación Argentina de Comunicación Interna

The Asociación Argentina de Comunicación Interna was formed in 2007 and is composed of internal communication professionals working for Argentina's major companies.

The AAdeCI was created because of the growing importance of Internal Communication in organizations year after year. Our goal is to boost its development together with highly trained and experienced professionals.

To achieve this goal, at the AAdeCI we produce information and knowledge, we spread good practices, we work in a network and we make alliances with other organizations which are engaged in the promotion of Internal Communication in our country. Also, we are in touch with major international institutions in the sector and we create alliances of mutual cooperation.

For more information click here: www.aadeci.wordpress.com

Or contact us: Lic. Alejandro Formanchuk President - AAdeCI [email protected] Tel: +(54-11) 4862-9677 Lic. Andrea Lojo Vicepresident - AAdeCI [email protected] Tel: +(54-11) 4779-0651

The Role of Internal Communication in Argentine Companies during the Global Financial Crisis of 2009

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Introduction

At the Asociación Argentina de Comunicación Interna we are glad to show you the results of our first research: The Role of Internal Communication in Argentine Companies during the Global Financial Crisis of 2009.

The purpose of our research is to provide a frame of reference about what communication professionals are doing in this context of global financial crisis.

We would like this document to be the basis for further work to address our concerns.

Research team:

· · · · · · ·

Andrea Lojo Adriana Bottiglieri Adriana Shimabukuro Alejandro Formanchuk (Coordinator) Gonzalo Novara Pilar Bravo Virginia Marega Maggio

Research data:

·

Universe: Companies having over 300 employees with headquarters in the City of Buenos Aires, Argentina

· ·

Methods: quantitative research, exploratory study Information gathering technique: Telephone surveys

The Role of Internal Communication in Argentine Companies during the Global Financial Crisis of 2009

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·

Information gathering tool: Questionnaire with multiple-choice and open-ended questions

· ·

Sample: 40 cases (heads of Internal Communication in companies) Field study date: March to June 2009

Sample detail

· ·

According to activity: 51% of industrial companies and 49% of service companies According to origin: 46% national and 54% multinational. Regarding the origin of multinational companies: 54% belong to Europe, 28% to the US and 18% are Latin American

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Results of the research

1. Internal Communication in companies

Firstly, the research showed the place occupied by internal communication within the structure of organizations and the number of people who work in this area.

1.1. Its place in company structures

As a result, the research showed that:

· ·

70% of the companies have a formal IC area or department. 30% do not have an exclusive area but there is one person, at least, who, among other functions, manages the IC.

Have a formal Internal Communication area or department

30.0%

70%

One person manages the IC but also fulfils other functions

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1.2. Number of people who manage the IC

Regarding the number of people who manage the internal communication in the companies, the research showed the following:

· · · ·

1 person manages the IC in 35.5% of the companies. 2 people manage the IC in 21.5% of the companies. 3 people manage the IC in 27% of the companies. 4 or more people manage the IC in 16% of the companies.

35.5% 27% 21.5% 16%

1 person

2 people

3 people

4 o r more people

Although in almost 85% of the companies, the IC department has a maximum number of only 3 people, 78% of the companies have the support of external consulting companies or professionals specialized in communication. This outsourced service covers a broad range including development of diagnosis, plans, actions and/or implementation of media and/or tools.

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2. The crisis and its impact on the resources of the IC area

In a second stage, the study showed some aspects of internal communication management and their relationship with the current crisis, mainly those aspects related to budget, tools and personnel of the area.

2.1. Economic resources:

Regarding the economic resources of the area, 84% have an annual budget specifically allocated to this function and 16% say they do not have a budget allocated to their task (see Graph 4).

Graph 4 Does the Internal Communication area have an annual budget?

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This 16% who do not have their own budget can fulfil their function with the economic resources provided by other areas of the company:

· ·

40% of the cases are financed with the Human Resources budget. 30% of the cases are financed by the area which requests the Internal Communication service.

· ·

8% of the cases are financed with a global account. The remaining 22% are financed by other areas.

Graph 5

40% HR

8% Global Account

30% Area which requests the service

22% Another area

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When consulted about this year's budget related to the previous year's, and considering the context of the global financial crisis, 40% confirmed that such budget is higher than last year's, 30% informed that it was the same as last year's and another 30% that it was lower.

Graph 6

What is you budget with respect to last year's budget? (2008 vs. 2009)

40% 40% 35% 30% 25% 20% 15% 10% 5% 0% Higher Lower The same 30% 30%

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2.2. Tools

In this same context, we asked them if they were planning to discontinue some communication tool or action in comparison with what was done during 2008.

65% said that they will continue with the same tools as last year.

Graph 7

Do you think that your company will discontinue any communication tools this year? (2008 vs. 2009)

YES 35%

NO 65%

Among the tools/actions to be discontinued, they mentioned mainly events, for example: work breakfasts, parties and celebrations, outdoor activities, etc.; those activities which mean expenses which the company prefers to avoid in this instance. They also mentioned a decrease in the printing-out of material, with an impact on house organs.

In this context, face-to-face communication and digital communication media such as newsletters and the intranet are used in the same way or their use has increased.

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2.3. People responsible for IC

Regarding the people working in IC and their prospective future, 73% of the respondents estimated that during 2009 their team will have the same number of people. 19% considered that more personnel will be hired, while 8% stated that personnel from other areas will be trained to perform IC tasks (see Graph 8).

None of the companies has downsized the Internal Communication area workforce as a consequence of the crisis and they are not planning to do so.

Graph 8

What do you think will happen to the personnel in the IC area?

a) It will be downsized

73%

b) The team will be the same

c) More personnel will be hired

19% 0% 8%

d) Personnel from other areas will be trained to perform IC tasks

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2.4. What type of resource is IC when facing a crisis?

Our research was conducted to get to know the perception of the people responsible for communication about the management's opinion on this function.

54% of the respondents said that their company considers the IC area a strategic ally to go through the crisis (see Graph 9).

Graph 9

Does the company understand what the IC area can provide to go through the crisis and that, therefore, it is a strategic ally at this moment?

YES 54%

NO 46%

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70% consider that this crisis is an opportunity to show that they can give strategic answers and that they have a lot to offer the company while they get a better position in the organization. 30% consider that this crisis scenario is not an opportunity to show the value of internal communication (see Graph 10).

Graph 10

Do you think this crisis is an opportunity to show the potential of the IC area and all the things it can do for the company?

YES 70%

NO 30%

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2.5. External assistance

Of the 78% of the companies who said they have the support of consulting companies or professionals, 65% stated that they use the same level of resources aimed at outsourcing IC services; while 35% confirmed that their level of resources decreased or was cancelled directly (see Graph 11).

Graph 11

What do you think will happen with the outsourcing of external communication services?

65% keep the level of outsourcing

35% reduce the level of outsourcing

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3. How they communicate the crisis internally

3.1. How prepared is the company? The crisis committee

As part of the strategic development of communication, many companies have a committee who make decisions in crisis situations.

In this study, of the total number of companies surveyed, 49% said that they had a crisis committee and 51% that they did not have one.

Graph12

Does your company have a crisis committee?

NO 51%

YES 49%

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3.2. The communication of the crisis

When asked whether the current situation was formally communicated or not and how the company is affected by the local and international crisis, 46% gave some kind of formal communication while 54% of the respondents answered that they opted for keeping silent.

3.3. Who communicated and how

Within the percentage who did give communications about the crisis, it is worth pointing out that regardless of the size of the companies surveyed (over 300 employees), the way chosen to communicate was face-to-face and the person in charge of giving the communication was mainly the CEO.

Graph 13

67.0%

38.8%

38.8% 22.2% 16.6% 16.6%

11.1%

Face-to-face

Face to face CEO/Manager Direct boss

Internal Magazine

Others (audio Conference)

Newsletter

Intranet

Notice boards

Series1

67.0%

38.8%

38.8%

22.2%

16.6%

16.6%

11.1%

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4. Conclusions:

1. It is important to emphasize that the employees from all the companies who took part in our study say that they formally manage the internal communication in their organization. And over half of the people responsible for this task consider that this area is a strategic partner to go through the crisis.

2. Our study shows that in most companies the people in charge of Internal Communication are usually a few compared to the whole staff of the companies. However, most companies hire consulting companies who help them to take effective action.

3. Regarding the resources of the area, when asked about the budget, 84% of the people responsible for Communication in the companies state that they have their own budget and 40% a budget which is higher than last year's.

4. When asked about the workforce in the context of the current crisis, none of the companies is planning to downsize the Internal Communication area; they even talk about the possibility of training employees from other sectors in communication tasks.

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5. When we asked about tools and media, the recurrent measure to reduce costs seemed to revolve around events organization and printing out material.

6. As regards communication in this context of crisis, 49% of the companies said that they have a team prepared to communicate in this crisis situation. Within this framework, 46% formally communicated the impact of the crisis in companies. In these companies the priority action was direct communication either personal, by cascade or through letters from the high management. This attitude leads us to think that in those companies Internal Communication constitutes a valued space as it is used to give information in critical situations.

As this is the first study of this type conducted by the Asociación Argentina de Comunicación Interna (AAdeCI), we do not have comparison variables regarding the role of internal communication in previous crisis. We expect this study to be the basis for future research which will allow us to make the necessary changes to continue improving the effective management of Internal Communication in Organizations.

Buenos Aires, July 1, 2009

The Role of Internal Communication in Argentine Companies during the Global Financial Crisis of 2009

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