Sierra's Theory of Communicativity: Calculating the Value of Organizational Communication through Cost Effort and Perception

By Sierra, Lorenzo | Communication World, June-July 2003 | Go to article overview

Sierra's Theory of Communicativity: Calculating the Value of Organizational Communication through Cost Effort and Perception


Sierra, Lorenzo, Communication World


I couldn't help but wonder if my tie was on straight. For that matter, I was hoping my new suit made a good impression.

Somehow, I had gained an audience with an up-and-coming CEO and his human resources manager. I was there with a group of consultants who were telling the duo about the services they were receiving as a client. My role was to get them to buy additional internal communication services.

I was on top of my game. Goals. Strategy. Audiences. Media. Measurement. I addressed it all.

I was formulating the company's communication plan in my head when the CEO said, "I really see no value in that [communication]."

What could I say? What could I do?

No value?

This was one of those CEOs you see in various national publications, a forward thinker. Yet he did not "get it" when it came to the value of communication.

The sad fact is that many business leaders don't understand the value of communication. Moreover, I've had discussions with communication professionals who find it hard to calculate the value they bring to their organizations.

It's those conversations and my own humbling experience that led me to develop an easy-to-understand way of showing non-communicators the value of what we do. The equation is simple: V = (c + e)P

That is, the value of communication is equal to the costs plus the efforts of what you're communicating to the power of perception.

VALUE

Don't confuse value with the ubiquitous term ROI, or return on investment. ROI lets you know what you're getting for what you're spending. Value, on the other hand, is the relative worth of a thing or concept. In this case, the concept is communication.

Organizational communication is a lot like love. You really can't quantify it with raw numbers, but you need it to survive.

In the equation, V (value) is used to determine the monetary and anecdotal worth of what you're communicating and assumes that you're doing all the things good communicators do. For example, you have approached your communication strategically. You have clearly stated goals. You have solid messages. You know your audience. You've determined the most effective media. You know how to measure the success of your efforts. You stay within your budget.

Starting from the same vantage point, the value of internal organizational communication can be determined by calculating the costs and efforts of what is being communicated. This can be a new product. It can be a performance program. It can be an employee benefit plan. It can be any number of organizational endeavors.

COSTS

Here, you are actually putting a real dollar figure on the value of communication. Again, look at what you're communicating.

For example, if you're communicating your organization's medical benefit plan, use the bottom-line amount your organization pays to provide the benefit. In many organizations this is a substantial figure. Therefore, if your organization pays $1 million to provide medical benefits, the monetary part of the equation is $1 million.

Another way to look at the cost portion of the equation is by estimating the effect of not communicating. Staying with your organization's medical benefit plan as an example, consider the ramifications if the plan is not communicated. For starters, employees may not know how to use their medical benefits properly. In that case, the $1 million investment is squandered because your organization's plan is no longer the competitive differentiator it was meant to be.

Moreover, in some countries medical benefit plans require legislatively mandated communication. Not fulfilling these requirements can lead to fines. In this case, possible fines also can be seen as a way to determine costs.

EFFORTS

In today's business world, time is often your most valuable asset. The time you take to achieve an organizational goal is a resource that can't be recouped. …

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