Wednesday, June 15, 2011

Return on Values

Yesterday, I began to  look at ROI in a slightly different way and Philip Sheldrake and Tim Marklein maintained the argument for staying with a financial measure of public relations based on cash investment providing an incremental cash return.

For some PR trades, this is a perfectly adequate. One press release reaches a readership of a million people who in turn repay the client the cost of the press release and then some. The effect on the relationship between the organisation and the readers as well as tertiary publics such as journalists, editors and the process of WOM is ignored. Crude, better than nothing and informing management very little about effect.

Lets see if we can improve on that.

Suppose the PR practitioner was to ask the client:

  • "Do you have values?"
  • "Does your organisation have values?"
  • "Do you invest time explaining, even re-enforcing, your values and the organisation's values to the Board?"
  • "Do you and the Board invest time explaining your values and the organisation's values to your shareholders, employees, customers, vendors and other stakeholders?"
  • "Do you use your values and the organisation's values to single out your brands among consumers/customers?"

I think that most managers would agree that their values and the values of the organisation are very significant competitive differentiators and that valued have value.

Now, lets make this harder. What if you ask the CEO:


  • "What is the Return on Investment from your values and the values of the organisation?"


Ummm......

Now, in PR, we do have the answer.

Not marketers, not accountants, not business gurus.

Although many do recognise values as important even if they are not really sure how to identify values I cite: Charles Handy, Peter Drucker and Henry Mintzberg plus L Chen - 2009; H Donker 2008; M Chong 2010; J Cambra-Fierro & Y Polo-Redondo 2008; NL Trapp 2010 etc. etc).

In PR, grounded research (much better research than brand mangers have - and explained in this post), show that, among different segments of the public, there are drivers that build relationships between them and the organisation. They take the values of the organisation and where those values coincide with personal or group values, they find an affinity with the organisation.

An organisation can be described as a nexus of values and, to extent that they chime with the values of people or groups, there is a coincidence of interest.

We also know from a range of research and academic writing that organisations need to be able to understand the affinity between consumers and brand values to be effective and successful.

I cite, for example: JN Kapferer 2008; S Boo, J Busser, 2009; KL Keller & T Apéria 2008; S Srinivasan 2009; N Mizik & R Jacobson 2008; AE Cretu 2007; J Kim & JD Morris 2008 ....

For PR, deeper and more relevant measurement is to be able to identify the Return on organisational Values.

Does the organisation understand the values of its constituents? Does the organisation have values that chime with its constituency and in explications of its values, is it creating, sustaining and enriching positive relationships.

There is significant literature which explores the concept of Return on Values and much of the literature touches on matters like ethics, trust and reputation.

I cite for example: P van Beurden 2011; KS Cameron 2006; DA Waldman & MS de Luque 2006 LL Nash 2010 etc.

With rich, sustainable and supportive relationships, organisations will prosper both in the short and long term.

The return on investment in having clear, relevant, supportive and mutually acceptable values with the organisational constituency is a great deal more than cash out and cash-plus back. Yes, there is cash-plus back today but also cash-plus back tomorrow and with wider audiences. The real ROI will be seen to deliver real shareholder value, lower cost of doing business, a stable workforce with lower recruitment cost, enhanced vendor relationships and a more supportive licence to operate (Keller, Handy, etc etc).


Return on Values seems to be a much more sensible way of measuring PR.


Image from http://thefinancialbrand.com.