Performance Measurement: Can PR/Communication Contribute to the New Bottom Line of Intangible, Non-Financial Indicators?

Fraser Likely

It seems like it was just yesterday.

I remember listening to John Francis, when he was National President of the Canadian Public Relations Society (CPRS) in 1989, give a highly successful speech on the contribution Public Relations/Communications makes to an organization’s “bottom-line.” John, like every National President of CPRS, was Canada’s spokesperson on everything to do with public relations in that country. John toured Canada and the US giving speeches on recognizing PR/Cs contribution to the success of the organization. The title of his speech, and of subsequent articles that appeared in a variety of publications including PRSA’s former magazine PR Journal, was “Beneath the Bottom-Line.”

John argued that the so-called “bottom-line” did not and could not reflect properly our function’s contribution to an organization’s health. We needed to go beneath, behind or beyond the bottom-line. John, as usual, was ahead of his time. (It should be noted that John Francis acquired a Masters in Public Relations Degree from Boston College in 1952. Undoubtedly he was among the first group of professionals to hold a graduate degree in public relations – a degree leaders in PR/Communications now are flocking to in droves!)

In the more than 13 years following John’s cry, one thing is very clear: The current concept of bottom-line, a 15th century method of accounting for an organization’s tangible assets (land, buildings, machinery, raw materials, an inventory of finished products, capital, etc.) cannot adequately recognize our contribution.

Nor can it recognize other intangible assets such as intellectual capital, customer satisfaction and loyalty, corporate reputation, positive stakeholder relations, employee satisfaction and loyalty, corporate culture, or the ubiquitous “goodwill” surrounding a well-perceived organization. It’s interesting to note that these intangible assets are taken into account when one organization buys another (a firm may pay a premium for concepts like loyalty and reputation or brand recognition), but once the purchase is completed, the buying firm can not count these “assets” on its books.

That’s why we in public relations/communication are so concerned with the measurement of these intangible assets. That’s why our professional area is joining others to redefine what is considered the bottom-line. Groups like the International Accounting Standards Committee and the Society of Management Accountants of Canada are being pressured to accept the concept of a different bottom-line, one that values intangible assets – one that values our contribution.

Now, we must change as well. Let’s stop whining about not being recognized for our contribution to an accounting system that’s clearly outdated. (Hey, lots of economists, led by Michael Porter, say the same thing.) Let’s work to have a different system recognized. Let’s join forces with the leaders in this push; experts like CPRS member Elaine Dixson, APR of Key Concepts in Calgary or Hans Johnsson of the US and Sweden. Elaine Dixson, APR is the Canadian authority on valuing intellectual capital and knowledge management. Her firm’s newsletter “Key Words: The bottom-line about communication evaluation” is a must read. She was a featured speaker at the CPRS Annual Conference in Hamilton in June 1999, with the topic “Measuring Communication Value on the Bottom Line.” She, along with Margaretha Sjoberg of Sweden – another international expert on measuring intangible assets – was a panelist at the June 2000 CPRS Conference in Ottawa. The panel title was “Top-End Measurement: Measuring Reputation, Value and Intangible Assets.”

Hans Johnsson was one of the featured speakers at the Institute of International Relations conference “Performance Measures for PR/Communications” in Toronto, in April 1999 – the first such conference in North America devoted solely to performance measurement for our functional area. He gave one session, as well as a workshop titled “Benefiting from New Valuation Methods: Return on Communications and Real Biz.” Hans is an international expert and world leader on new valuation methods to establish company value and on measuring the quality and strength of a company’s relationships. It was my pleasure to chair this conference, as well as to speak on how to develop a performance measurement framework for an organization’s communication function.

Now as well, if we want recognition in this new accounting system, we must be able to show that our outputs and outcomes actually affect the outgrowths of our PR/communication work – concepts like organization-stakeholder relationships, corporate reputation and organizational leadership. Can we do that? Can we measure our contribution to these concepts – and then measure the movement in the concepts themselves?

We can measure efficiency, effectiveness and cost-effectiveness (the combination of efficiency and effectiveness) at three levels: communication products, communication programs and organizational positioning.

We can measure our individual communication products and services in terms of a production process: inputs, throughputs, outputs and outtakes. We measure inputs and throughputs for the effectiveness and efficiency, and thus productivity, of the production process. We measure the effectiveness of the delivery of the outputs (for example distribution, reach and coverage) and then we measure the outtakes or impact of these outputs for quality (attractiveness, accuracy, believability, etc. in the eyes of the receiver), their recall/retention of the message, and finally how they attended or responded to the communication product (did they pass it on to a friend, or did they go to a web site for more information).

We can measure the outcomes of our communication programs – a program being a collection of products with the same or similar messages aimed at the same target audience. Outcomes are the intermediate and longer-term effects of communication program: collective changes in levels of awareness, knowledge, understanding, preference, attitudes, opinions and behaviours. Very seldom can one single communication product (be the product a media release, a web site, a brochure, a direct mail piece or a video) affect the desired level of change. We recognize the need for message repetition, the message embedded in a variety of communication products utilizing a number of different communication channels directed to the same public over time. We can measure the efficiency of our programs, such as project management, supplier management, resource utilization and internal client satisfaction. By combining effectiveness and efficiency measures, we arrive at a cost-effectiveness measure.

Finally, we can measure the effectiveness of the outgrowths of all our communication programs and thus determine positioning measures like relationships, reputation and leadership. At this level, we also can measure the effectiveness and efficiency of our communication function in terms of organization, of the alignment with both deliberate and emergent corporate planning and thus whether the PR/communications function is strategically aligned, of staff competencies and continuous learning and of resource allocation. These latter measures are important measures if the organization employs an organization-wide performance measurement program like the Balanced Scorecard.

The time has come. It’s a new bottom line! We can measure our performance. We can choose the measures – efficiency, effectiveness or cost-effectiveness – at each level – communication product (output and outtake measures), communication program (outcome measures) or organizational positioning (outgrowth measures). We can show value. We can contribute to the measurement of “intangibles” or “non-financial indicators.”

It’s a different form of accounting, and one that will make us more valued and more ACCOUNTABLE!

Versions of this article appeared in the September 1999 issue of CPRS Edmonton (the newsletter of the Edmonton chapter of the Canadian Public Relations Society), on the CPRS National web site, and in the winter 2001 issue of the Canadian Health Care Public Relations Association’s magazine Impressions.

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One Comment

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