Melbourne Mandate will be Established at World Public Relations Forum

The Seventh World Public Relations Forum (WPRF) convened by the Global Alliance for Public Relations and Communications Management (GA) is set to take place in Melbourne, Australia from 18-20 November, 2012.

The Melbourne Mandate will be established, which builds on the Stockholm Accords from the Sixth WRPF, which will be a modern ‘mandate’ for organizational and societal value of public relations and communication management.

Two speakers at the WPRF are PR industry figureheads who also happen to be first cousins, Toni Muzi Falconi, Senior Counsel of Italy’s Methodos, and Emilio Galli Zugaro, director of Group Communications at Allianz Group.

Below is a frank interview with Toni interviewing Emilio. They discuss a recent GA and Enel study on corporate communications, corporate character / DNA, corporate practice, and the importance of trust and its effect on the bottom line.

1. Toni Muzi Falconi (TMF): One issue raised last year by the Page Society’s Building Beliefs report that has become one of the three principal areas of investigation for the Melbourne Mandate is corporate character or DNA. The GA/Enel study highlights your work at Allianz in ensuring that corporate character be a constant reference for employees. Could you expand on this? Why and how is your DNA unique?

Emilio Galli Zugaro (EGZ): Our corporate character or DNA is unique because of our industry. We are in insurance and asset management or, you could say, in managing risks and investments. These businesses attract a certain kind of people, actuaries and lawyers, and these are people who are very prudent with risks, who are strong analytically.

Then, in our particular case, you have the age of a corporation. We are 122 years old. This means, we have many stories to tell, sometimes families of employees are with Allianz in the third or fourth generation. We were among the insurers of the Titanic, paid lots of claims after the San Francisco earthquake in 1906 or were smart investors before World War I, putting our money in gold and Swiss francs. When the hyperinflation hit Germany in the years of the Weimar Republic, our investments were not affected and in the consolidation game of the 1920s we were able to buy competitors since we had the funds. All of this, together with very painful other stories, like having insured SS factories in concentration camps in the Nazi period, shape a company’s DNA. Once we’ve studied the mistakes of our forefathers in the Nazi dictatorship or during the Communist rule in eastern Germany, employees today are very vigilant on issues of corporate responsibility, we are all learning from the past, we want to avoid repeating past mistakes.

We then consider the national elements. The oldest part of our corporate history is German, thereby linked to values like punctuality, reliability and precision, things that matter in insurance. In the last decades we’ve become a global company and we’ve imported a more hands-on management style, more informal and less hierarchical attitudes, much more diversity. This is also part of today’s DNA.

Last, but not least, the growing interest by both external and internal stakeholders with bigger transparency has compelled communications professionals to hunt for the stories giving evidence to what we are today. And good stories like what happened when we insured the rats of an Indiana Jones movie or how we handled the claims of cattle after a dramatic Typhoon in Kerala, Southern India, can stimulate the sense of pride and the curiosity. But these stories have to be in sync with the corporate DNA to be credible and in order to convey a business strategy and not just being stories per se.

TMF: The Page Report also attempts to create an operational link between corporate character and active stakeholder advocacy. In practice, if a corporation’s DNA is truly unique (I am told by experts that epigenetics should be the term used in this context rather than DNA…), then the organization needs to make an effort — beyond routinely advocating with stakeholders — to leverage those characteristics in a communicative process that aims to turn those stakeholders themselves into advocates-at-large (clearly not only employees, as this has been a constant concern for public relations since its origins).

In the GA/Enel study report, you explain your specific use of the Net Promoter Score methodology to monitor, evaluate and measure such effort. Would you please elaborate on this for our readers?

EGZ: First, one needs to briefly explain what Net Promoter Score (NPS) is. Fred Reichheld, a fellow at the consultancy Bain & Company, discovered some years ago that there is a very strong correlation between the answers by customers of a company to one question and the profitable growth of this company. This question is: “How likely would you recommend this company to your friends and family on a scale from 1 to 10?” Scores from 1 to 6 are so-called Detractors, they despise the company in question. 7 and 8 are neutral and the 9 and 10 are the Promoters, customers who are enthusiastic about the services of a company. You subtract the Detractors from the Promoters and you have your NPS score.

If it is positive your company will grow profitably. You can find out why specific customers are either enthusiastic or angry about your services and if you work on these causes you can achieve enormous business success. But this only works if you look at all the processes in a corporation, if you don’t exclude one single employee. Sometimes a flippant answer by a call center colleague to a customer enquiry can kill all the efforts of all other colleagues delivering superior service. And this goes for all relationships, with all stakeholders. We regularly ask our employees if they would recommend Allianz not only as an insurer or asset manager but also as an employer.

In 2010 we studied the correlations between good external communications practices (like media work) and NPS and between good internal communications, or engagement, and NPS. There are strong correlations. In other words: good corporate communications can contribute to profitable growth of a company and we can measure it. And “good communication” means being close to the stakeholders’ needs, able to listen to the world and bridge gaps with the company. And this has to occur throughout an organization. A daunting task but enormously rewarding! Plus, it really makes fun.

TMF: The financial industry has been in constant turmoil in recent years and the issue of trust has now become a professional mantra. If by trust we interpret that an organization does what it says it will do — regardless of whether its actions are immediately, short term, medium term, long term or even never beneficial — would you say that the levels of trust in your organization have significantly declined? Have they been demonstrable relevant on the bottom line? How does Allianz interpret the bottom line?

EGZ: Trust is determined by many factors: to tell the truth, to build on long-term relationships, to be able to admit mistakes, to submit yourself to strict controls and monitoring by truly independent stakeholders, to treat others like you like to be treated and to understand the feelings and reasons of stakeholders, their motivation and their mentality. Trust is built on thousands of even small promises kept. Finally, the NPS system captures trust, since nobody would recommend a company’s product or service if he or she didn’t trust this corporation. So we know that in some countries we have lost trust and in others we are constantly gaining it.

This also answers your question on the bottom-line: where we are trusted we grow profitably. These are what Fred Reichheld calls the “good profits”. A bad profit would be the money you earn when you have a monopoly, where the customer has no choice. Bad profits bring about bad CSR. It’s the companies that sell lousy products to youngsters and then sponsor grassroot events like barbeques in schools. Come on! It’s better to deliver honest and good products and you can save the money on greenwashing, whitewashing and all this dirty laundry stuff.

Often companies just focus on (bad) profit, employees must make their numbers, sales and profit goals. But what we really want are loyal customers. Good profits are profits made with the participation of the customer, being enthusiastic to pay for an outstanding service, delivered by warm, empathetic and personal people. And this will give you both the bottom line as well as the licence to operate as a business. Loyal customers come back more often, buy additional products and services and refer their friends. It’s very difficult to achieve, we have to fight every day and everywhere to make this happen and we may be wrong many times. But it’s so rewarding.