Published on April 13, 2018, at 1:43 p.m.
by Alana Doyle.
ROI, cash on hand, balance sheet, P&L, competitive advantage. These are key terms every public relations professional should understand when entering the business world. According to a recent Forbes article, executive communications roles are vital to a company’s success. A PR strategist is more likely to effectively sell a communications plan by discussing the impact on the organization’s bottom line to company leadership with the use of basic business and financial concepts.
The monetary benefit of public relations
Public relations has the ability to directly and indirectly impact the profit of a corporation. According to Dr. Bruce K. Berger, direct contributions can be made through the sale of goods or services through communications, events and programs. Another form of direct PR contributions is an increase in productivity among team members. Berger defines productivity as when companies “do more with the same or fewer resources, based on process improvements and better time management and resource use.”
Dr. Berger is a professor emeritus, advertising & public relations, at The University of Alabama, where he taught public relations courses for 16 years. Prior to entering academia, Berger was a communication professional for 21 years. From 1989 to 1996, he was vice president of corporate affairs for Whirlpool Corporation and president of the Whirlpool Foundation. From 1975 to 1989, he worked at the Upjohn Company, a pharmaceutical company, where he was director of Worldwide Human Health PR. In this role, he worked on PR programs in 30 countries.
In regard to indirect contributions to the bottom line, communications can positively impact internal aspects of an organization like job retention and employee engagement. When turning the focus to external communication benefits, marketing efforts, crisis communications plans and digital media strategies drive customer attention, awareness and knowledge of the brand and therefore positively encourage buying behaviors.
Berger stated that the most important thing to remember when it comes to the indirect impact of communications on company profit is to “link plans to real business goals, objectives and values, and include appropriate measures to document the effects and outcomes of the plan.”
When developing an effective communications plan, it is vital that there is a clear understanding of the organization and that various viewpoints and insights are combined in order to achieve success. “Public relations professionals help tell the stories of the organization; they listen and observe the work necessary to bring about the success,” said Lori Marble.
Marble currently works as the director of strategic innovation at the Mercy Hospital Joplin in Missouri. In this role, she oversees a hospital-wide, goal-setting initiative to decrease costs, increase patient visits and reduce turnover, as well as serve in a leadership capacity for the telecommunications and auxiliary efforts. In 2014 and 2015, she served as a transformation agent on Mercy’s 10-person Noah’s Ark project, crafting communication platforms for future transformation efforts. Previously, Marble served as Mercy’s director of marketing and communications for the Southeast Kansas and Southwest Missouri region. Before entering health care, she held public relations positions in higher education and government, and as an independent practitioner.
According to Marble, there are a few key terms that public relations professionals need to know when entering the workforce. ROI (return on investment), NOI (net operating income), cash on hand, and P&L (profit and loss statement) are concepts that are vital to communications-focused professionals. Berger also provided an 11-page document defining key business and financial terms, which can be found here: Business and Financial Communications Packet
The impact of business knowledge on your career
The relationship between business and public relations works hand in hand. Dr. Berger described three key benefits of understanding business and financial terms as a PR professional.
1. It helps get a job.
When applying for internships and jobs, companies have developed the expectation that new hires already understand these basic terms. The ability to ask finance-focused questions during an interview or meeting will increase an individual’s value to the corporation. Since the majority of PR graduates don’t, those who do may distinguish themselves and help define their personal brands.
2. It helps to get ahead.
Linking the values of an organization with a description of the communications plan’s impact on the company’s bottom line will boost your credibility and career. Other important business drivers to mention in a pitch are the vision and mission of the corporation.
3. It can help get a seat at the BIG decision-making table in the organization.
In order for public relations professionals to be seen as business and communication leaders, financial knowledge must be applied on the job. In the end, a seat at the table is the ultimate goal.
Parting advice to PR professionals
“I have always felt that a missed opportunity in college was not taking a series of business management and accounting classes,” said Marble. “The value of public relations efforts is ultimately measured in the boardroom by how they impact the bottom line.”
“Never say in an interview you’re ‘not a numbers person.’ You have to be a numbers person, right?” said Berger. “How else will you effectively measure outcomes, conduct and analyze research, and understand organizational numbers like sales, earnings, productivity rates, market share, etc.?”
A clear understanding of financial communication terms is vital for all public relations professionals when entering the field. In order to improve your career, dedicate some time to learning other aspects of business to rise to the top.