PR pros often disdain and fear math, accounting and economics. That aversion hampers corporate communicators in their jobs and impedes them from winning the respect of C-suite executives. Today, PR pros need a high level of financial literacy to perform their jobs successfully.
Very few communications professionals can read a financial statement, let alone understand and interpret one, says David Remund, an assistant professor of public relations at the University of Oregon, (now an executive director at Drake University in Iowa).
“If we wish to help truly lead the organizations we serve, and be of service to the greater society, too, our profession must master basic economics and finance,” Remund asserts.
Communications leaders explain how PR pros can become knowledgeable in these areas:
Economics. Economics influence how people, organizations and nations interact, a key concern for PR pros who focus on building relationships. At the very least, obtain a basic understanding of monetary policy and fiscal policy, including employment, trade and economic growth. Complete online courses in microeconomics, macroeconomics and accounting or finance. Read articles on business and economics in leading media outlets such as the Economist or The Wall Street Journal. Many other media outlets offer articles for free online. Improved understanding of economics and finance will also help you better organize your personal financial life and investments.
Financial statements. Learn how to read and interpret balance sheets, income statements, and cash flow statements. Remund suggests reading John Tracy’s How to Read a Financial Report: Wringing Vital Signs Out of the Numbers, and Karen Berman’s Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean.
Financial terms. Learn to understand the meaning of financial terms and abbreviations, such as price-to-earnings (P/E) ratios, margins, liquidity, variance, market cap, earnings per share and return on investment (ROI), recommends Karen Vahouny, who teaches business and finance to PR pros at George Washington University.
What the numbers mean. In addition to knowing definitions, learn how to find insights and meaning in the numbers. Knowing how to interpret financial statements allows communication professionals to understand their organization’s story and present that story to key stakeholders, including shareholders, customers and employees.
Annual reports. Most large companies produce annual reports, even if they’re not required by law. Communicators play a key role in creating those documents, says Vahouny, who led a virtual presentation on financial literacy for communication professionals for Ragan. In addition to financial statements and an overall summary or chairman’s letter, the best annual reports have clear, concise language and key messages that reflect the personality of the business. Examine examples of succinct, compelling financial reporting, Vahouny says, naming T-Mobile, Home Depot and JP Morgan.
Start reading financial statements. Start improving your financial literacy by reading those key financial reports, recommends Ron Hutcheson, a managing director at Hill+Knowlton Strategies. You can usually find them on the company’s website in a section marked “Investor Relations” or “Investors.” Also listen to earning calls or scan the transcript, if available.
“Ease into financial literacy by taking a peek at your client’s annual report,” Hutcheson says. “You might actually find some of it interesting.”
Bottom Line: Financial literacy is essential for PR pros to do their jobs well and gain respect in the business world. By delving into the organization’s financial reports, PR pros can better understand their organizations and communicate its key messages.
William J. Comcowich founded and served as CEO of CyberAlert LLC, the predecessor of Glean.info. He is currently serving as Interim CEO and member of the Board of Directors. Glean.info provides customized media monitoring, media measurement and analytics solutions across all types of traditional and social media.