Business Roundtable Statement–Finally Getting Public Relations

Much was made this week when the Business Roundtable issued its Statement on the Purpose of a Corporation.

The essence of the statement is that businesses should have a larger purpose than only maximizing value for shareholders, aka investors.

A close look at this statement shows a bullet list that identifies other groups of people to whom businesses should show a commitment–customers, employees, suppliers, and communities.

What is compelling about this is how this “revelation” is actually quite old, and how this management innovation is actually fundamental public relations.

Those “groups of people” I mentioned above are more commonly called publics in the vernacular of public relations professionals. In a PR management class I teach I devote a week to each of these and other publics. The heart of public relations is to maintain mutually beneficial relationships with ALL publics, understanding that sometimes two or more publics with whom an organization has relationship may have competing goals. As they say in interpersonal relationships, it’s complicated.

What may be best for investors is sometimes antithetical to the interests of customers. A good action on behalf of employees may alienate the community. And so on. This is why PR is more than tactics, more than communication–it is a management function. And it has been considered such by many for a long time. Consider:

  • Stakeholder Theory, managing with consideration of all who have a stake in the success of or could be affected by an organization, is traced back as far as 1984;
  • The PR Council, an organization of public relations agencies, developed several years ago a guide called “Ethics as Culture” that stresses making ethics and consideration of all stakeholders a fundamental aspect of counseling clients and not mere compliance with rules;
  • The Arthur W. Page Society, an organization of top CCOs (Chief Communication Officers) representing the in-house function of PR and communications, issued a thought leadership effort called “The New CCO” that makes stakeholder consideration paramount in the role.

I am delighted that the Business Roundtable, representing the top business leaders in the country, has articulated an endorsement of the basic tenet of public relations. However, I’m upset yet again that they think this is their idea and don’t recognize what they advocate as fundamental public relations.

I’m also annoyed that while there has been much media coverage of this announcement (here’s a partial list in a Google News search), little if any of it equates this statement to public relations. Several media even express negative opinion in their coverage: The LA Times calls it “propaganda,” and CNN calls it “symbolic”.

So, the Business Roundtable has shown they finally get public relations. But they, and the media who covered their statement, don’t get that what they are talking about is public relations.

One can only hope that the statement leads to consistent, legitimate efforts to treat all publics with mutual respect and the realization that doing so is both ethical and sound strategy. And then, if it’s not asking too much, business leaders, the media and the public at large will realize that this management practice is what enlightened  PR pros have been encouraging all along.

Marketing: A Public Relations Discipline

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It caught me off guard for 2.3 seconds. I was just starting a radio interview about something public relations related, I don’t remember what any more. But I do remember the host getting us started by asking me: “First, what’s the difference between PR and marketing?”

I had not expected the question. But I should have. Because people get confused. Some use the terms interchangeably. Even some professional trade publications assert–incorrectly in my view– that “PR is a marketing discipline.” Others talk about work they do as “marketing and public relations” in a way that implies PR is only media relations, another minimizing error.

So what IS the difference? In the radio interview I stated that marketing is about all the activities that are required to bring a product or service to market, whereas public relations is much more broad in terms of developing and maintaining mutual relationships with many publics, not just customers.

I discuss this in my classes. As simplistic graphic above shows, marketing runs deeper in terms of bringing products and services to market, to reach consumers, with the objective of sales. Marketers engage in product development, packaging design, consumer behavior research, channels of distribution, economic analysis, pricing strategy and other aspects of what have been called the 4 Ps.

Public relations overlaps with marketing in terms of one public–consumers–and one of the 4 Ps–promotion. The tactics of both professions overlap in what is often called marketing communications, or MARCOMS.

But professions are not defined by their tactics. A mechanic, carpenter, electrician, and plumber may all use the same tools at one time or another. But they have different objectives.

So, PR has a limited contribution to marketing in terms of promotion. But in terms of objectives and publics it is considerably broader. As the graphic above shows, public relations is concerned with relationships, not only sales. Positive, honest, ethical, mutual relationships lead to good things with many publics, including sales to consumers, but also employee retention, investor confidence, community support, and more.

A fellow public relations professor who works in California said recently on social media that “marketing should report to public relations.” Exactly, for the reasons indicated above. It is broader and inclusive of marketing in terms of publics of interest and overall objectives. Another way of saying that is that marketing is a public relations discipline.

There are lots of opinions on this issue. This is just my take, albeit shared by many PR professionals and faculty with whom I speak regularly. But overall, the two professions need to have a mutual respect for each other, not demonizing or minimizing what the other does. I teach my PR students the basics of business and marketing (as well as addressing nonprofit management and the political landscape), and I am always pleased when marketing programs explain PR as something more than a product news release.

Evidence That Good Management Depends on Good PR

UnknownA Wall Street Journal article yesterday about the Management Top 250–the most effectively managed companies–reminded me of a fundamental principle.

Good public relations is essentially the same thing as good management.

I learned that years ago reading a book by Peter Drucker, the management guru on whose principles these awards are based.

Public relations academics and seasoned professionals will say that public relations is a “management function.” We stress it in classes, at conferences, and on the job.

It’s important to stress, because the word on the street–and, sadly, even within the ranks of public relations practitioners–is that PR is merely media relations, one-way communication, or worse, purposeful spin and deception.

Public relations, properly understood, IS good management. If public relations is properly practiced, there are tangible management benefits. Practicing good PR means considering ALL publics, striving for mutually beneficial relationships with all of them, and communicating with them strategically through ALL available tactics.

As evidence, consider the five criteria of performance for the Management 250 and the corresponding public relations contribution to each:

  1. Customer satisfactionSome would think immediately this has to do with marketing. But PR involves consumer relations, communication after the sale, reputation, CRM (customer relationship management) and is the basis for concepts like “permission marketing” and “relationship marketing.” Customers do not only derive satisfaction from the product or service, but from the relationship with the brand.
  2. Employee engagement and development. Here, human resources comes to mind naturally. But public relations professionals who specialize in internal or employee relations have much to do with this performance indicator. Communicating beyond benefits and annual performance reviews, being intentional about culture, retention, empowerment, being the ’employer of choice,’ and other objectives are ways PR enhances this aspect of management.
  3. Innovation. As mentioned above, culture is a key objective of internal public relations. And studies have shown that companies that are innovative don’t just hire innovative individuals but work on developing an innovative culture. Culture is based on and perpetuated by communication, the purview of internal PR professionals.
  4. Social responsibility. Corporate social responsibility has been a key aspect of public relations for decades. It relates to the fact that proper PR considers not just reaching but listening to all stakeholders and working toward mutually beneficial relationships. Recent research has shown more PR professionals take on the role of corporate conscience or ethical conscience of their organization. This leads to socially responsible practice.
  5. Financial strength. OK, maybe we leave this one to the accountants and finance experts. However, numbers 1-4 above are key drivers of performance, which is what gets the finances you are able to manage.

So, while public relations is mentioned in articles about bad management and crises, the unseen truth is that the best managed companies have a good public relations person offering strategic counsel on relationships, ethics, culture and more that are well beyond mere proficiency in communication tactics.