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.