“Public Relations Leadership in 2001: Greater Importance, Greater Competition”
The Golden Workshop
"Expectations of the Chief Corporate Public Relations Officer In 2001"
The purpose of The Golden Workshop paper is to describe and analyze a critical issue facing professionals in corporate public relations. While the focus of this paper is on the prospective roles and management approaches of the corporate PR chief, it embraces issues related to the roles of PR agencies.
The Arthur W. Page Society today is fortunate to count among its 277 members many leaders of corporate public relations, as well as many individuals in PR agencies who have held leading corporate posts and who today deal daily with major corporations.
Inevitably, in-house PR chiefs and agency PR practitioners may have differences of view on some of the leading questions raised in this paper - if the contrasting opinions can come to the fore in The Golden Workshop discussions, then the benefits to the PR profession as a whole could be substantial.
This paper was designed to set the stage for such discussions.
The paper is in two parts: the first is an introduction to many of the general issues that are set to confront corporate communicators in their global work; the second part is a hypothetical case study, providing real issues and the critical questions, from investors relations through internal communications, with some bribery and human rights on the way!
The "case study" underscores the most critical question that PR chiefs have asked themselves in the past, and will need to ask themselves again:
How can we best organize and manage our PR departments to be efficient and successful in an era of continuous and dramatic change?
SUMMARY OF ISSUES
QUESTIONS FOR THE GOLDEN WORKSHOP DISCUSSIONS
Globalization will be in full flight at most leading U.S. corporations in 2001, while downsizing will continue to be widespread. These phenomena will have a fundamental impact on the expectations of PR chiefs.
- Globalization will add complexity to every PR area.
- Downsizing of staff functions at many corporations will be relentless, forcing still
greater pressures on PR departmental budgets.
The issue is not whether the PR chief will be able to cope, but how ?
Accordingly, the toughest questions for the PR chief will concern management, organization and standards.
1. Defining Responsibilities:
Narrow the Scope and Give Up Responsibilities to HR, Marketing, Finance and Legal ?
In the new century's prospective environment of increasing business complexity, is it realistic to expect the PR chief to manage the full panoply of areas now viewed as the domain of public relations/public affairs ?
Or, is it more realistic for such responsibilities to be more narrowly defined and for the CEO to allocate a range of responsibilities elsewhere, such as to Human Resources (employee communications), Finance (investor relations), or to Legal (government relations) ?
2. Organizational Structure:
Decentralization or centralization ?
As the corporation becomes increasingly global, is decentralization of the PR function both inevitable and necessary ?
Or, do new technologies and communications systems, in fact, make Marshall McLuhan's "global village" such a reality that PR effectiveness demands still more intensive centralization of some key functions ? (See 1997 Conference Board speeches by Frank Vogl for some additional views on this topic.)
3. Forging New Internal Partnerships:
What are the best approaches to winning the confidence of increasingly sovereign key corporate managers ?
How should the PR chief best forge new partnerships (and, set guidelines and provide human and/or financial support) with the increasingly powerful and independent unit, regional and national senior managers within the corporation, whose overall scope of responsibilities is growing through globalization ?
4. Forging New External Partnerships:
How do PR agencies fit into the 21st century equation ?
In the light of downsizing, forging internal partnerships, globalization and mounting pressures to outsource many activities, PR chiefs may ask:
What guidelines can be determined for making optimum use of public relations agencies ?
What criteria need to be developed for selecting PR agencies?
What changes must PR agencies themselves make to be more effective partners for 21st century corporate PR chiefs ?
5. Staffing The PR Department:
Do PR departments need different kinds of staff and talents and new training programs ?
What skills will the PR chief need to meet the challenges of operating in a global business ?
What are the appropriate combination of skills that the PR department in 2001 will need to have within its staff ?
Where will the PR chief need to go to recruit new PR staff ?
What training programs will be needed to meet the prospective challenges ?
6. Image and Values:
Does going global force new critical ethical issues ?
How will the PR chief take leadership and demonstrate skill as the corporation evolves a global image from its U.S.-based image, and confronts in its external relationships, a growing diversity of cultures and traditions, many of which may have different values and understandings of ethical standards ?
THE CEO, EXPECTATIONS
AND PRESSURES ON CORPORATIONS
As PR practitioners we recognize that our key client is the Chief Executive Officer. It is the CEO who has primary responsibility for defining the corporation's expectations of its chief public relations officer. If we fail to enjoy the confidence of the CEO, then we may be best advised to seek employment elsewhere.
The PR chief needs to have an open, vibrant and effective continuous relationship with the CEO, which demands that the PR chief meets the CEO's expectations.
Those expectations are a combination of the CEO's personal aspirations, his vision for the corporation, and evolving developments within and without the corporation that are determining business success.
The expectations in 2001 will be largely similar to those of earlier times. For example, the CEOs of the future, as in the past, will have a strong ego and a keen desire to be seen inside the corporation and externally as an individual of outstanding leadership talent and integrity. The PR chief will be expected to be sensitive and responsive to such considerations.
But, CEOs are facing an array of new pressures, which force changes on corporate strategies and developments. These, in turn, force changes in the expectations of corporate public relations professionals.
Shareholder Pressures For Shareholder Value
The strategies of America's leading corporations are being changed by the sustained low inflation and low economic growth of the 1990s. The macro-economic development of the U.S., which impacts every corporate strategy, is not difficult to predict. The Federal Reserve Board appears determined to sacrifice growth for price stability. Perhaps an appropriate approach given the unpredictability of fiscal policy. Even on the fiscal side, however, the mood of the nation appears to demand greater efforts at reducing the budget deficit and, in effect, curbing the growth of public spending.
These factors result in the leaders of corporate America being hounded, indeed besieged, by their shareholders.
Inflation is not available to give earnings a veneer of significant growth, nor are rapid advances in the gross domestic product available to boost overall revenues. But, shareholders constantly want more formidable benefits from the corporations in which they invest.
Competitive Pressures In The Integrated Global Economy
In addition, competition between enterprises is increasing and set to increase further. Capital is becoming more abundant to support new, rival enterprises. Corporations in emerging economies are becoming multinational challengers. Not, just in emerging markets, but also in the U.S. market through acquisitions and exports. High technology innovation is accelerating the momentum of competition, and providing corporations with swifter direct access to their final market targets.
For leading corporations in most sectors, enhanced competitiveness is a direct product of globalization. The ability to take fullest advantage of low cost production centers, diverse multinational R&D centers, the exchange of managerial experiences across national frontiers, are some of the factors that build stronger global productivity. The gains translate swiftly to the bottom line, especially as so many emerging markets are now opening and grow fast.
But, keeping pace with competitors, demands an unprecedented level of multinational investment spending and rapid responses by managements to global challenges.
Organizational Pressures Force Constant Streamlining Efforts
CEOs are concluding that they must "restructure" their enterprises to meet the mounting shareholder and competitive pressures. This unleashes organizational pressures, which may involve the following remedies:
i. curbing all manner of business costs;
ii. innovating to find ever more efficient means of production; and,
iii. opening new markets.
These actions lead corporations to streamline management and decentralize authority (see Ford box). In some cases, as we have seen at AT&T, ITT, and Dun & Bradstreet, CEOs determine the optimum course is to split the corporation into several distinct corporations to maximize shareholder value and boost competitiveness.
| Ford CEO Alex Trotman in Ford Motor Company's 1994 Annual Report: The changing organization results from the change in the processes by which we run our business. We're using less top-down management and more cross- functional teamwork; less bureaucracy and more employee empowerment; fewer multiple approvals and more efficient decision-making. A single organization doesn't mean we've centralized power - just the opposite. We're pushing authority and accountability down into the organization as far as it will go, to keep us fast and innovative and in touch with our customers. We're on our way to being a more efficient, agile organization with fewer layers of management. We want our employees to keep learning, and to be empowered to make decisions at the level closest to the action. I've told the entire Ford team that I want to reduce our coefficient of bureaucratic drag so that our business is as streamlined as our cars. |
The organizational charts of many companies become less pyramidical and flatter. The search for enhanced productivity leads to entry into new product areas and greater efforts to find rationalizations between plants in different locations. The search also means more acquisitions of existing businesses through take-overs and mergers, or new greenfield investment.
The combination of the shareholder, competitive and organizational pressures, results in an ever greater premium being placed on top management's skills to be flexible, adaptable and efficient in decision-taking. Key functions become still tighter and team relationships between the leadership group become ever more vital.
To be a player, the PR chief must be sensitive to each of these factors: running a tight ship (with probably fewer budget resources), providing swift and expert information to the leadership team on a continuous basis, and demonstrating the skills to secure a place at the top management table. The CEO in 2001 will expect nothing less from the chief PR officer.
CORPORATIONS GOING GLOBAL
Globalization will impact every aspect of the PR chief's work.
The corporation in the year 2001 will be more global than it is today. Analysis of competitive factors demonstrates that going global is not a question of choice. It is a necessity. Leading corporations, in most business sectors, that do not become increasingly global, will fail (see BOOM by Vogl). The choice is globalize, or demise.
Numerous U.S. corporations are already global in most respects, with vast operations in many countries - such as Coca-Cola (see box), Johnson & Johnson, American Express, J. P. Morgan. But, they are the front-runners still. These corporations have multinational top management teams, organizational approaches that make no distinctions between U.S. and international, and investment strategies that see vast, long-term, non-U.S. outlays. At these corporations, the PR chief strides the world's stage with an air of confidence, and an internal angst in the face of mounting challenges.
CEO Roberto C. Goizueta in Coca-Cola's 1994 Annual Report Refusing to neglect any territory anywhere in the world, we have long pursued geographic expansion as a fundamental means of growth. Through our persistence, the end of the Cold War and the fundamental transformations of many important local economies, we have more than doubled since 1980 the number of potential consumers truly within our reach. (In 1994, Coca-Cola's worldwide unit case volume was 11.8 billion --- 70% was outside of the United States). |
Most leading U.S. corporations (as reflected, for example, in Arthur W. Page Society, membership), however, are still dominated by U.S. operations and considerations, although all have international business links of diverse and numerous kinds. They are corporations where defining characteristics include:
- Top managements with only modest international experience;
- most employees, suppliers and customers, U.S. based;
- most investor and financial relationships are U.S. based;
most issues of governmental affairs are related to the U.S. agenda;
- the PR department is overwhelmingly composed of U.S. nationals with little non-U.S.
experience;
and,
- the PR agenda is dominated by U.S. issues and audiences.
But, a global business paradigm is in the ascendant almost everywhere now. In relative terms, the U.S. will play a decreasing role in each of the above described areas. In almost every area of corporate business the expansion will be in the offshore areas, so forcing a relative downsizing of the U.S. operations, and a redefinition of the U.S. activities. More sales, more investment, and more R&D will take place outside the U.S..
Today, most leading corporations are in transition, therefore, from a U.S. + international organization to one that is genuinely global.
Conference Board Survey of Business Globalization In 1994, the Conference Board of New York surveyed 1,250 publicly traded U.S. manufacturers to understand more about globalization trends. Of the firms surveyed, 92.5 percent reported direct foreign investment, foreign sales or other forms of international activity. The Conference Board's conclusion was that the internationalization of marketing and manufacturing activity has become irreversible even for relatively small companies. The survey suggested that profitability rises for firms with broad global scope. The typical path of corporate development is to undertake international roll-outs in several stages, moving from development of exports and sales infrastructure abroad to eventual production overseas, noted the Conference Board. But, its study of smaller multinationals indicated that there may be an alternative approach. By advancing to multinational engagement well before the milestone of $ 1 billion in annual sales, a firm may compress or even leapfrog the intervening stages. And, not only is size no obstacle to international expansion, but early entry into the global market may be a clear sign of success. |
PR AND THE GLOBAL STATE OF MIND
"I don't think you necessarily need a global product to be a successful global competitor. More important, I think you need a global state of mind."
George V. Grune, Chairman of The Reader's Digest Association, Inc.,1989.
The tempo of globalization will accelerate. The global paradigm will increasingly dominate the planning, the definition of corporate vision and the cutting-edge strategic issues preoccupying top management.
"Corporate leadership must now plan marketing strategies that are interrelated with the rest of the world. The CEO of the next five years must understand transnational strategies, new markets, and stronger competition."
Lester Korn, co-founder of the executive recruitment firm Korn Ferry, at the Arthur W. Page Society Spring Seminar, 1988.
As Arthur W. Page Society member Jean Farinelli, Chairman and CEO of Creamer Dickson Basford, observed in a 1993 speech in Charlotte, North Carolina:
"As more American companies go global, they find most of their employees lacking the background, the understanding, even the interest necessary to be truly effective. Why is this happening? The answer lies in our provincialism, coupled with an inability to keep up with what is taking place in the rest of the world. Like most Americans, we are primarily focused on what is happening in our own companies and communities. You often see the same inward focus in other countries too. Few businesspeople in our country even speak a second language fluently."
The Increasing Importance of International Experience In an article on January 29, 1996, for example, The Wall Street Journal noted that: "Many U.S. multinational companies long trumpeted the importance of overseas assignments for middle managers. But these days, even the executive suite is going global. With nearly every industry targeting fast-growing foreign markets, more companies are requiring foreign experience for top management positions." To illustrate its argument, The Wall Street Journal noted that, for example, Samir Gibara, President and CEO of Goodyear Tire & Rubber worked abroad for 27 of his 30 years with the company; Raymond Viault, now Vice Chairman of General mills, was previously President and CEO of Kraft Jacobs Suchard in Switzerland; Michael Hawley, the President and CEO of Gillette, spent 20 of his 35 years with the corporation outside of the U.S.; Harry Bowman reached the top at Outboard Marine after heading the European business of Whirlpool; and, Lucio Noto, Chairman and CEO of Mobil Oil, worked abroad for 17 of his 34 years with the corporation. |
While multi-lingual fluency may not be a set criteria for hiring tomorrow's corporate PR chief, it is probable that CEOs will increasingly seek PR advisers with a broad and firm grasp of the global environment. They will want to feel assured that their PR advisors are presenting them with speeches for foreign audiences, and tips on foreign cultures, that avoid embarrassment because of cultural insensitivity.
More importantly, CEOs will want PR chiefs at the top management table who have something of real value-added to contribute to strategic discussions on international challenges - especially in crisis situations.
THE GLOBAL REPUTATION
More CEOs than ever know that they must look at the world differently if they are to succeed in the early years of the 21st century. The PR chief needs to be on the same wavelength as the CEO. And keeping up will become harder as the pace of corporate change accelerates. And the changes in corporate structure, product base and geographical span, force changes in the image of the corporation.
We live in an increasingly integrated world economy full of opportunity where "doing business" means myriad new strategies and behaviors. It means having a vision about where the world is going and our part in it. It means restructuring the company to make it genuinely multinational. It means being right on top of the latest global developments that can influence business-decisions, knowing the strategies of foreign competitors, and having the right contacts.
Going global also means establishing a reputation of excellence on a global level, a reputation that secures respect, and, in turn, an advantage among the corporation's, employees, customers, suppliers, sources of finance, public sector regulators, and other stakeholders.
The degree to which a corporation enjoys a high reputation has a direct impact on its ability to gain entry to new foreign markets, to find the best joint venture partners, to win the confidence of governmental authorities, sources of finance, suppliers and customers. Reputation management in the global arena is a bottom line competitive issue. It has to be a top priority for the CEO.
Interest Groups, Shell and Nigeria As the global information networks buzz, they influence the political agendas in the Third World and, in turn, directly impact the ways in which multinational corporations must behave. Today, for example, if a major corporation acts in ways viewed as counter to the public interest on the environmental front in Latin America, non-governmental organizations in the region will alert their North American network counterparts, who in turn may alert activist shareholders. As a result, the company will find itself facing publicity problems at home all because of actions it has taken thousands of miles away. The difficulties that Royal Dutch Shell has recently encountered from global environmental and human rights organizations because of its actions in Nigeria, and the universal publicity that this has attracted, highlights this issue (see The New York Times, Page A1, February 13, 1996) |
Positive global reputations are won win difficulty and lost with ease. This assertion will be even more valid in 2001 than it is today. The slightest hint that a U.S. corporation, or one of its foreign affiliates, is willing to pay a bribe to gain new market access, or a governmental contract in a remote region of the globe, can damage the corporation's reputation for integrity on a worldwide basis.
Global communications systems and the establishment of global civil society organizations, be they concerned with the environment or animal rights, are posing increasing challenges to global corporate reputation management. They will do so even more in coming years as communications technologies improve and the civil society organizations become more experienced.
Global networking by interest groups is forcing corporations to an increasing degree to accept the reality that they dare not seek to apply one set of environmental (or employment, or public policy) standards in one country and a much different and lower set of standards in another. Inevitably the corporate PR chief will need to be insistently attentive to these issues, and increasingly effective in encouraging regional and national senior corporate managers to adhere to business ethics and standards that do not put the corporate global reputation at risk.
GLOBAL ORGANIZATIONAL COMPLEXITY
"I believe it will be increasingly important to do business internationally; I believe it will be increasingly fascinating to do business internationally. But I do not believe it will become any easier - it may indeed become more complex."
WPP Group plc's CEO Martin Sorrell to an Arthur W. Page Society
conference in Florida in the early 1990s.
Centralization versus Decentralization
Globalization accelerates the trends towards increasing delegated responsibilities to unit, regional and national managers, and this creates a dilemma for corporate public relations.
PR decentralization of responsibility is difficult. Globalization may enhance needs for stronger central managerial and executive capacities and resources in the public relations area. Globalization means that an unprecedented range of audiences has to be handled, yet each must have a sense that they are being addressed by one corporation, with one image and one set of messages. Decentralization risks conflicting messages reaching external audiences, it risks the establishment of a less than crystal clear corporate identity; indeed, it risks an image over time of a corporation that appears to external audiences as out of its depth in the competitive global business ocean.
Then, the growth of the Internet, the evolution of global media entities (CNN, News Corporation, The Financial Times, Dow Jones, etc.), and the rapidly increasing integration of financial markets and institutional investor communications across national borders, means that PR chiefs can swiftly talk to many audiences in many countries in a uniform way from a single base. It sounds efficient.
Yet, can PR continue to be centralized, or seek a new form of centralization, in a corporation where almost all business areas are enjoying unprecedented decentralization?
Does PR centralization make sense where the CEO is creating his office as a type of holding company relative to growing numbers of semi-independent business units, and where unit, regional and national corporate senior executives are urged by the CEO to be increasingly sovereign ?
There are no simple answers. Some functions may need to be centralized, or, at a minimum, that there will be a need for a head office capability to act globally on urgent PR issues. At the same time, it may be the case that the overall corporate forces of decentralization leave the PR chief with few organizational choices.
Instead of a large central department, the PR chief may be better served with a tiny, high-powered, team. That team may in turn have direct lines of communication to corporate PR professionals based in the key offices of senior corporate regional and national managers, and who have a direct reporting accountability to such managers. In addition, it could be that the overall structure is complemented by the engagement of PR agencies to provide services direct to the PR chief and his team, as well as to the senior corporate regional and national managers.
PR Partnerships With Key Regional & National Managers
This discussion highlights one of the most sensitive issues for the PR chief in 2001: the forging of effective relationships not only with the CEO and the top management team, but with the increasingly important unit, regional and national managers who drive the corporation's dynamic global operations.
While Finance can demand worldwide reporting standards and procedures from managers across the globe and monitor their operations with intensity, PR does not lend itself to similar approaches. While corporate Legal can seek to enforce compliance to distinct norms upon corporate managers around the world and wave the threat of severe sanctions in the event of non-compliance, PR can attain cooperation and partnership only by more subtle approaches.
In fact, the impact of the corporate PR chief on unit, regional and national managers, comes first and foremost from the PR chief's ability to win respect and be viewed as credible by these managers.
The importance and the difficulty of the PR chief securing the partnership of unit, regional and national corporate managers will be greater in 2001 than it is today. It will be a direct function of the mounting independence of action devolved to these managers in increasingly globalizing corporations by corporate headquarters.
Winning on this front by the PR chief demands a combination of being seen to enjoy the esteem of the CEO, occasional demonstrations of wisdom (but not arrogance), tact and diplomacy, sensitivity to diverse regional and cultural situations, and a willingness to move with skill and speed to assist unit, regional and national managers resolve real PR problems that they face.
EMPLOYEE COMMUNICATIONS
And, arguably in no single area is the requirement of forging these relationships more important than in employee communications. Few CEOs would deny that employee motivation and productivity is significantly influenced by effective communications to all employees of a clear global corporate identity, by a set of admirable global core values, by a sense of success throughout the corporation, and by an array of factors particular to the immediate national and regional location of the employee.
While the latter local area may be the sole province of managers in the field, the other components are best designed and implemented in a partnership between the head office, where the PR chief should have lead responsibility for the CEO, and the unit, regional and national senior corporate managers.
There are no simplistic solutions. Creating an employee magazine at head office for a 100,000 employees in 20 countries is both probably expensive, probably of marginal value, and full of risks of inadvertently touching some sensitivities in distant places. Producing reports -- print, audio or video -- in numerous languages may at best serve to supplement pro-active programs of employee communications in the global corporation, but they can not be the heart of such communications.
The most effective communications is provided by immediate supervisors to their staff groups. The most effective communications to the supervisors is by their managers and so on up the chain of command. The PR chief can at most strive to see that head office communicates well with a relatively limited number of middle level and senior corporate managers around the world, and assists them to be the chief communications officers to the employees directly under their umbrellas.
To make this work the PR chief must enjoy the respect of the managers with whom he communicates; the chief must be seen as a source of support for their communications efforts; and, the chief must demonstrate sensitivity to their problems. Perhaps nowhere in the PR domain is the PR chief more tested than in this area on an ongoing basis. And, the more global and the more decentralized the corporation becomes, so the tougher this challenge will be.
A GLOBAL PR ARCHITECTURE
The changes described here all point to the mounting need for many PR chiefs to prepare for 2001 by defining and building a global architecture to drive their operations. Above all the architecture must recognize that globalization is forcing changes in corporate leadership and culture. Accordingly, corporate communications needs to be a change-agent in this process, playing an integral role in securing change and in explaining change.
The PR department can not remain parochial if the corporation goes global.
"If your company is going global, you should be at the forefront of its effort to position itself in the worldwide marketplace. Organizations with a global business strategy also need a global communications strategy - with agreement on objectives, priority messages, target publics and product promotion plans from New York to New Zealand, so each country's public relations activities not only support local operations but also reinforce the corporation's global plan...our antennae must be up wherever our organizations do business all over the globe."
Carol Howard, former Vice President and Director of Public Relations and Communications Policy, The Reader's Digest Association Inc.
To meet the expectations of the CEO in 2001 the PR chief will need to answer many questions and acquire many skills. An illustrative list suggests that the PR chief will:
- need to acquire an increasingly broad range of skills for herself, or himself, and for the PR department;
- obtain greater knowledge of corporate global operations, international affairs in general, and international economic and business issues in particular;
- secure enhanced efficiency of global corporate resources deployed for communications;
- find increasingly sophisticated ways to communicate effectively with growing numbers of audiences;
- need to have substantial management skills to tackle, for example, the mounting potential turf battles with national and regional corporate managers; and,
- need to redefine the corporate image, its vision, its culture and confront the many ethical issues that such challenges pose.
Each of us in public relations may find that the architecture will need to differ from one corporation to the next to best fit unique operations, distinct visions for the future, and the differing personalities of CEOs. Our approaches will need to be guided by both the broad considerations that have been highlighted above, as well as by hosts of particular, detailed issues that are increasingly likely to confront the PR chief.
PR will be different in 2001.
