Charting the future of public relations
Can PR Help CEOs Meet Changing Expectations?
Paul Holmes
Holmes Report

Can PR Help CEOs Meet Changing Expectations?

The good news is that many of the issues keeping these CEOs awake nights revolve around the relationship between their companies and the societies in which they operate. The bad news is that they seem to have no faith in the ability of public relations pe

Paul Holmes

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A little more than a year ago, Business Week columnist and Yale School of Management dean Jeffrey Gartner sat down with and interviewed some of the most powerful CEOs in the world—GE’s Jack Welch, AT&T’s Michael Armstrong, AOL’s Steve Case, BP Amoco’s John Browne, Nokia’s Jorma Ollila. The resulting interviews are gathered in Gartner’s new book, The Mind of the CEO, and they contain good news and bad news for public relations professionals.

The good news is that many of the issues keeping these CEOs awake nights revolve around the relationship between their companies and the societies in which they operate. These CEOs understand that societal expectations of big business have undergone a sea change in recent years, and they are wrestling with the challenge of meeting the expectations of multiple legitimate stakeholders while continuing to deliver growth and profitability to their shareholders.

The bad news is that they seem to have no faith in the ability of public relations people to help them with those challenges. When the words public relations are used in The Mind of the CEO, it is as a reminder that response to these problems has to involve more than “just PR.”

The first part of the book looks at the two biggest forces shaping business today—the Internet and increased globalization—and offers relatively little that readers will not have picked up from other sources. The second part of the book discusses the social issues raised by globalization and exacerbated by the Internet—the need for values, the imperative of communicating a clear vision and executing against it, and the growing requirement that CEOs balance (or at least understand and address) the needs of various shareholders.

It is here that The Mind of the CEO gets interesting, and encouraging. It becomes clear that the majority of these CEOs (with the conspicuous exception of News Corp’s Rupert Murdoch) do not dismiss “soft” issues as easily as many of their predecessors did. Some, like William Ford, chairman of the Ford Motor Company, even see them as a source of competitive advantage.

“It’s now a question of what consumers are going to be demanding rather than what business leaders are envisioning,” says Ford. “Consumers want a safer, cleaner, more equitable world, and they’ll buy from companies that display those characteristics. I believe that companies that are responsive to those needs—assuming they have great products and services, of course—will have a commanding market position.”

Jorma Ollila, chairman and CEO of Nokia, expresses a similar perspective. “People want their company to be a good citizen,” he says. “They want it to show true concern for the world, for the environment. They want it to have a social conscience. There is now a very clear expectation… that companies have to have a soul—a state of mind that represents a social conscience. That’s very different from the early 1990s, when we were applauded just for employing more people.”

Nor does this new generation of leadership believe that managing for multiple stakeholders means short-changing shareholders.

“I look at shareholder value as the result of several things,” says Unisys chairman Lawrence Weinbach. “To me, if you take care of your people and your people then take care of your customers, your shareholders win. The vision of the company is to increase shareholder value and what I tell everyone here is, shareholder value is the result of what we call our three-legged stool. If we get it right with customers, employees, reputation—then shareholders win…. I’m very mindful of shareholder value, but I don’t look at it as the single reason I’m in business. I think of it as the result of what we’ve been able to accomplish.”

Finally, in the third part of the book, Garten tells us what the CEO’s didn’t say, and it is at this point that his own agenda becomes more apparent. Because Gartner is both a critic and a champion of business leadership, and he is concerned that powerful corporations either don’t appreciate or are unwilling to assume the leadership role that is being thrust upon them.                

When Garten asked CEOs what keeps them awake night, “by far the largest number of responses reflected a fear of a major disruption… in the process of globalization.” And yet, as he points out, during the protests against the World Trade Organization in Seattle, or the World Bank in Prague, “there were few corporate voices providing any context or contrary arguments; in fact CEOs, even those whose companies had an enormous stake in new trade agreements, were nowhere to be seen.”

Garten sees this failure to engage as indicative of a more serious blindspot.

“CEOs want to be seen as good citizens, and they make substantial efforts in that direction…. Still, they seem uncomfortable with the growing pressures for global corporations to go where governments now tread. They argue that they have enough concerns in running their companies; they do not want to be held accountable for policies they may not be able to implement and goals they may not be able to achieve. Nor do they want to be caught in the crosshairs of political controversy.

“All this is understandable. Yet those leaders are badly underestimating the rise of global problems that will affect their firms and the environment in which they operate. They are failing to see the gap between society’s expectations of what they should do and what they seem prepared to do.” As a result, Garten says, they face three kinds of risk: that the trend toward freer trade and investment could falter if economic disparities are not addressed; that employees will shun companies that are not seen as engaged and progressive; and that NGOs will target companies that are seen as part of the problem of globalization rather than part of the solution.”

Some of the reviews of The Mind of the CEO have expressed concern that Garten is asking business leaders to go too far. Critics on the left point out that nobody elected corporations, that they are not answerable to democratic forces. This makes them unsuitable—and untrustworthy—instruments of social policy. It’s an understandable concern, but one that fails to recognize the fact that corporations are already wielding more power than some governments, and that a call for them to wield it more wisely should benefit us all.

Critics on the right, meanwhile, are still disturbed by the notion that companies have any responsibility beyond delivering a profit to their shareholders. But the reality is that society still has the ability to punish companies that fail to live up to its expectations. Today, the punishments it metes out are relatively inconsequential—embarrassment in the media, delayed approvals for new technologies or new facilities—but in the future those punishments may be more severe.

It’s good that so many CEO’s understand this. Garten quotes John Browne, CEO of BP Amoco: “Companies are an integral part of the societies in which they work. We don’t make our profits and then go and live somewhere else. This is our society too. The people who make up our company are also citizens. They have hopes and fears for themselves and their families. Companies that want to keep operating successfully have to uphold their employees’ values, just like their customers’ values. We cannot isolate ourselves. We have to be engaged in public policy issues. We have to be constructive.”

The challenge for public relations people is to make sure that they are helping their clients and their companies rise to this test, to help them formulate the policies and practices that make them part of the solution rather than part of the problem.

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