Paul Holmes 14 Apr 1994 // 11:00PM GMT
by Paul A. Holmes
When corporate interests want to impose their will upon the legislative agenda, in Washington or the increasingly powerful state capitals, they most commonly do so through trade associations—large, monolithic, well-funded, well-organized confederations of companies with common interests and easy access to the corridors of power.
The conventional wisdom is that trade associations have several significant advantages over individual companies in the public affairs arena.
For one thing, they are perceived by lawmakers as representing a larger constituency than even the largest of companies. They speak for the managers, the shareholders, perhaps even the employees of an entire industry. Moreover, they are able to do so in a single visit, thus minimizing the strain on the already busy schedules of the people they are visiting.
For another, their resources—both financial and intellectual—are theoretically at least far greater than those of any individual corporation. They can support the large research and intelligence-gathering structures needed to keep abreast of new developments impacting the industry, and they can draw on the expertise and insights of executives from all their member companies.
Additionally, they may even appear more objective than an individual corporation, at least to the broader public. The Coalition for Vehicle Choice, for example, sounds considerably more user friendly and philanthropically-motivated than would General Motors, Ford and Chrysler had they opposed the move toward smaller, more fuel-efficient vehicles under their own corporate monikers.
And finally, trade associations help companies avoid the risks inherent in becoming visible, in taking the lead on an issue. The old Japanese dictum that "the nail that sticks out gets hammered" has many adherents in corporate America. Most companies—especially those in controversial industries—have preferred not to make themselves targets for their critics.
There is a sense in Washington that this traditional order may be changing, however. Companies are beginning to question the value they receive from their industry associations. They are also beginning to see value in taking a leadership position, in articulating a position and becoming identified with an issue.
Says Robert Mnkead, general manager of corporate communications for Public Service Gas & Electric in Newark: "When you rely on a trade association what you get is plain vanilla every time. That's why we decided to take a leadership role in communicating on the issue of electro-magnetic fields, rather than relying on the Edison Electric Institute to define the terms of the debate."
On issues such as EMF, industry opinion may be divided. Some utilities may believe that the best approach is to play down any danger, and may argue that any proactive communication will only lead to heightened concern. Other, more progressive companies may take the position that the industry has a responsibility to participate in and even lead the debate. In such a case, the trade association will generally take a middle-of-the-road approach.
Companies that would be more aggressive are left to go it alone.
Then there are issues that demand an individual company response. The use of animals in testing pharmaceutical problems is one such. At first sight, it is a classic trade association issue, since individual companies are loathe to talk about their own participation in such experiments, thus making themselves targets for activist groups whose tactics occasionally border on terrorism.
Unfortunately, the most effective way to communicate on this issue is to tell the human story, to highlight individuals whose lives have been saved or illnesses cured by new products tested on animals. To tell that story, however, it is necessary to identify the product, to talk about the researchers who developed it, the company that markets it. For years, the failure to tell that story ceded the moral high ground in this debate to the animal rights activists.
"Sooner or later, someone has to have the courage to take a stand on an issue like this," says one pharamceutical company PR executive, who admits that he has had little success persuading his CEO that his company should be the one to demonstrate such bravery. "Unless you have the courage to stick your ahead above the parapet, you are going to be under siege for a very long time."
The tobacco industry was, for many years, another that allowed its trade group, The Tobacco Institute, to do its talking for it. Several years ago, however, industry giant Philip Morris decided that it needed to take the lead in fighting increasingly draconian anti-smoking regulation.
Since then, Philip Morris has sponsored a celebration of the Bill of Rights, emphasizing that the American principle of freedom should include the freedom of adults to choose to smoke; stepped up its communication with smokers, producing a newsletter that advocates smokers' rights; conducted campaigns to help restaurants and bars fight anti-smoking legislation; and even sued some states that have enacted tough antismoking laws.
"Trade associations in Washington know they are in trouble," says the principal of one public relations firm headquartered in the District. (Since the agency has trade associations among its clients, the individual in question requested anonymity.) "Their members are telling them they are no longer prepared to fund them at existing levels, because they are not addressing the needs members believe to be important."
One clear trend has been the creation of smaller, single-issue trade groups, says Richard Sullivan, head of the Washington office of Fleishman-Hillard.
He cites a number of examples, including: the Clean Air Working Group; the cooperative venture of seven regional bell operating companies; the coalition of large pharmaceutical companies interested in shaping the healthcare reform debate; and the large insurance companies that formed a group separate from the Health Insurance Association of America after divisions between large and small insurers emerged.
"More and more groups are forming around single issues that their members believe to be important," Sullivan says. "The advantage is that they have no permanent bureaucracy, no permanent overhead, and members can control the agenda, the degree to which they focus on an issue members feel is important."
In interviews with 22 senior corporate communications and public affairs professionals in a number of industries, only slightly more than half said their trade associations did a "good" or an "excellent" job of communicating with the federal government on key issues affecting their company. Most of the others said their trade groups did a "fair" job, but four characterized it as "poor" and one said the trade association representation in his industry was "terrible."
More than half said they believed their companies ought be more directly involved in major issues, although most added that selling the CEO on the benefits of a highprofile presence in Washington was increasingly difficult.
One argument that is effective, however, is value. Working through a trade association can appear less expensive, insiders say, but if the trade association is not pursuing the agenda the company wants to pursue, savings can be illusory. Companies are finding that dedicating their own resources to issues, and using outside organizations that specialize in intelligence-gathering and other support services, can be more effective and more cost-effective.
"Some companies just want a higher profile in Washington," says Joe Gleason, a principal of MS&L/Capitoline, a recently formed public affairs joint venture between Manning Selvage & Lee and Capitoline International. "The ceo wants to be considered a player. Sometimes they want more control over an issue and how it is played out."
Gleason cites Lawrence Bossidy, the CEO of Allied Signal who was highly visible during the debate over the North American Free Trade Agreement, as one example of this new breed of CEO. The archetype, however, may be Lee Iacocca, whose high-profile in Washington in the early `80s helped shape legislation that saved his Chrysler motor company.
Elliot Schreiber, senior vp of corporate communications at Miles Inc. is one executive who sees more significant advantages in taking the lead however. Miles is in an interesting position, since it has operations in both the chemical and the pharmaceutical industries, and is a member of trade groups in both industries.
Says Schreiber: "I believe there is a lot to be gained by being out front on an issue as a company, by setting the agenda. I think there's a real possibility that legislation in, for example, the environmental arena, will look at the best practices within the chemical industry and apply them across the board to all chemical companies. If you can be the company defining those best practices, and explaining them in Washington, there's a real advantage there."
No-one expects the government to announce new regulations for an industry but tell those companies that are taking a leadership role that they are exempted. But those leaders may be given an opportunity to shape legislation.
Levi Strauss & Co. is another company acting on this assumption. It has voluntarily introduced strict guidelines for relationships with overseas suppliers, particularly those in countries with suspect human rights records, or a history of employing child or slave labor. It is quite possible that as the debate over business ethics overseas continues, other companies will be compelled to meet those standards.
"The payoff comes in closer relationships with Congress," says Gleason. "An individual effort can create a greater understanding of your company's position and the factors that impact its business. In the short-term, you are not going to get all the favorable legislation you want, but in the long term there are real advantages to having that kind of relationship, that kind of understanding."