Paul Holmes 14 Nov 2012 // 1:08PM GMT
Here’s a question for you: How many public relations professionals have a role in deciding how much their companies pay in taxes? If you said zero, then my guess is that you either right, or within an acceptable margin of error. So here’s another question: Should public relations professionals have a role in deciding how much their companies pay in taxes? The correct answer: only if those companies believe that their reputation is an asset worth managing. To explain in a little more depth, I draw your attention to a story playing out on the front pages of UK newspapers this week, involving a number of giant US companies including Amazon, Google and Starbucks, whose senior executives were called to testify before British Members of Parliament this week over charges that they were evading UK taxes. There’s no real surprise to see Amazon on this list. The online retail giant has made tax avoidance a key part of its business strategy, and probably its number one public affairs priority. As for Google, the company’s famous “do no evil” philosophy should really read, “Do no evil, but don’t go out of your way to do any good either.” But to see Starbucks on the list is a bit of a shock. In the US, at least, the coffee giant is regarded as a progressive, enlightened employer (most recently, the company issued a memo promising to pay workers even if their local stores were closed due to Hurricane Sandy) and an exemplary corporate citizen. It has invested heavily and CSR and community relations, winning a SABRE Award for its efforts last year. But the crisis the company is suffering through in the UK demonstrates that for corporate social responsibility to be truly authentic—and not just a “program” run by the CSR or PR department—it has to infuse every aspect of the company’s business. The implications for a company’s reputation and its relationships with key stakeholders have to be considered every time a decision is made. And it’s pretty clear—at least with hindsight—that the decision about how much a company pays in taxes has implications for both reputation and relationships. That means such decisions need to be made with careful consideration of the organization’s value, in a way that is consistent with the way those values are communicated to the outside world. And that means either (a) the company’s accounting, finance and legal staff need to have a clear understanding of those values and the authority to make sure they are accurately reflected in the decisions they make or (b) someone responsible for reputation and relationships needs to be consulted by accounting, finance, and legal staff when major decisions are made. (My preference would be for the latter.) It’s possible, obviously, that some—perhaps many—companies will decide that minimizing their tax bill is more important than maximizing the value of their reputation. I’d consider that a mistake, but as long as there is a process in place that takes reputational consequences into consideration, it’s a question on which reasonable people might differ. But if the commitment to social responsibility, corporate citizenship, the value of reputation and the importance of managing stakeholder relationships is more than just skin-deep, a company’s PR people need to be consulted on this kind of policy—and on any kind of policy that has the ability to undermine that commitment.