Strategic PR as an integral part of successful business practice

Strategic PR as an integral part of
successful business practice
Valentin Boinitsky
for CIPR Advanced Certificate class
March 2014

The aim of the tutorial: look at how
a modern company functions as a
system, and the role of PR in it.

Modern company:
raison d'être,
systems theory
and practical mechanics.
1 2 3 4 5
The Alpha & Omega of PR:
reputation.
The world outside:
stakeholders,
publics,
environment.
PR in the works:
strategic communications,
issue management, CSR.
The nuts and bolts:
PR function inside
the company.

Modern company:
raison d'être,
systems theory
1 2 3 4 5
reputation.
The world outside:
environment,
stakeholders
and publics.
The nuts and bolts:
PR function inside
the company.
PR in the works:

Key concepts:
• mission
• vision
• values
• corporate culture
• strategy vs. tactics
• goals vs. objectives

The business of business is business.
attrib. to Milton Friedman (1912-2006),
a winner of Nobel Prize in Economics

Money is like
gasoline during a
road trip. You don't
want to run out of
gas on your trip, but
you're not doing a
tour of gas stations.
Tim O'Reilly,
Founder
O'Reilly Media

Walt Disney,
Co-founder of Disney
We don't make movies to make money,
we make money to make more movies.

Vision the desired state of an organisation,
long-term aspiration for the future
Mission the fundamental purpose of
an organisation, why it exists
Values beliefs, attitudes and behaviours shared
among the members of an organisation

Our mission
By creating value for our customers, we create
value for our shareholders. We use our expertise
to create transport-related products and services
of superior quality, safety and environmental care
for demanding customers in selected segments.
We work with energy, passion and respect for the
individual.
Our vision
The Volvo Group's vision is to be valued as the
world's leading supplier of commercial transport
solutions.
Corporate values
Quality, safety and environmental care are the
values that form the Volvo Group’s common base.
www.volvogroup.com/group/global/en-gb/volvo%20group/mission_vision/Pages/our_mission.aspx

Google's mission is to organize the world's information
and make it universally accessible and useful.
www.google.com/corporate/facts.html

Mission, Vision & Values
The world is changing all around us. To continue to thrive as a business over the next
ten years and beyond, we must look ahead, understand the trends and forces that
will shape our business in the future and move swiftly to prepare for what's to come.
We must get ready for tomorrow today. That's what our 2020 Vision is all about. It
creates a long-term destination for our business and provides us with a "Roadmap"
for winning together with our bottling partners.
Our Mission
Our Roadmap starts with our mission, which is enduring. It declares our purpose as a
company and serves as the standard against which we weigh our actions and
decisions.
• To refresh the world...
• To inspire moments of optimism and happiness...
• To create value and make a difference.
Our Vision
Our vision serves as the framework for our Roadmap and guides every aspect of our
business by describing what we need to accomplish in order to continue achieving
sustainable, quality growth.
• People: Be a great place to work where people are inspired to be the best they can
be.
• Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate
and satisfy people's desires and needs.
• Partners: Nurture a winning network of customers and suppliers, together we
create mutual, enduring value.
• Planet: Be a responsible citizen that makes a difference by helping build and
support sustainable communities.
• Profit: Maximize long-term return to shareowners while being mindful of our
overall responsibilities.
• Productivity: Be a highly effective, lean and fast-moving organization.
Our Winning Culture
Our Winning Culture defines the attitudes and behaviors that will be required of us
to make our 2020 Vision a reality.
Live Our Values
Our values serve as a compass for our actions and describe how we behave in the
world.
• Leadership: The courage to shape a better future
• Collaboration: Leverage collective genius
• Integrity: Be real
• Accountability: If it is to be, it's up to me
• Passion: Committed in heart and mind
• Diversity: As inclusive as our brands
• Quality: What we do, we do well
Focus on the Market
• Focus on needs of our consumers, customers and franchise partners
• Get out into the market and listen, observe and learn
• Possess a world view
• Focus on execution in the marketplace every day
• Be insatiably curious
Work Smart
• Act with urgency
• Remain responsive to change
• Have the courage to change course when needed
• Remain constructively discontent
• Work efficiently
Act Like Owners
• Be accountable for our actions and inactions
• Steward system assets and focus on building value
• Reward our people for taking risks and finding better ways to solve problems
• Learn from our outcomes -- what worked and what didn’t
Be the Brand
• Inspire creativity, passion, optimism and fun
www.thecoca-colacompany.com/ourcompany/mission_vision_values.html

vs.
corporate values
corporate culture

What are mission, vision and
values needed for?
What is their practical
function?

(strategos)
- a Greek word for
leader or commander
of an army, general

Strategy, a word of military origin,
refers to a plan of action designed to
achieve a particular goal.
Wikipedia

Strategy development
is a question-based process:
Where are we now?
Where would we like to go?
How do we get there?
Peter Edelmann, Senior Executive President, Voith Turbo

you are here
you want to be hereStrategy

you are here
you want to be hereTactics

strategic goal
tactical objectives

strategic goal
tactical objectives
strategic direction
tactical steps
strategic approach
tactical instruments

Organisation’s
strategy
Departmental
strategy
Departmental
tactics

The essence of strategy is
choosing what not to do.
Michael Porter
Professor at Harvard Business School,
an international authority on company strategy

environment environment
environmentenvironment
production
subsystem
disposal
subsystem
adaptive
subsystem
maintenance
subsystem
management
subsystem

Production = manufacturing, service
Disposal = marketing, sales
Maintenance = HR, business support
Adaptive = research, planning
Management = strategy, control
subsystems

organisational
mechanics in
practice

Ltd What exactly is limited,
and how does it relate
to the development of
a stock market?

publicly traded company privately held company
Public company Private company
(company shares are sold openly) (might have shares, but not openly sold)
Initial Public Offering (IPO)
Buy-out and de-listing
Plc (UK)
AG (Germany)
ПАТ (Ukraine)
ОАО (Russia)
Ltd (UK)
LLC (US)
GmBH (Germany)
ТОВ (Ukraine)
ПрАТ (Ukraine)
ООО (Russia)
ЗАО (Russia)

Chairman and the Board of Directors
(shareholders)
Chief Executive Officer
(CEO)
Chief Operating Officer
(COO)
Vice President (VP) Vice President (VP) Vice President (VP)
Director Director
Manager Manager
Supervisor Supervisor
Staff Staff
seniormanagement
(“dominantcoalition”)middlejunior

The role of CEO
see the
bigger picture
link the external world with
the internal organisation

The four tasks of CEO
Defining
the meaningful
outside.
1 Deciding
what business
you’re in.
2
Balancing
present and
future.
3 Shaping
values and
standards.
4
Adapted from A.G. Lafley, the Chairman and CEO of Procter & Gamble, and Peter Drucker, an international authority on management.

The character
pre-bureaucraticvs. bureaucratic
entrepreneurialvs. systematised

production
subsystem
disposal
subsystem
adaptive
subsystem
maintenance
subsystem
management
subsystem
PUBLIC RELATIONS
boundary-spanning

production
subsystem
disposal
subsystem
adaptive
subsystem
maintenance
subsystem
management
subsystem
internal communications

external communications

talking and* listening
* Grunig’s and Hunt’s two-way symmetric model of PR

Public relations is about reputation -
the result of what you do, what you say and
what others say about you.

Reputation is defined as the collective
representation of an organisation’s
past performance that describes the
firm’s ability to deliver valued
outcomes to multiple stakeholders.
Put in plain terms, reputation is the
track record of an organisation in the
public’s mind.
Dennis Wilcox and Glen Cameron, in Public Relations Strategies and Tactics (2005)

Image vs. Reputation
Adapted from Elearn, Management Extra: Reputation Management (2005)
Image Reputation
Is built Is earned
Is a cost Is an asset
You create and promote an image.
It is something you build to show
others.
You gain reputation over time
through actions and communication.
It is what people see in you.
You pay to create it and you pay to
project it. The more image-conscious
your market, the more it may cost.
Reputation can add value through
attracting more customers and
investors. Also acts as a buffer in
times of crisis.
VS.

Adapted from Joep Cornelissen, Corporate Communications - Theory and Practice (2004)
company's "personality"
as broadcast
externally
products and
services
company's "DNA":
mission
vision
corporate culture
REPUTATION
in the eyes of
stakeholders
word of mouthmedia reporting IMAGE

The commercial value of
reputation: how much is it worth?

Tiger Woods
The world’s first sports billionaire.
The world's most marketable athlete.
Endorsement earnings in 1996-2007
exceed golf earning by ~ 6 times.
Recent endorsement contracts
included Gillette, Nike, TAG Heuer,
Accenture, AT&T and Gatorade
(owned by PepsiCo).

Following the infidelity scandal in Nov 2009, most
sponsors suspended or cut contracts with Tiger
Woods. His earnings potential decreased by ~50%.
Shareholders of Tiger Woods sponsor-companies
lost a collective $5 to $12 billion*.
* A study by the University of California, Davis (Business Wire, December 28, 2009), looking at the drop in share prices.

revenues in 1992-2001, $ million
Enron scandal happened in October 2001.
Billions lost in the largest corporate bankruptcy in U.S. history by that time.
The Big Five became The Big Four, as Arthur Andersen (est. 1913) disappeared.
85,000 Arthur Andersen employees worldwide lost their jobs...

Arthur Andersen was charged with and found guilty
of obstruction of justice for shredding the thousands of documents and
deleting e-mails and company files that tied the firm to its audit of Enron.
The conviction was later overturned by the U.S.
Supreme Court due to the jury not being properly instructed on the charge
against Andersen.
Was Arthur Andersen guilty?
So Arthur Andersen was cleared of the charges, i.e. not guilty...

Which businesses rely
on their reputations
most?

The Reputation Institute (est. 1997), www.reputationinstitute.com
Studying reputation: a systematic approach
Global Reputation Pulse – annual survey of corporate reputations
on major markets worldwide.
The RepTrak™ Model – an upgrade
on the RQ tool, used from 2006.
The Reputation Quotient (RQ) – an index
that sums up people’s perceptions of
companies. Used 1999-2005.

* Based on RQ model. From “Developing a Reputation Quotient”, by Charles Fombrun and Christopher Foss, The Gauge, Vol.14, No.3, 2001.
Dimensions
of corporate
reputation*
Products & services2
Emotional appeal1
Financial performance3
Vision & leadership4
Workplace environment5
Social responsibility6

* Based on RQ model. From “Developing a Reputation Quotient”, by Charles Fombrun and Christopher Foss, The Gauge, Vol.14, No.3, 2001.
Products & services2
Emotional appeal1
Financial performance3
Vision & leadership4
Workplace environment5
Social responsibility6
• record of profitability
• tends to outperform its competitors
• strong prospects for future growth
• offers high quality products/services
• offers value-for-money products/services
• develops innovative products/services
• have good feeling about the company
• admire and respect the company
• trust the company
• has excellent leadership
• has a clear vision for the future
• takes advantage of market opportunities
• seems a good company to work for
• looks like it has good employees
• is well managed
• supports good causes
• environmentally responsible
• treats people well

Principles
of corporate
reputation
From “Developing a Reputation Quotient”, by Charles Fombrun and Christopher Foss, The Gauge, Vol. 14, No. 3, 2001.
The principle of distinctiveness1
The principle of focus2
The principle of consistency3
The principle of identity4
The principle of transparency5
Principles
of corporate
reputation

Quantifying
the corporate
reputation

Global Reputation Pulse 2013
Top-10

2011 2012 2013
Top-10 in the last three years

Top-5 most reputable companies by region
North America Europe Asia Pacific Latin America

global
industry
reputations
2012 vs. 2011

Top-100 most reputable companies in the world in 2013

Rating done by
Reputation Capital
(the official representative of
Reputation Institute
in Ukraine)
The most reputable companies in Ukraine 2010
for more info see:
www.ReputationCapital.org
www.ReputationInstitute.com

However,
there are some
sceptical voices
RE: quantifying
reputation

With the greatest of respect, I find this
convoluted and completely unhelpful. It
is entirely understandable for experts
and companies to seek ways to evaluate
reputation, because it would be so
powerful if we could say with any
accuracy that ‘your reputation is worth
US$345 million a year, so you’d better
manage it properly’, or ‘you score 67
per cent on the reputation ranking, the
third lowest in your sector.’ ... But
unfortunately, reputations cannot be
valued or scored like this. Reputation is
not a science. ... [You cannot] find
scientific or mathematical answers to
emotional questions. ...
The best way to sell reputation
management is through case studies.

Public relations practitioners have
often been caught in a mire of
confusion in an attempt at offering
hard measures for intangible
outcomes.
Intangible resources, which used not to
appear on UK balance sheets, are
difficult to value objectively, even when
recognized as being of value, but the
UK now supports the public relations
industry with statutory regulations that
address this key element of worth.
The mandatory reporting of non-
financial performance for large
companies is an important
development in the publication of
annual reports and accounts and
therefore reputation.

Strong reputations result from
initiatives and messages that are in
tune with the distinctive values and
personality of a company, and which
are meaningful to all company
constituents and stakeholder groups.
Charles Fombrun, Executive Director
and Christopher Foss, Associate Director
of Reputation Institute (2001)

Public relations is the planned and sustained
effort to establish and maintain goodwill
and mutual understanding between
an organisation and its publics.

Stakeholders
Stakeholder is “any group or
individual who is affected by or
can affect the achievement of
organisation’s objectives.”
Freeman, in Strategic Management: A Stakeholder Approach (1984)

Publics
Publics are stakeholders that
face a problem or have an issue
with the organisation.
James Grunig and Todd Hunt, in Managing Public Relations (1984)

Publics
- in relation to an issue
Stakeholders
- in relation to organisation

Messages for publics
Relations with stakeholders

Stakeholder analysis
The first three steps:
1. Identify all stakeholders.
2. Classify them into meaningful groups.
3. Prioritize them.
Harrison and St. John, in Strategic Management of Organisations and Stakeholders (1994)

A very basic model
Andrew Griffin, in New Strategies for Reputation Management (2008)
Priority 1 The people without whose active support we can’t
operate: customers, employees, shareholders, local
communities.
Priority 2 The people who hold power over us: governments,
regulators.
Priority 3 People who influence those in the above categories:
the media, interest groups, experts.
Priority 4 People who want us to fail: activist campaign groups,
competitors.

The linkage model
Adapted from James Grunig and Todd Hunt, in Managing Public Relations (1984)
Shareholders
Legislators
State regulatory bodies
Board of Directors
Employees
Unions
Suppliers
Consumers
Industrial purchasers
Retailers
Distributors
NGOs
Community residents
Mass media
Special interest groups
Competitors
Peer institutions
Associations
Professional societies
Organisation
Enabling
linkage
Normative
linkage
Diffused
linkage
Functional
linkages

high power & low interest
low power & low interest low power & high interest
high power & high interest
Power/interest matrixpower
interest
Keep satisfied Key players
Minimal effort Keep informed
Adapted from Mendelow, cited in Johnson and Scholes Exploring Corporate Strategy (2002)

active & supportiveinactive & supportive
inactive & non-supportive active & non-supportive
Based on Brad Rawlins, Prioritizing Stakeholders for Public Relations (2006)
Attitude/activism matrix
supportivenon-supportive
activeinactive
Advocate stakeholdersDormant stakeholders
Apathetic stakeholders Adversarial stakeholders
raise awareness & understanding encourage supportive behaviour
raise awareness & understanding conflict resolution, aim for win-win

Power/legitimacy/urgency matrix
Mitchell, Agle and Wood, Towards a Theory of Stakeholder Identification and Salience (1997)
Definitive
stakeholder
Dominant
stakeholder
Dangerous
stakeholder
Dependent
stakeholder
Discretionary
stakeholder
Demanding
stakeholder
Dormant
stakeholder
urgency
power legitimacy

The stages of building reputation (stakeholder’s perspective)
advocacy
trust
favourability
familiarity
awareness
Would I recommend you? Work for you?
Work with you? Invest in you?
Can you be trusted?
Do I like you?
What do I know about you?
Have I heard of you?
© Milorad Aider (Ipsos MORI)

Potential recruits: I’d love to work for Shell if I could
Desired stakeholder responses: example
Investors:
Customers:
Government:
The media:
NGOs/Activists:
The general public:
Employees:
I’d put my last dollar into Shell
I’d go out of my way to buy Shell
Our desired partner
I’ll give Shell the benefit of the doubt
If someone has to do it, better it be Shell
You can be sure of Shell
I’m proud to work for Shell
Cited by Alison Theaker, in The Public Relations Handbook
Shell’s programme “Listening & Responding”

Organisations choose
stakeholders, but “publics arise
on their own and choose the
organisation for attention”.
James Grunig and F.C. Repper, in Strategic Management, Publics and Issues (1992)
Situational theory of publics

Publics classified by “activism”
Adapted from James Grunig and Todd Hunt, Managing Public Relations (1984)
Active publics
Organise to discuss and do
something about the problem.
Aware publics
Recognise that a problem exists,
but do not do anything about it.
Latent publics
Face a problem, but
do not see it as a problem.

By role in communication strategy
Modified from Wilson, Strategic Program Planning for Effective Public Relations Campaigns (2005)
Target publics
Key publics, priority target
for communication.
Channel publics
Pass the information on
to the target public.
Authority publics
Influentials, opinion leaders.
Can support organisation’s
efforts or work against them.

PEST / EPISTLE
Political
Economic
Social
Technological
Economic
Social
Technological
Political
Information
Legal
Environmental

SWOT
Strengths
Weaknesses
Opportunities
Threats
internal
external

Public relations is the planned and
sustained effort to establish and
maintain goodwill and mutual understanding
between an organisation and its publics.

Find the problem(s)2
Identify perception gaps1
Check if the problems are
communication problems
3
Work out a strategy to
resolve the problems and
close the perception gaps
4
Implement, evaluate5
• reasons for perception gaps?
• desired vs. actual perception
• yours vs. competitors
• benchmark to measure progress
• change the public’s view of the issue
• or change the organisational practice
• or aim for concessions on both sides
• based on the results of evaluation,
if needed, amend the initial plan
• due to the lack of communication?
• due to wrong sort of communication?
• can be solved by communication alone?

Issues management
is a proactive and systematic approach to
1. predict problems
2. anticipate threats
3. minimize surprises
4. resolve issues and
5. prevent crises.
Dennis Wilcox and Glen Cameron, in Public Relations Strategies and Tactics (2005)

Issuesmanagement Crisismanagement
Strategic Tactical
Proactive Reactive
before
something happens
after
it has happened

Stages of issues management
Issue analysis2
Issue identification1
Strategy options3
Action plan4
Evaluation of results5
Dennis Wilcox and Glen Cameron, in Public Relations Strategies and Tactics

Issue analysis (one of the approaches)
priority
for resources
build
alliances
infrequent
monitoring
constant
monitoring
impact on business
HIGH
LOW
opportunity
to influence
YESNO

1990s: Unilever – the largest single
buyer of fish in the world.
1996: Greenpeace selected
Unilever as a target for the planned
“sustainable fisheries” campaign.
Issues management: case study

The golden rule of issues management
Be part of the solution,
not part of the problem.

Corporate
Social
Responsibility

European Commission’s definition
Corporate Social Responsibility is “the responsibility
of enterprises for their impacts on society”.
To fully meet their social responsibility, enterprises
“should have in place a process to integrate social,
environmental, ethical human rights and consumer
concerns into their business operations and core
strategy in close collaboration with their
stakeholders”.

Charity mostly concerned with giving
rather than involvement
Sponsorship financial or “in-kind” contribution
in return for sponsorship benefits
Related concepts
Triple bottom line
reporting on ecological and social
performance in addition to
financial results; also known as
“People, Planet, Profit” approach
Cause related
marketing (CRM)
linking the company’s sales
activities to a charity or public
cause, for mutual benefit

CSR pyramid
Economicresponsibilities. Be profitable.
The foundation on which all the others are built
Legalresponsibilities. Obey the law.
Law is society’s codification of right and wrong.
Ethicalresponsibilities. Be ethical.
Do what is right, just and fair.
Carroll, in The pyramid of corporate social responsibility: toward the moral management of organisational
stakeholders (1991), cited in Ralph Tench & Liz Yeomans Exploring Public Relations (2006)
Philanthropic
responsibilities.
Be a good corporate citizen.
Contribute resources
to the community.

CSR case study:
plana.marksandspencer.com

Words of caution...
The social responsibility of business is
to increase its profits.
Milton Friedman in New York Times Magazine (1970)
65 % of British people claim that they
only buy energy-saving light bulbs, but
only 20 % of the bulbs sold each year
are energy-saving.
Anrew Griffin in New Strategies for Reputation Management (2008)

Modern company:
raison d'être,
systems theory
1 2 3 4 5
reputation.
The nuts and bolts:
PR function inside
the company.
The world outside:
environment,
stakeholders
and publics.
PR in the works:

Types of communication
Van Riel, in Principles of Corporate Communication (1995)
Managerial communication
Marketing communication
Organisational communication

PR orientation Examples of activity Typical staffing
Start up Marketing communication Face-to-face meetings, presentations, social
events. Printed corporate literature.
Website. Media relations: news releases,
press conferences.
PR – part of
Marketing
Growth As above, plus:
Internal communication
As above, plus:
Merchandise. Joint promotions. Media
relations: features, exclusives, facility visits.
Internal communications: briefings, notice
boards, emails. Issue tracking.
PR specialist or
consultancy
Maturity As above, plus:
Public affairs
Financial PR
Community relations
As above, plus:
CSR. Investor relations: direct and via
financial press. Issues management. Internal
communications: Intranet, employee
conferences, newsletters.
PR Department
plus consultancy
if required
Decline Priority given to:
Marketing communication
Investor relations
Internal communication
Issue/crisis management. Communications
support to mergers and acquisitions.
Internal communication: layoffs,
redundancies. Customer retention. Supplier
retention.
Specialist PR staff
and specialist
consultancy if
required
Based on Ralph Tench & Liz Yeomans, in Exploring Public Relations (2006)
PR at various stages of the organisational lifecycle

Typical roles of a senior PR manager
Moss, Newman and DeSanto, in Defining and redefining the core elements of management in public
relations/corporate communications context: What do communication managers do? (2004)
Problem solver2
trouble shooting, handling a
range of internal and external
challenges to the company
Monitor and evaluator1 organising and tracking PR work
Issues management expert4
intelligence gathering and analysis,
monitoring external trends and
recommending responses
Communications technician5 technical tasks associated with
the PR role
Key policy & strategy advisor3 contributing to top management
(a summary from 10 leading UK companies)

the communications
manager
vs.
the communications
technician

The future: welcome to the Reputation Economy
Reputation Intelligence journal, vol. 2, issue 2, 2010
… the world where increasingly what you stand for is even more important
than what you buy and sell …
Reputation will be chronicled in the annual reports of a significant number of
multinational companies by 2015.
There will be a Chief Reputation Officer in an overwhelming majority of
Fortune 500 companies by 2015.
Companies will reorganize to focus on stakeholders, not channels or functions
as is the case today.
Stakeholders will demand more hands-on experience with the companies they
are expected to support.
Access to information will force companies to be more transparent than ever,
and the only way to manage this will be by having a central person in charge.

риторические инструменты*
* в них можно заблудиться
Stay in touch via:
good luck!
+380 50 312 02 44
valentin.boinitsky@gmail.com
www.linkedin.com/in/boinitsky
Thank you
and

Strategic PR as an integral part of successful business practice

Strategic PR as an integral part of successful business practice

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