PRWEEK FORUM: Corporate issues set the debate - As 50 top corporate communicators attended the inaugural PRWeek Forum in Lincolnshire last week, Kate Nicholas reports on the main events

Corporate citizenship and pressure for disclosure were the common

strands emerging from a broad range of debate at the inaugural PRWeek

Forum at Belton Woods Hotel, in Lincolnshire, last week. The urgent

pressures on companies for transparency, ranging from new employment

consultation laws to the Company Law Reform proposals dominated debates

among the 50 top corporate communicators present. Representatives of

leading quoted and privately-owned companies participated in discussion

groups moderated by a stellar cast of speakers (see panels), and held

pre-arranged meetings with key suppliers.



The Forum opened on a topical note from James Rubin, former US Assistant

Secretary of State and Chief Spokesman for the State Department, on 12

November just hours before the fall of Kabul. Rubin, a partner at

Brunswick and a leading commentator on the 'war on terrorism', took the

opportunity to air his views on the comms challenges faced by the UK and

US.



While supportive of Allied policy and optimistic about the outcome of

the campaign, Rubin admitted that technical errors had been made in

communications strategy. In the early stages he felt the US had been

slow to set up mechanisms such as the recently installed rebuttal office

in Islamabad and slow to talk to the Middle East media. 'Although there

is 98 per cent support for this in the States, outside it is an issue

for debate. We were slow to see that Al-Jazeera should have been part of

the comms process,' he said.



In particular, he claimed that the allies had made a grave error in

suppressing communications from Osama bin Laden, as given enough rope

the Al-Qa'ida leader would hang himself. 'The more he says - the more he

attacks every country in the world - the more dangerous he becomes and

the clearer his intention. We need to dissect his views and to use them

to convince that this action is justified.'



ALAN PARKER - CAPITAL MARKET SPECIALISATION



Seismic shifts in the relationships between corporates and capital

markets are going to force greater specialisation married with a

convergence of skillsets, according to Brunswick group chairman Alan

Parker.



'The institutional market has become hugely specialised,' said Parker.

He was debating with delegates whether corporates are prepared to meet

the agendas of the new range of specialists in capital markets, ranging

from bond-holders to hedge funds, and sell-side analyst houses.



In particular he pointed to the changing role of sell-side houses, and

the increasing pressure 'not to inform about what companies are doing

but to give views'.



According to Parker this is mirrored by a hostility and analytical drive

in City media: 'As Richard Lambert pointed out recently in The FT, their

nature is to challenge, they have to give analysis and opinion - the FT

is no longer a paper of record. The challenge is to find somewhere that

investors can see what you have said.'



Media coverage is, in turn, having a negative effect on retail

sales.



As Dixons group director of corporate affairs Lesley Smith pointed out,

it will have the knock-on effect of 'changing the way in which we talk

to analysts'. Parker added: 'The speed and interactivity, the

convergence of the markets, means that (corporate comms) people have

more responsibility to go out and fight to build an understanding. It is

a more driven market and actually requires many of the skills of

marketing services. There is also the question of whether we as an

industry should provide serious third-party analysis.'



ACE Europe head of comms (Europe) Anna Moreno pointed to the need to

manage internal change at a time when an increasing number of employees

are also shareholders, while Parker was damming of the tendency to

segregate audiences.



Parker's belief has always been that you can't 'do' financial PR without

corporate PR, and that the most effective IR groups (among whom he

counts BP) also see IR as just 'another area of communications ... just

another corporate audience.'



In fact, Parker referred repeatedly to the enormous improvement in the

quality of corporates' own resources, stressing the need for the 'new

generation of corporate comms directors both in Europe and the US to get

a greater role on management committees.'



Parker also stressed the need for an balance between relationships with

investors in London and Wall Street: 'You need to mix IR with management

of reputation so that you have a consistency of presence in their

universe.



The financial model is critical, but the difference is that buy-side

investors look at the background against which the model is viewed.'



He also believes there is room for an international IR offering, and

that while 'some people would like to see IR and media relations in

separate firms' the two disciplines can work well on an international

basis.



DOMINIC FRY - REGULATION FAIR DISCLOSURE



With the FSA threatening to clamp down on sharp practice among financial

PROs, the debate on Regulation FD (fair disclosure) moderated by

Scottish Power head of corporate communications Dominic Fry could hardly

have been more timely.



Fry, whose company has a presence on both sides of the Atlantic,

admitted to initial scepticism about potential red tape. However, he

argued that regulation designed to create an equilibrium between the IR

function and retail shareholders and to 'fix dysfunctional relationships

with sell-side analysts can only be a positive influence.



'In looking at disclosure, companies focus more on strategy,' Fry told

delegates. 'If you adhere to it you have a better handle on what the

market thinks and a better structure.' He argued that it doesn't chill

the relationship with the market, but just codifies best practice and

encourages people to spend time and effort on presentations and Q&As,

reviewing analysts' notes and rehearsing for one-on-ones. Conference

calls are more tightly scripted and scheduled, while IRs have to be more

cogniscent of web casting.



'The US sets best practice and London takes a lead from there,' said

Fry, who also argued that US journalists are more professional. 'It is

easier to build relationships over here but not as productive - in the

US it is more transactional. The US media are keen to educate management

teams so it is less adversarial.' He claimed that in the UK corporate

communicators have fostered a more adversarial relationship with the

media by creating competition and 'preferring journalists with certain

stories.'



Fry didn't offer any kind of checklist for compliance, as the SEC's

continual monitoring of global disclosure practice does make Regulation

FD something of a moveable feast.



GE Capital director of corporate comms Europe Ivan Royle also sounded a

warning note regarding the unspecified level of detail required,

pointing out that in rushing to disclosure, you can create market

instability.



NIGEL STANLEY - INDUSTRIAL RELATIONS



A potent mix of delegates from unionised and non-unionised firms

gathered to hear Nigel Stanley, the TUC head of campaigns and

communications, talk about the transformation of industrial relations

from a 'naturally adversarial to a partnership model.' While he admitted

that the TUC will continue to mount name-and-shame campaigns against

abuses committed by non-unionised employers, John Monk's election in

1984, according to Stanley, has helped to turn the TUC into a

predominantly campaigning organisation 'speaking for the wider world of

work.' As evidence he points to the effective negotiations with the CBI

over the minimum wage, work with Cherie Blair over the rights for

parental leave and current work on rights to return to work.



A recent TUC-funded Industrial Relations Survey by the London School of

Economics' shows 61 per cent of those who are not members supported

strong unions. The same poll also revealed that only 38 per cent of

employees trust their employers, which leaves a large proportion of

disenfranchised workers who represent a potential danger to corporate

reputation.



Among the loyalty factors highlighted by the LSE poll was a greater

desire for companies to share power and authority, a factor that will be

enforced with the Passage of the European Information and Consultation

Directive.



Within seven years every company with more than 50 employees will have

to establish a works council representative of unionised and

non-unionised workers.



The Gillette Company has been running international councils for

two-and-a-half years including European and 11 country works councils

plus four consultative groups. London Electricity head of corporate

affairs Paul Taylor is actively involved in European Works Councils

established in France by parent company EDF.



'We have found them particularly useful in the consultative process,

they have been at the forefront of implementing changes,' said The

Gillette Company director of comms Paul Fox.



'Information and consultation will confirm to companies that change

management and good workforce relations can be achieved through unions,'

said Stanley. 'You can't write off (union concerns) as vested

interests.



Unions can be powerful enemies but they can also be powerful friends,

and they can be particularly useful in terms of government

relations.



LORD BELL - THE RESPONSIBILITY OF REPUTATION



CEOs' ability to manage the reputations of their companies should be

monitored and if they should fail to protect that reputation they should

be removed from their post, Chime Communications chairman Lord Bell told

participants at the PRWeek Forum.



'The most important asset of a company is its reputation - it can't

really be the responsibility of corporate comms, PR or human resources,

etc.



They don't have enough influence with all the stakeholders in the court

of public opinion. A CEO will delegate (potentially, as one delegate

suggested, to a reputation subcommittee on the board ) but they should

be responsible for its totality and as such should have more

understanding of communications,' he said.



In the case of companies such as Unilever and Proctor & Gamble where the

reputation of the company is made up of the reputation of the brands,

the CEO takes a less overt role in reputation management. As Proctor &

Gamble director of external affairs Gary Cunningham pointed out, where

individual brands are king, there has to be a different balance: 'We

regard corporate communications as pretty important but focus on

individual brands.



So you have very senior business leaders, who would be bigger than the

UK chief executive.' However, the media focus on corporate personalities

is inexorable, and there can be a tension between the reputation of the

CEO and the reputation of their organisation - particularly if the two

are inextricably linked.



Two examples cited were Sainsbury's CEO and former Prudential head Peter

Davis and Richard Branson, a point quickly picked up on by Jackie

McQuillan, Virgin Management group PR director (consumer).



McQuillan denied there is any danger for the Virgin brand at present but

said: 'With the cult of personality you can have issues that come up

where people need to step in.' Sean Costello, Deloitte & Touche

marketing communications and PR manager, said: 'It is up to the CEO to

create a core team around them - smart people recognise talent.'



Delegates also questioned whether changes in share price with shifts of

individuals are an indicator that CEOs have become too important, and

whether in promoting them as individuals corporate communicators are

actually doing a disservice to the markets.



FRANK KANE - MEDIA RELATIONS



There was a swift intake of breath at the Forum as Frank Kane, The

Observer business editor, told delegates that he preferred dealing with

agencies rather than in-house communicators. The latter he felt were

often several steps removed from the centre of power and not close

enough to corporate issues.



'I can get a better feel for an issue from an agency,' said Kane. 'Where

the in-house PRO will give me the standard line, the agency will often

brief off-the-record.' However, he admitted there were exceptions who

combined access at the highest levels with the ability to give

off-the-record briefings. he also pointed out that the longevity of

agency personnel made it easier to create a close and profitable

relationship.



Despite the traditional complaints of favouritism of access, false

denials and occasional libel writs visited on him as a result of

information supplied by PROs, Kane was quick to leap to the defence of

PROs, citing them as a crucial source alongside analysts, brokers and

investment banks.



As reported in PRWeek (16 November) Kane was also quick to condemn the

heavy handedness of the Financial Services Authority.



'FSA's Code of Market Conduct is a ridiculous, dangerous limitation of

the freedom of the press,' Kane said. 'It robs the market of liquidity

by denying information to the 12 million individual investors outside of

the institutions.' 'The FSA has been panicked into this by The Mirror

Slickers scandal.



Journalists aren't subject to the FSA regulations, having been dropped

in the early stages after press furore. Davies has picked on a soft

target - PR people.'



Kane said he intended to campaign against the FSA's stance and suspected

that many other City editors would take up the cause. He said that PROs

could count on a high level of support: 'It isn't in any of our

interests to dry up sources.'



JOHN BROWNE - COMPANY LAW REVIEW



The PR industry is failing to appreciate the opportunities created for

corporate communicators by the combined effects of the Turnbull Report,

the increasing preponderance of SRIs and the Company Law Review, which

is due to come onto the statute books in 2003, Dr John Browne,

PricewaterhouseCoopers reputation assurance director, told

delegates.



'A number of factors are working together to make the role of PR more

complicated but also more multi-dimensional ... but all too often

corporate communicators are not on the board or risk management

committee,' said Browne. Tony Stephens, Rentokil Initial general manager

corporate affairs, and Ralph Tuckwell, Philips Semiconductors comms

director, were among the few delegates to have been involved in writing

up their company's Operating and Financial Reviews.



Delegates' concerns mainly related to delivery rather than content, and

in particular the seeming contradictions between the regulations on the

timed release of published information, and the way companies are being

encouraged to delivery dynamic reports on the internet.



Gareth Lloyd, director of communications for the National Grid, which

has produced an environmental report for the past five years, and has

just launched its performance data online, said: 'We are not getting the

most out of the medium. We have a data set that closes at a certain time

but there are other areas on which we will want to continually give

more.' There were also some concerns that new laws on inducement

contained within the new electronic communications legislation,

scheduled to come into force at the end of this month, will also have an

impact on the level of information that can be provided through the

internet. As well as concerns that in meeting government OFR

requirements in full, companies will be reducing their competitive

edge.



'You will fundamentally end up with two strategies: the hidden strategy

of what the company will actually do and the diluted one that will be

made public,' said Tuckwell.



Multinationals represented had differing experiences of CSR commitment

across different geographies. 'What the US calls good CSR is about

corporate giving,' said McDonald's head of communications Eddie

Bensilum. 'My colleagues in different countries have different attitudes

about what CSR constitutes and different views on subjects such as GM,'

All agreed, however, that the UK is leading the rapid changes within the

European Union partly because, although the CSR element of the OFR is

voluntary, it has hidden teeth.



'It would be a brave board that says that CSR has no impact on the

company,' said Browne.



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