FOCUS: ISSUES MANAGEMENT; Don’t let a drama turn into a crisis

AWARENESS: Many UK companies fail to realise that taking a wider and long-term view can avert disasters THE ICEBERG EFFECT: Academic studies show how companies can control the progress of issues CASE STUDY: The Government’s warning on oral contraceptives sent millions of women into a state of panic

AWARENESS: Many UK companies fail to realise that taking a wider and long-term view can avert disasters

THE ICEBERG EFFECT: Academic studies show how companies can control the progress of issues

CASE STUDY: The Government’s warning on oral contraceptives sent millions of women into a state of panic



According to US business philosophy, certain crises can be avoided with

forward planning. Kate Nicholas asks if UK companies can afford to take

a short-term view



Crisis management is no longer enough. Now issues management, the latest

American import, has arrived to shelter UK companies from the fall-out

created by changing social, environmental, commercial and legislative

priorities.



For most UK chief executives, the term issues management conjures up

images of stricken sea tankers foundering in an oily maelstrom of their

own making, but in reality full-scale ‘crises’ such as the grounding of

the Sea Empress are the highly visible tip of the issues management

iceberg.



Now UK crisis management specialists are teaching companies how to avert

rather than deal with disaster by keeping their corporate ears to the

ground. However, certain crises such as Brent Spar - a reputation risk

that might have been averted by a more astute appraisal of public

opinion and the axe that Greenpeace had to grind - illustrate the point

that a long-term approach to issues management is still very much in its

infancy.



‘Issues management as a discipline is at the same stage that crisis

management was at ten or 15 years ago,’ says Judy Larkin, partner of

Regester Larkin, one of the few UK-based agencies specialising in issues

management, formed 18 months ago by Larkin and crisis specialist Michael

Regester. ‘A decade ago companies were able to think on a more short-

term basis when dealing with groups such as customers and shareholders,

but now they are faced with a communication-led community, energetic

social interest groups and much greater public scrutiny.’



While issues management has worked its way sufficiently high up the

corporate agenda in the US to have spawned issues management specialists

such San Diego-based Tucker and Broom, dedicated consultancies have only

recently emerged in the UK.



Most of the major players include issues management in some shape or

form on their menu of options. Hill and Knowlton’s director of issues

and crisis management, David Brotzen, talks about ‘building mutually

acceptable common positions on issues that typically relate to human

resources, environment and government or European legislation,’ as well

as a sub-discipline he refers to as ‘ vulnerability management’. Peter

Sheldon-Green managing director of Sheldon Communications also promotes

the concept of reputation risk management as a means of pre-emptive

crisis management.



However the lines between what constitutes issues and crisis management

remain blurred. Michael Bland author of the PRCA’s ‘Crisis Checklist’

claims that the only difference between issues and traditional crisis

management is the timescale. ‘There are more similarities than

differences,’ says Bland. ‘You still have to deal with perceptions

rather than realities and you still have the same enemies.’



A quick ring around some of the 45 or so PR agencies that claim to offer

issues management clients revealed the scale of the confusion with

secretaries hunting through corporate, public affairs and crisis

departments for ‘the person that deals with that’. It was this lack of

definition that recently led Regester Larkin to commission a survey into

awareness of issues management as a discipline in its own right.

Earlier this year, Opinion Leader Research interviewed corporate

communications, public affairs directors, CEOs and managing directors of

50 medium to large scale UK-based companies with international interests

- around of half of which are publicly quoted - representing the oil,

chemicals, food and drink, IT, telecommunications, pharmaceuticals

industries, financial services and utilities.



One of the most obvious barriers to the development of issues management

flagged up by the survey was the need to justify spending by

demonstrating tangible financial benefits. ‘It is easy to understand the

financial benefits of a crisis in terms of protecting reputation and

bottom line performance. A disaster is immediate and you can see the

implications and the damage it can do,’ says Larkin. ‘It is less easy to

understand this in terms of issues management. One of the problems in

this area is that it is difficult to define, so it is difficult to

persuade companies that they have to do something about it and get them

to seriously think ahead.’



Of the companies questioned, two-thirds were familiar with the term

issues management but, of these, 40 per cent still considered the

practice to be confined to commercial issues, as opposed to political,

social and environmental concerns.



It was also widely seen to be a defensive activity ‘essentially a

reaction to problems rather than a business building process; a form of

insurance or damage limitation’ as opposed to a means of improving

competitive advantage and financial performance. This was a

disappointment to Larkin who sees the discipline as a management process

whose goal is to help preserve markets, reduce risk, create

opportunities and manage corporate reputation as an asset for the

benefit of the organisation and its primary stakeholders.’



While 78 per cent of respondents said they had a crisis management

system in place, 40 per cent admitted that they had made no provisions

for issues management. Only two companies accepted it as a distinct

discipline and had made in-house provisions by employing specialists. A

quarter of respondents said that they were reluctant to create an issues

management structure that was too rigid. ‘There’s a school of thought

that says you shouldn’t be too regulated and that you need to maintain

flexibility, but it makes sense to have a process you can pull together

to analyse or decide whether to push up the idea to be considered at

board level,’ says Larkin.



Other approaches include that taken by IBM, which has designated

individuals as ‘issue owners’ throughout various departments in addition

to providing centrally co-ordinated issues management with a dedicated

issues manager. BNFL also talks to managers in various business groups

to establish issue priorities. ‘What issues management does is inject a

discipline into PR and helps prioritise where you place resources,’ says

BNFL director of corporate communications Colin Duncan. ‘Without that

you have to rely on gut feeling.’



So what are the issues that are seen as priorities for long- term

management? According to Larkin developments in public policy or

privatisation are the biggest concern. Companies are worried that their

corporate independence will be reduced by greater legislation forced by

environmental and safety issues.



New technology is seen as important in terms of competitive advantage

and the speed with which the media and special interest groups can

respond. In response to the survey, companies didn’t single out

corporate governance or business ethics, but this is becoming

increasingly important on the agenda one obvious example is disclosure

of information in the financial services industry. Little emphasis was

placed on legal services, which is also surprising given the threat of

reprisals.



In general, Larkin says she was disappointed with the level of

awareness. ‘This whole area is still seen as something to be dealt with

on an ad hoc, reactive basis.’



As well as the financial barriers to long-term issues management,

companies also suffer from an inertia towards long-term issues. A sense

of urgency tends not to impact on the corporate consciousness until far

too late, illustrated by the fact that media monitoring was cited as the

most important source of information for pre-emptive management, despite

the obvious fact that if a company finds itself tracking issues already

controlled by the media, they are probably too late to gain the upper

hand.



While few would disagree with Larkin’s contention that companies need to

take a longer-term view, it remains to be seen whether this latest

specialism will carve out a niche in the UK.



Life cycle: The iceberg effect as issues turn to crises



In a bid to understand the way in which an issue develops into a full-

blown crisis, US academics and issues management specialists have

charted the ‘life cycle’ of a typical scenario. The ‘issues life cycle’

(see accompanying chart) approach driven by agencies in the US

illustrates the number of stages that a typical issue moves through

before it becomes a crisis, and the potential a company has for

controlling and containing that progress.



The graph outlines the ‘iceberg effect’ of an issue life cycle beginning

with the identification of a potential issue and the interest it is

likely to attract. At the emerging stage the issue is drawn to the

attention of public interest groups who look to legitimise their view by

seeking support from experts and the media.



The handling of the issue then moves into the arena of media management

as the subject is initially picked up by the specialist media. At this

stage there is still the potential for a company to influence the course

of the life cycle, but as soon as interest moves over to the key media

the potential for control is dramatically minimised and the company

could be faced with the prospect of a crisis. The intensity of the media

spotlight makes it difficult for the company to intervene, quickly

throwing it onto a crisis footing.



Case study: The ‘epidemic of anxiety’



Millions of women were sent into a state of panic last October when the

Government issued a warning that certain brands of oral contraceptive

were twice as likely to cause potentially life-threatening blood clots

in leg veins.



Debate about the risk/benefit profile of third generation oral

contraceptive pills began when they were introduced in the 1070s, but

it was an unfinished World Health Organisation study showing a possible

link between these pills and thrombosis which prompted media coverage in

July 1995. A World in Action documentary on the subject on 10 July

failed to spark the anticipated public crisis, but the issue did not go

away.



On 18 October, acting on the basis of three unpublished studies, the

Government sent a letter advising GPs not to issue the pills concerned

except to women ‘intolerant of other oral contraceptives and prepared to

accept an increased risk of thromboembolism.’ The story was apparently

picked up by a journalist married to a doctor and spread across the

media not just in the UK but across 60 countries worldwide. Women

besieged surgeries and family planning clinics but the first many

doctors knew of the crisis was when they were called for advice. The

Government was accused of breaking the Hippocratic oath and of creating

an ‘epidemic of anxiety’ by Professor Spitzer, leader of one of the

research studies at the core of the crisis.



‘There was a great underestimation of the likely reaction to an issue

like this,’ says Mike Seymour, director of issues and crisis management,

Burson-Marsteller Europe. Howard Godman, director of healthcare at

Manning Selvage and Lee, who acted on behalf of Professor Spitzer, says

that ‘the Government acted prematurely without taking along key people

who could have contributed to the decision’. (One of Spitzer’s findings,

not mentioned in the Government’s communique, is that the same drugs

that allegedly increase the risk of thromboembolism can decrease the

risk of heart disease.)



There was surprise that doctors had not been briefed prior to the

announcement. Seymour is also critical of the helpline set up by the

Department of Health, which he says didn’t have adequate technical

capability or the manpower to handle the wave of calls.



Drug companies claimed that the results were ‘inconsistent with more

than ten years’ clinical trial data. But according to ethical

guidelines, the drug companies involved had no option but to withdraw

the products, raising questions about their future involvement in this

category of drug.



So what lessons can be learned from the damage done to this market? ‘The

time for analysis is right at the out of the appearance of an issue,’

says Regester and Larkin partner Michael Regester was asked in at the

last stages to advise Schering Health Care, one of the companies

involved. ‘You need to analyse the effect on a company early enough to

take action to reassure people if the issue does gain momentum If this

had been done in this case, they might have deflected the whole thing.’



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