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.
