EDITORIAL: Exxon and Jarvis motivated by PR

Two separate pieces of news from the business pages will have given a justified cheer to the PR community this week. Just as services group Jarvis was announcing its withdrawal from rail maintenance contracts on the grounds that they posed an unacceptable risk to its reputation, news broke that archetypal US mega-corporation Exxon was embarking on a textbook stakeholder relations drive.

Exxon reportedly claims that, although there has been no change of heart among its bosses on substantive energy issues, it believes it has been misunderstood and 'needs to engage more with the outside world'. For those who felt frustrated by the company's steadfast refusal to get involved in, say, the Kyoto treaty for climate-change management (other than in a blocking capacity), this is surely good news.

There is an argument that, for oil companies, reputation doesn't matter because the main determinant of sales is the location of outlets. Prices vary little from supplier to supplier, and it is an enlightened motorist indeed who stops to consider his vendor's reputation when the fuel light starts to flicker.

But, as Exxon now appears to concede, reputation and stakeholder engagement do matter, for several reasons: because consumers are not the only ones affected by their business; because at every level of operations, their work is tightly regulated; and, above all, because when crises emerge, having a public goodwill overdraft to draw on can make the difference between plain sailing and going under.

Since it is firmly entrenched in the pro-expansion lobby as regards the use of unrenewable energy resources, Exxon faces something of a challenge in convincing a sceptical stakeholder community (which it has always shunned) of its conversion. Nevertheless - notwithstanding the fact that one day of good headlines is scant compensation for a generation of bad publicity - a start has been made, and that is to be welcomed.

Jarvis's motivation in handing over its rail contracts to the non-profit-making Network Rail seems plainer still - the Potters Bar rail crash, in which seven people died, gave the company's image a severe battering.

It is rare for a company to ascribe a major operational decision to PR considerations. And make no mistake, this was a major operational decision: Jarvis made millions each year from these contracts. And yet, the stated reason for this handover was that the ongoing damage to its reputation was a toll too heavy to bear.

Even if the more pressing cause was an imminent decline in profitability, the fact that the stated reason was essentially a PR argument is hugely important: the core message is that reputation concerns are not only legitimate, but can drive business transformation. This is a landmark decision.

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