PR won’t save you if trust has gone

PR can significantly improve the perception of a company, but there has to be something to work on in the first place.

If the reputation is tarnished, PR alone will not be enough to turn the tide.Recent developments in the City suggest that if a firm is powerful enough, and its management held in sufficient awe, the converse is also true.

The contrasting experiences in the past few days of Vodafone and Sainsbury confirm this. For most of early February, Vodafone – or a source allegedly close to it – was floating the idea that it might launch a near £20bn bid for US operator AT&T Mobile. The reaction to this kite-flying was almost universally hostile. Institutional investors worried publicly that the move would damage rather than enhance profits. The share price fell and press comment was negative. Yet the firm forged ahead and it took a trumping bid from rival Cirgular to end the bidding battle.

No such luck at Sainsbury. It needs a new chairman and announced that the job was going to the one-time Bass chief , Sir Ian Prosser. There followed such a deluge of protest from shareholders that he may yet feel obliged to step down before he even gets there.

The Vodafone PR was markedly more skilful because all those leaks softened people up. Investors did not like the bid but at least it did not come as a surprise. Shock turned to resignation.

In contrast, Sainsbury made no attempt to soften people up. Indeed Prosser’s name never figured in the betting. Shock turned to anger. The conclusion one can draw is that the reputation of Vodafone is sufficiently good for it to get away with behaving in a high-handed fashion. Sainsbury’s management is not held in such awe so even if its tactics had been different, it would have caught the flak because the trust is no longer there.

But that, too, carries a lesson for Vodafone. If it ignores its stakeholders and fails to deliver on its promises, it will pay a high price.

anthony.hilton@haynet.com

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