Translated from the Journal of Communication Management
(December, 1996)
A Scary Thought: Congress May Try to Fix Private Equity and Performance
Reporting
Companies have only recently admitted to the fact that "public opinion",
although this is not an operational concept, demands from them responsiveness
to an expectation that has become widespread since the 1960s: an access to corporate
information.
Corporate information, i.e. information on management decisions or orientations
such as financial data and moves, human resources policies, and modifications
of the corporate structure were until then the priviledge of specialised, "knowledgeable",
circles.
The rise in the average level of public education and the parallel evolution
of employment from traditional manufacturing execution jobs to tertiary, information-linked
jobs for a majority of the working population have created interest, then demands,
for corporate information in ever-growing sections of opinion.
There is today a right to information, to which legal evolutions attest: financial
information is submitted to obligations of disclosure; management orientations
must be submitted to representative bodies of workers before they become decisions;
product labelling must include data on ingredients and nutritional value; etc.
There is, today, a coverage of corporate information in popular media.
Companies have, during the same period, contributed to creating expectations
for corporate information in that business circles recognised the benefits of
becoming better understood in order to become better accepted in society. Public
information has even become a competitive element between companies.
Taking this into account has brought about the development of a public relations
function in the management structure of companies, with the objective of showing
responsiveness and competitively managing information.
Looking at the situation of companies across Europe can only lead to the conclusion
that progress can still be made in generalising companies' abilities to be responsive
to public opinion's expectations.
Yet, being responsive is no longer enough.
Public opinion has, since the mid-1980s, developed a tendency to pass judgment
on what it considers as socially acceptable or not. One of the signs of this
trend is the rise of the question of "ethics" in all aspects of society's
organisation and operation.
Having reached a point where it considers itself better informed, and therefore
"knowledgeable", the public, although this is not an operational concept,
expresses more and more opinions on behaviours or practices which it condemns.
It eventually resorts to the legal system when opinion pressure is not sufficient,
or when the practice or behaviour is seen as particularly intolerable, or calls
for compensation. Courthouses have thus become one of the primary places of
public debate, and one of the strongest links with the media: suing a party
is today an efficient way of publicising a cause.
Companies do not escape this trend because they are seen as one of the powers
in society, and are thus expected, as any other power, to behave not only responsively,
but also, more and more, responsibly.
Public opinion has, over the same period, welcomed the corporate trend towards
taking on an increasing share of social responsibility. Social responsibility
has even, during those years, become one of the corporate world's mottos in
seeking acceptance in society, leading to an increasing involvement in education,
culture, the social progress of minorities, or individual workers' development.
Taking this into account brings about a change in the nature of the public
relations function. The shift from "reponsive" to "responsible",
as it caused companies not only to answer expectations but moreover to face
liabilities, has brought to light a new type of risk which corporate management
must face: the "opinion risk".
Any enterprise is a risk-taking. Profit is the reward of risk. Management structures
and techniques have developed as the risks diversified: financial risk, commercial
risk, technical risk, social risk have all given birth to corresponding management
disciplines.
Today the opinion risk is so real that companies may disappear as a result
of its mismanagement. The Union Carbide catastrophe in India caused American
public opinion to press for compensation which led to the company's dismantling.
The Perrier consumer crisis caused the company to disappear: there is no longer
a Perrier company, but only a brand owned by a division of Nestlé.
The level of management responsibility attached to the public relations function
has thus reached a point where it can rightly be described as strategic. Being
more strategically responsible for the development or survival of companies
leads to the function being more accountable for the way in which it contributes
to corporate performance. Hence the development of evaluation tools specific
to the function.
Furthermore, among other aspects, two other criteria of public relations performance:
the ability to identify those aspects of any business which touch on public
opinion sensitivities, and the ability to monitor those parts of public opinion
which are in a position to decisively impact business performance.
Public opinion, across borders, shows a sensitivity to subjects which relate
to key values of society. Health, the environment and ethics are currently in
that category of subjects. However obvious this may seem, companies still disregard
what this implies for the conduct of business.
Recent phenomena such as the ban on asbestos in France, the reactions to the
bovine spongiform encephalopathy issue or the Brentspar episode in the summer
of 1995 demonstrate this. Whatever the scientifically established facts, public
opinion judged on the basis of emotional reaction, and caused governments to
enforce decisions based on public opinion rather than scientific rational.
One may deplore this state of affairs, but emotions are as much a fact as rationality.
Assessing opinion risk calls for public relations practitioners to realize that
fact if they are to fulfill their management responsibility. And boardrooms
should listen if they are to fulfill theirs.
Yet such public opinion phenomena all follow the same pattern: they all originate
with minorities. This is one of the paradoxes of contemporary mass-media societies,
which pay so much attention to opinion polls showing majorities. In fact, managing
the opinion risk demands that more attention be paid to minority attitudes,
and a correct evaluation of their potential to rally opinion support.
Such is the case of a number of minorities: minority shareholders in the name
of ethics; victims of accidents in the name of compassion and compensation;
members of local communities when one industrial or infrastructure development
is seen as impacting the environment; to name just a few.
When the media give the appearance of a widespread opinion movement around
any such issue, it is usually too late. It is also the sign that those in charge
of managing opinion risk have either not been effective in performing their
task, or not listened to.
This is not the place to elaborate on management solutions to such management
issues. Yet a first step in the right direction is for corporate management
to recognize such phenomena as management issues. And for them to accept that
the public relations function should not only take care of responsiveness, but
also share in responsibility.
Published in London by Henry Stewart Publications. The author is an editorial
board member.
