Strategic PR as an integral part of successful business practice

1. Strategic PR as an integral part of successful business practice Valentin Boinitsky for CIPR Advanced Certificate class March 2014

2. The aim of the tutorial: look at how a modern company functions as a system, and the role of PR in it.

3. Modern company: raison d'être, systems theory and practical mechanics. 1 2 3 4 5 The Alpha & Omega of PR: reputation. The world outside: stakeholders, publics, environment. PR in the works: strategic communications, issue management, CSR. The nuts and bolts: PR function inside the company.

4. Modern company: raison d'être, systems theory and practical mechanics. 1 2 3 4 5 The Alpha & Omega of PR: reputation. The world outside: environment, stakeholders and publics. The nuts and bolts: PR function inside the company. PR in the works: strategic communications, issue management, CSR.

5. Key concepts: • mission • vision • values • corporate culture • strategy vs. tactics • goals vs. objectives

6. Why do businesses exist?

7. The business of business is business. attrib. to Milton Friedman (1912-2006), a winner of Nobel Prize in Economics

8. Money is like gasoline during a road trip. You don't want to run out of gas on your trip, but you're not doing a tour of gas stations. Tim O'Reilly, Founder O'Reilly Media

9. Walt Disney, Co-founder of Disney We don't make movies to make money, we make money to make more movies.

10. Vision the desired state of an organisation, long-term aspiration for the future Mission the fundamental purpose of an organisation, why it exists Values beliefs, attitudes and behaviours shared among the members of an organisation

11. Our mission By creating value for our customers, we create value for our shareholders. We use our expertise to create transport-related products and services of superior quality, safety and environmental care for demanding customers in selected segments. We work with energy, passion and respect for the individual. Our vision The Volvo Group's vision is to be valued as the world's leading supplier of commercial transport solutions. Corporate values Quality, safety and environmental care are the values that form the Volvo Group’s common base. www.volvogroup.com/group/global/en-gb/volvo%20group/mission_vision/Pages/our_mission.aspx

12. Google's mission is to organize the world's information and make it universally accessible and useful. www.google.com/corporate/facts.html

13. Mission, Vision & Values The world is changing all around us. To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and move swiftly to prepare for what's to come. We must get ready for tomorrow today. That's what our 2020 Vision is all about. It creates a long-term destination for our business and provides us with a "Roadmap" for winning together with our bottling partners. Our Mission Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions. • To refresh the world... • To inspire moments of optimism and happiness... • To create value and make a difference. Our Vision Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth. • People: Be a great place to work where people are inspired to be the best they can be. • Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. • Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. • Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. • Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. • Productivity: Be a highly effective, lean and fast-moving organization. Our Winning Culture Our Winning Culture defines the attitudes and behaviors that will be required of us to make our 2020 Vision a reality. Live Our Values Our values serve as a compass for our actions and describe how we behave in the world. • Leadership: The courage to shape a better future • Collaboration: Leverage collective genius • Integrity: Be real • Accountability: If it is to be, it's up to me • Passion: Committed in heart and mind • Diversity: As inclusive as our brands • Quality: What we do, we do well Focus on the Market • Focus on needs of our consumers, customers and franchise partners • Get out into the market and listen, observe and learn • Possess a world view • Focus on execution in the marketplace every day • Be insatiably curious Work Smart • Act with urgency • Remain responsive to change • Have the courage to change course when needed • Remain constructively discontent • Work efficiently Act Like Owners • Be accountable for our actions and inactions • Steward system assets and focus on building value • Reward our people for taking risks and finding better ways to solve problems • Learn from our outcomes -- what worked and what didn’t Be the Brand • Inspire creativity, passion, optimism and fun www.thecoca-colacompany.com/ourcompany/mission_vision_values.html

14. www.efes-ukraine.com

15. vs. corporate values corporate culture

16. What are mission, vision and values needed for? What is their practical function?

17. strategyvs. tactics

18. (strategos) - a Greek word for leader or commander of an army, general

19. Strategy, a word of military origin, refers to a plan of action designed to achieve a particular goal. Wikipedia

20. Strategy development is a question-based process: Where are we now? Where would we like to go? How do we get there? Peter Edelmann, Senior Executive President, Voith Turbo

21. you are here you want to be hereStrategy

22. you are here you want to be hereTactics

23. strategic goal tactical objectives

24. strategic goal tactical objectives strategic direction tactical steps strategic approach tactical instruments

25. Organisation’s strategy Departmental strategy Departmental tactics

26. The essence of strategy is choosing what not to do. Michael Porter Professor at Harvard Business School, an international authority on company strategy

27. systems theory

28. environment environment environmentenvironment production subsystem disposal subsystem adaptive subsystem maintenance subsystem management subsystem

29. Production = manufacturing, service Disposal = marketing, sales Maintenance = HR, business support Adaptive = research, planning Management = strategy, control subsystems

30. organisational mechanics in practice

31. Ltd What exactly is limited, and how does it relate to the development of a stock market?

32. publicly traded company privately held company Public company Private company (company shares are sold openly) (might have shares, but not openly sold) Initial Public Offering (IPO) Buy-out and de-listing Plc (UK) AG (Germany) ПАТ (Ukraine) ОАО (Russia) Ltd (UK) LLC (US) GmBH (Germany) ТОВ (Ukraine) ПрАТ (Ukraine) ООО (Russia) ЗАО (Russia)

33. Chairman and the Board of Directors (shareholders) Chief Executive Officer (CEO) Chief Operating Officer (COO) Vice President (VP) Vice President (VP) Vice President (VP) Director Director Manager Manager Supervisor Supervisor Staff Staff seniormanagement (“dominantcoalition”)middlejunior

34. The role of CEO see the bigger picture link the external world with the internal organisation

35. The four tasks of CEO Defining the meaningful outside. 1 Deciding what business you’re in. 2 Balancing present and future. 3 Shaping values and standards. 4 Adapted from A.G. Lafley, the Chairman and CEO of Procter & Gamble, and Peter Drucker, an international authority on management.

36. The character pre-bureaucraticvs. bureaucratic entrepreneurialvs. systematised

37. environment environment production subsystem disposal subsystem adaptive subsystem maintenance subsystem management subsystem PUBLIC RELATIONS boundary-spanning

38. production subsystem disposal subsystem adaptive subsystem maintenance subsystem management subsystem internal communications

39. environment environment external communications

40. talking and* listening * Grunig’s and Hunt’s two-way symmetric model of PR

41. Public relations is about reputation - the result of what you do, what you say and what others say about you.

43. Reputation is defined as the collective representation of an organisation’s past performance that describes the firm’s ability to deliver valued outcomes to multiple stakeholders. Put in plain terms, reputation is the track record of an organisation in the public’s mind. Dennis Wilcox and Glen Cameron, in Public Relations Strategies and Tactics (2005)

44. Image vs. Reputation Adapted from Elearn, Management Extra: Reputation Management (2005) Image Reputation Is built Is earned Is a cost Is an asset You create and promote an image. It is something you build to show others. You gain reputation over time through actions and communication. It is what people see in you. You pay to create it and you pay to project it. The more image-conscious your market, the more it may cost. Reputation can add value through attracting more customers and investors. Also acts as a buffer in times of crisis. VS.

45. Adapted from Joep Cornelissen, Corporate Communications - Theory and Practice (2004) company's "personality" as broadcast externally products and services company's "DNA": mission vision corporate culture REPUTATION in the eyes of stakeholders word of mouthmedia reporting IMAGE

46. The commercial value of reputation: how much is it worth?

47. Tiger Woods The world’s first sports billionaire. The world's most marketable athlete. Endorsement earnings in 1996-2007 exceed golf earning by ~ 6 times. Recent endorsement contracts included Gillette, Nike, TAG Heuer, Accenture, AT&T and Gatorade (owned by PepsiCo).

48. Following the infidelity scandal in Nov 2009, most sponsors suspended or cut contracts with Tiger Woods. His earnings potential decreased by ~50%. Shareholders of Tiger Woods sponsor-companies lost a collective $5 to $12 billion*. * A study by the University of California, Davis (Business Wire, December 28, 2009), looking at the drop in share prices.

49. revenues in 1992-2001, $ million Enron scandal happened in October 2001. Billions lost in the largest corporate bankruptcy in U.S. history by that time. The Big Five became The Big Four, as Arthur Andersen (est. 1913) disappeared. 85,000 Arthur Andersen employees worldwide lost their jobs...

50. Arthur Andersen was charged with and found guilty of obstruction of justice for shredding the thousands of documents and deleting e-mails and company files that tied the firm to its audit of Enron. The conviction was later overturned by the U.S. Supreme Court due to the jury not being properly instructed on the charge against Andersen. Was Arthur Andersen guilty? So Arthur Andersen was cleared of the charges, i.e. not guilty...

51. Which businesses rely on their reputations most?

52. The Reputation Institute (est. 1997), www.reputationinstitute.com Studying reputation: a systematic approach Global Reputation Pulse – annual survey of corporate reputations on major markets worldwide. The RepTrak™ Model – an upgrade on the RQ tool, used from 2006. The Reputation Quotient (RQ) – an index that sums up people’s perceptions of companies. Used 1999-2005.

53. * Based on RQ model. From “Developing a Reputation Quotient”, by Charles Fombrun and Christopher Foss, The Gauge, Vol.14, No.3, 2001. Dimensions of corporate reputation* Products & services2 Emotional appeal1 Financial performance3 Vision & leadership4 Workplace environment5 Social responsibility6

54. * Based on RQ model. From “Developing a Reputation Quotient”, by Charles Fombrun and Christopher Foss, The Gauge, Vol.14, No.3, 2001. Products & services2 Emotional appeal1 Financial performance3 Vision & leadership4 Workplace environment5 Social responsibility6 • record of profitability • tends to outperform its competitors • strong prospects for future growth • offers high quality products/services • offers value-for-money products/services • develops innovative products/services • have good feeling about the company • admire and respect the company • trust the company • has excellent leadership • has a clear vision for the future • takes advantage of market opportunities • seems a good company to work for • looks like it has good employees • is well managed • supports good causes • environmentally responsible • treats people well

55. Principles of corporate reputation From “Developing a Reputation Quotient”, by Charles Fombrun and Christopher Foss, The Gauge, Vol. 14, No. 3, 2001. The principle of distinctiveness1 The principle of focus2 The principle of consistency3 The principle of identity4 The principle of transparency5 Principles of corporate reputation

56. Quantifying the corporate reputation

57. Global Reputation Pulse 2013 Top-10

58. 2011 2012 2013 Top-10 in the last three years

59. Top-5 most reputable companies by region North America Europe Asia Pacific Latin America

60. global industry reputations 2012 vs. 2011

61. Top-100 most reputable companies in the world in 2013

62. Rating done by Reputation Capital (the official representative of Reputation Institute in Ukraine) The most reputable companies in Ukraine 2010 for more info see: www.ReputationCapital.org www.ReputationInstitute.com

63. However, there are some sceptical voices RE: quantifying reputation

64. With the greatest of respect, I find this convoluted and completely unhelpful. It is entirely understandable for experts and companies to seek ways to evaluate reputation, because it would be so powerful if we could say with any accuracy that ‘your reputation is worth US$345 million a year, so you’d better manage it properly’, or ‘you score 67 per cent on the reputation ranking, the third lowest in your sector.’ ... But unfortunately, reputations cannot be valued or scored like this. Reputation is not a science. ... [You cannot] find scientific or mathematical answers to emotional questions. ... The best way to sell reputation management is through case studies.

65. Public relations practitioners have often been caught in a mire of confusion in an attempt at offering hard measures for intangible outcomes. Intangible resources, which used not to appear on UK balance sheets, are difficult to value objectively, even when recognized as being of value, but the UK now supports the public relations industry with statutory regulations that address this key element of worth. The mandatory reporting of non- financial performance for large companies is an important development in the publication of annual reports and accounts and therefore reputation.

66. Strong reputations result from initiatives and messages that are in tune with the distinctive values and personality of a company, and which are meaningful to all company constituents and stakeholder groups. Charles Fombrun, Executive Director and Christopher Foss, Associate Director of Reputation Institute (2001)

67. Public relations is the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics.

69. stakeholders vs. publics

70. Stakeholders Stakeholder is “any group or individual who is affected by or can affect the achievement of organisation’s objectives.” Freeman, in Strategic Management: A Stakeholder Approach (1984)

71. Publics Publics are stakeholders that face a problem or have an issue with the organisation. James Grunig and Todd Hunt, in Managing Public Relations (1984)

72. Publics - in relation to an issue Stakeholders - in relation to organisation

73. Messages for publics Relations with stakeholders

74. Stakeholders

75. Stakeholder analysis The first three steps: 1. Identify all stakeholders. 2. Classify them into meaningful groups. 3. Prioritize them. Harrison and St. John, in Strategic Management of Organisations and Stakeholders (1994)

76. A very basic model Andrew Griffin, in New Strategies for Reputation Management (2008) Priority 1 The people without whose active support we can’t operate: customers, employees, shareholders, local communities. Priority 2 The people who hold power over us: governments, regulators. Priority 3 People who influence those in the above categories: the media, interest groups, experts. Priority 4 People who want us to fail: activist campaign groups, competitors.

77. The linkage model Adapted from James Grunig and Todd Hunt, in Managing Public Relations (1984) Shareholders Legislators State regulatory bodies Board of Directors Employees Unions Suppliers Consumers Industrial purchasers Retailers Distributors NGOs Community residents Mass media Special interest groups Competitors Peer institutions Associations Professional societies Organisation Enabling linkage Normative linkage Diffused linkage Functional linkages

78. high power & low interest low power & low interest low power & high interest high power & high interest Power/interest matrixpower interest Keep satisfied Key players Minimal effort Keep informed Adapted from Mendelow, cited in Johnson and Scholes Exploring Corporate Strategy (2002)

79. active & supportiveinactive & supportive inactive & non-supportive active & non-supportive Based on Brad Rawlins, Prioritizing Stakeholders for Public Relations (2006) Attitude/activism matrix supportivenon-supportive activeinactive Advocate stakeholdersDormant stakeholders Apathetic stakeholders Adversarial stakeholders raise awareness & understanding encourage supportive behaviour raise awareness & understanding conflict resolution, aim for win-win

80. Power/legitimacy/urgency matrix Mitchell, Agle and Wood, Towards a Theory of Stakeholder Identification and Salience (1997) Definitive stakeholder Dominant stakeholder Dangerous stakeholder Dependent stakeholder Discretionary stakeholder Demanding stakeholder Dormant stakeholder urgency power legitimacy

81. The stages of building reputation (stakeholder’s perspective) advocacy trust favourability familiarity awareness Would I recommend you? Work for you? Work with you? Invest in you? Can you be trusted? Do I like you? What do I know about you? Have I heard of you? © Milorad Aider (Ipsos MORI)

82. Potential recruits: I’d love to work for Shell if I could Desired stakeholder responses: example Investors: Customers: Government: The media: NGOs/Activists: The general public: Employees: I’d put my last dollar into Shell I’d go out of my way to buy Shell Our desired partner I’ll give Shell the benefit of the doubt If someone has to do it, better it be Shell You can be sure of Shell I’m proud to work for Shell Cited by Alison Theaker, in The Public Relations Handbook Shell’s programme “Listening & Responding”

83. Publics

84. Publics Publics are stakeholders that face a problem or have an issue with the organisation. James Grunig and Todd Hunt, in Managing Public Relations (1984)

85. Organisations choose stakeholders, but “publics arise on their own and choose the organisation for attention”. James Grunig and F.C. Repper, in Strategic Management, Publics and Issues (1992) Situational theory of publics

86. Brent Spar case

87. Publics classified by “activism” Adapted from James Grunig and Todd Hunt, Managing Public Relations (1984) Active publics Organise to discuss and do something about the problem. Aware publics Recognise that a problem exists, but do not do anything about it. Latent publics Face a problem, but do not see it as a problem.

88. By role in communication strategy Modified from Wilson, Strategic Program Planning for Effective Public Relations Campaigns (2005) Target publics Key publics, priority target for communication. Channel publics Pass the information on to the target public. Authority publics Influentials, opinion leaders. Can support organisation’s efforts or work against them.

89. Environmental scanning

90. PEST / EPISTLE Political Economic Social Technological Economic Social Technological Political Information Legal Environmental

91. SWOT Strengths Weaknesses Opportunities Threats internal external

92. Public relations is the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics.

94. communications Strategic

95. Find the problem(s)2 Identify perception gaps1 Check if the problems are communication problems 3 Work out a strategy to resolve the problems and close the perception gaps 4 Implement, evaluate5 • reasons for perception gaps? • desired vs. actual perception • yours vs. competitors • benchmark to measure progress • change the public’s view of the issue • or change the organisational practice • or aim for concessions on both sides • based on the results of evaluation, if needed, amend the initial plan • due to the lack of communication? • due to wrong sort of communication? • can be solved by communication alone?

96. Issues management

97. Issues management is a proactive and systematic approach to 1. predict problems 2. anticipate threats 3. minimize surprises 4. resolve issues and 5. prevent crises. Dennis Wilcox and Glen Cameron, in Public Relations Strategies and Tactics (2005)

98. Issuesmanagement Crisismanagement Strategic Tactical Proactive Reactive before something happens after it has happened

99. Stages of issues management Issue analysis2 Issue identification1 Strategy options3 Action plan4 Evaluation of results5 Dennis Wilcox and Glen Cameron, in Public Relations Strategies and Tactics

100. Issue analysis (one of the approaches) priority for resources build alliances infrequent monitoring constant monitoring impact on business HIGH LOW opportunity to influence YESNO

101. 1990s: Unilever – the largest single buyer of fish in the world. 1996: Greenpeace selected Unilever as a target for the planned “sustainable fisheries” campaign. Issues management: case study

102. The golden rule of issues management Be part of the solution, not part of the problem.

103. Corporate Social Responsibility

104. European Commission’s definition Corporate Social Responsibility is “the responsibility of enterprises for their impacts on society”. To fully meet their social responsibility, enterprises “should have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders”.

105. Charity mostly concerned with giving rather than involvement Sponsorship financial or “in-kind” contribution in return for sponsorship benefits Related concepts Triple bottom line reporting on ecological and social performance in addition to financial results; also known as “People, Planet, Profit” approach Cause related marketing (CRM) linking the company’s sales activities to a charity or public cause, for mutual benefit

106. CSR pyramid Economicresponsibilities. Be profitable. The foundation on which all the others are built Legalresponsibilities. Obey the law. Law is society’s codification of right and wrong. Ethicalresponsibilities. Be ethical. Do what is right, just and fair. Carroll, in The pyramid of corporate social responsibility: toward the moral management of organisational stakeholders (1991), cited in Ralph Tench & Liz Yeomans Exploring Public Relations (2006) Philanthropic responsibilities. Be a good corporate citizen. Contribute resources to the community.

107. CSR case study: plana.marksandspencer.com

108. Words of caution... The social responsibility of business is to increase its profits. Milton Friedman in New York Times Magazine (1970) 65 % of British people claim that they only buy energy-saving light bulbs, but only 20 % of the bulbs sold each year are energy-saving. Anrew Griffin in New Strategies for Reputation Management (2008)

109. Modern company: raison d'être, systems theory and practical mechanics. 1 2 3 4 5 The Alpha & Omega of PR: reputation. The nuts and bolts: PR function inside the company. The world outside: environment, stakeholders and publics. PR in the works: strategic communications, issue management, CSR.

110. Types of communication Van Riel, in Principles of Corporate Communication (1995) Managerial communication Marketing communication Organisational communication

111. PR orientation Examples of activity Typical staffing Start up Marketing communication Face-to-face meetings, presentations, social events. Printed corporate literature. Website. Media relations: news releases, press conferences. PR – part of Marketing Growth As above, plus: Internal communication As above, plus: Merchandise. Joint promotions. Media relations: features, exclusives, facility visits. Internal communications: briefings, notice boards, emails. Issue tracking. PR specialist or consultancy Maturity As above, plus: Public affairs Financial PR Community relations As above, plus: CSR. Investor relations: direct and via financial press. Issues management. Internal communications: Intranet, employee conferences, newsletters. PR Department plus consultancy if required Decline Priority given to: Marketing communication Investor relations Internal communication Issue/crisis management. Communications support to mergers and acquisitions. Internal communication: layoffs, redundancies. Customer retention. Supplier retention. Specialist PR staff and specialist consultancy if required Based on Ralph Tench & Liz Yeomans, in Exploring Public Relations (2006) PR at various stages of the organisational lifecycle

112. Typical roles of a senior PR manager Moss, Newman and DeSanto, in Defining and redefining the core elements of management in public relations/corporate communications context: What do communication managers do? (2004) Problem solver2 trouble shooting, handling a range of internal and external challenges to the company Monitor and evaluator1 organising and tracking PR work Issues management expert4 intelligence gathering and analysis, monitoring external trends and recommending responses Communications technician5 technical tasks associated with the PR role Key policy & strategy advisor3 contributing to top management (a summary from 10 leading UK companies)

113. the communications manager vs. the communications technician

114. Modern company: raison d'être, systems theory and practical mechanics. 1 2 3 4 5 The Alpha & Omega of PR: reputation. The nuts and bolts: PR function inside the company. The world outside: environment, stakeholders and publics. PR in the works: strategic communications, issue management, CSR.

115. The future: welcome to the Reputation Economy Reputation Intelligence journal, vol. 2, issue 2, 2010 … the world where increasingly what you stand for is even more important than what you buy and sell … Reputation will be chronicled in the annual reports of a significant number of multinational companies by 2015. There will be a Chief Reputation Officer in an overwhelming majority of Fortune 500 companies by 2015. Companies will reorganize to focus on stakeholders, not channels or functions as is the case today. Stakeholders will demand more hands-on experience with the companies they are expected to support. Access to information will force companies to be more transparent than ever, and the only way to manage this will be by having a central person in charge.

116. Questions?

117. риторические инструменты* * в них можно заблудиться Stay in touch via: good luck! +380 50 312 02 44 valentin.boinitsky@gmail.com www.linkedin.com/in/boinitsky Thank you and

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