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Fundamental to the United States and its economic system, this is the seminal question CEOs are increasingly asking their PR professionals. The answer requires nothing less than a new PR worldview.
by John Paluszek, APR, Fellow PRSA
Jeffrey R. Immelt, CEO of General Electric Co., reflected for only a moment before answering Charlie Rose's provocative question: What is the central, overriding task of the CEO of a company like GE in this century?
It was early October 2003 during the PBS program "The Charlie Rose Show."
Immelt's answer was firm and focused: Fundamentally, Immelt said, the CEO must ask, "How do we fit into the world?"
He then elaborated in terms of products, technology, customer service and, most important, the velocity and direction of global change that is affecting his organization - and by implication, all organizations. He offered a striking example: the rapid evolution of 21st century China as a market and as a society.
The PR Canon and PortfolioTo help CEOs answer that question, PR professionals have to reflect on what our canon and portfolio - i.e., public relations' expanding body of knowledge and experience - can now offer. For, as Harold Burson, APR, Fellow PRSA, has so wisely observed, public relations has evolved over the decades from, essentially, delivering messages to counseling on policy, performance and communications. More and more, we are being asked, "What should the organization do?"
Today, that question is asked in relation to many publics and, increasingly, in many parts of the world. The question can only be answered through the development of reciprocal relationships inherent in "two-way symmetrical public relations." Fortunately, the PR profession is maturing to the point where it is developing resources that can help.
Three related recent initiatives are worthy of special attention:
The Public Relations Coalition is a partnership of 19 major U.S.-based organizations representing corporate public relations, investor relations, public affairs and related communications disciplines. In September 2003 it published a landmark study, "Restoring Trust in Business: Models for Action," which was included as a supplement to the Fall 2003 Strategist.
The study challenged Corporate America to do three things: adopt ethical principles, pursue transparency and disclosure in everything they do, and make trust a fundamental precept of corporate governance.
PRSA's International Professional Interest Section, in a series of international public affairs symposia, has undertaken the task of focusing PR professionals' attention on the international issues of this decade.
The International Section's most recent meeting, held at the United Nations headquarters in New York City last Dec. 4 and 5, featured 25 experts in public relations, journalism and foreign affairs discussing "Beyond War and Terrorism: Rebuilding Global Communication Links." (See Page 43 for more on the symposium.)
The Global Alliance for Public Relations and Communication Management manifests the universality of PR principles. The Alliance is an association of PR professional societies that, through direct and regional memberships, links such organizations in 60 countries in the Americas, Asia, Australia, Africa and Europe.
Representing some 150,000 professionals worldwide, the Alliance has adopted a global PR ethics code and is addressing universal PR Accreditation and the regulation of public relations by various governments. Of special importance to PR counselors is the Alliance program, just underway, to provide a global exchange of information on the rapidly evolving business model called, variously, "corporate social responsibility," "corporate citizenship" and "sustainable development."
The New Corporate Business ModelThe Global Alliance is one of many organizations with new or revised agendas that may help CEOs and their organizations withstand the perception of a tsunami of recent corporate scandals. Although the number of transgressors in the business community remains low, the weekly drumbeat of investigations, settlements, indictments, convictions and penalties involving CEOs, CFOs, auditors, investment bankers, financial analysts, mutual fund managers and currency traders has reduced public trust in business to a nadir not seen since the Great Depression.
In addition to endorsing the sound counsel on ethics and transparency offered by the Public Relations Coalition, many leading PR professionals are helping their organizations adopt a new business model, sometimes called "the triple bottom line," "stakeholder management" or "corporate social responsibility." This corporate model has been evolving for at least a decade and recently won ringing endorsements from many quarters. Examples include:
"Stakeholder value and shareholder value are converging." - Lise Kingo, executive vice president, Novo Nordisk. (Corporate Public Issues, October 2003)
"I believe in shareholder primacy. On the other hand, I firmly believe that, unless you are honest and take care of the other stakeholders in the business (employees, customers, suppliers and community) you will never create the profitability for your shareholders that you are required to under the law of fiduciary responsibility." - Charles Elson, director of the University of Delaware Center for Corporate Governance. (Across the Board, September/October 2002)
"With the fast-spreading commitment to corporate social responsibility, a case can be made that a fundamental new business model - one that respects stakeholder and shareholder values simultaneously - is evolving." (Report of The United Nations Global Compact Learning Forum, Berlin, 2002)
Last fall, three separate national surveys were conducted on corporate social reports. PRSA's survey, co-sponsored with Business for Social Responsibility, found that all 30 companies that reported issuing such reports will continue to do so, and, in 2004, will give greater emphasis to ethical codes and governance.
Another harbinger: the fast- growing and influential financial relations segment called "socially responsible investing," which William Greider, author of "The Soul of Capitalism," has called "the bow wave for a deep change in American consciousness." For example, a new group, the Investor Network for Climate Change, made up of some of the nation's largest pension funds, is pressing regulators, companies and Wall Street to pay more attention to the potential financial upheaval of climate risk.
How Does Corporate Social Responsibility Play Out on the Global Level? PR professionals advising top management may find valuable perspective on the situation by examining how capitalism has evolved in the last century. (Although perhaps more obvious in for-profit organizations, there are significant implications for nonprofits here as well. Hence, the newly formed PRSA Professional Interest Section, Strategic Social Responsibility, which seeks to bridge these communities).
In the United States, for example, the private sector's relationship with the public and its putative stewards in government have traveled a great distance from laissez-faire through the eras of the Progressives, Trustbusters and Muckrakers; the New Deal; the consumer and environmental movements of the 1960s and 1970s; up to contemporary demands for reforms in governance and globalization.
In each era, the perception of an imbalance of power, of social or economic injustice and of unfairness, swelled to a near breaking point. Prudent corporate leaders today see a similar groundswell - not only in the United States, but also in a wired global society - and are taking the initiative to address the situation.
Felix Rohatyn, former managing director of Lazard Freres and former ambassador to France, summed up in a Wall Street Journal article on Nov. 11, 2003, the difficult balance that must be achieved: "I am an American and an Atlanticist who believes in the United Nations and NATO. I am also a capitalist and believe that market capitalism is the best economic system ever invented; but it must be fair, it must be regulated and it must be ethical".
There's reason to hope that a new balance can be achieved. The late Michael Harrington, a lifelong socialist and author of "The Other America," reportedly offered a poignant, if reluctant, tribute to capitalists, his ideological opponents, before he died: "Capitalism's most daunting characteristic is its ability to co-opt the reforms, even the radical changes of the opponents of the system".
And, in perhaps the ultimate defense of private property, Lawrence Summers, president of Harvard University, quoted in a column by New York Times editorial columnist Thomas L. Friedman, reminds us that, "In the history of the world, no one has ever washed a rented car."
We may well be seeing the dawn of, in theologian Michael Novak's felicitous formulation, "Democratic Capitalism" - a time when "the people" participate increasingly not only as owners of private enterprise (as shareholders and bondholders), but also through organizations such as the proliferating nongovernmental organizations (NGOs) and new and old media. As such, they will have a greater role in forming public policy.
The Frontier: Poverty, Disease, Education, ResourcesThe frontier of corporate social responsibility is now emerging and extends well beyond the scope of the individual company. But the world, with its monumental problems, intrudes. It is now becoming a question of how world issues, such as poverty, disease, lack of education and resources, can be alleviated through participation by the private sector.
U.N. Secretary General Kofi Annan issued this century's challenge when, in 1999, he announced the formation of the U.N. Global Compact. (The group now comprises some 1,000 companies around the world who have pledged to adhere to nine Compact principles of operation involving the environment, human rights and labor rights.)
"Let us choose to unite the power of markets with the authority of universal ideals. Let us choose to reconcile the creative forces of private entrepreneurship with the needs of the disadvantaged and the requirements of the future," Annan said.
The questions for practical-minded business leaders are obvious: What is my organization's rightful share? What's the appropriate nature of our contribution? What difference can we make? Perhaps, even, where do we go to volunteer?
Yet there are already bold attempts at answers in what may be one of the greatest intellectual challenges of our time - balancing corporate stakeholder interests with those of society as a whole.
Hewlett-Packard has attempted this with its "Digital Village," in which the company invests personnel and product in less developed countries. The company's efforts help erode the digital divide while establishing the company's brand in emerging markets.
Visa, in association with the Foundation for International Community Assistance, is helping to empower "microloans" in Latin America and other parts of the world. Meanwhile, an international consortium of banks is beginning to implement its "Equator Principles" integrating environmental stewardship and socially responsible development into financing development.
Pharmaceutical companies - sometimes as partners with foundations and local NGOs - are offering generic and brand-name products at reduced prices to alleviate disease among the poor.
Activists (not necessarily a pejorative) always want more. Advocates for responsible globalization want fairer international trade. The recent breakdown of trade negotiations in Miami - following a similar collapse of World Trade Organization talks in Cancun, Mexico - illustrated, yet again, the chronic clash of national interests on steel, agricultural and textile tariffs as well as protection of intellectual property. The Miami failure thwarted hopes for an American hemispheric trade pact, "a NAFTA on steroids," as Austin Bunn described it in The New York Times Sunday Magazine on Nov. 16, 2003.
At the 21st annual Monetary Conference last Nov. 20, Federal Reserve Chairman Alan Greenspan, master aphorist ("irrational exuberance"), warned that "creeping protectionism" could undermine America's ability to support its huge international deficit.
The United States - Superpower in the SpotlightNowhere is the question, "How do we fit into the world?" being examined with more passion and diverse opinion than in the analysis of the rightful role of the United States in 21st-century global society. It would be far beyond the scope of this commentary to examine that question in anything approaching its totality, but some recently received wisdom from leading thinkers may well be relevant to our limited mission:
"There is a distinct link today between our defense posture, our overseas security posture, and the issue of corporate governance and the safety and protection of capital markets. Today, we need $1.5 billion a day coming in from overseas to finance our deficits. ... We cannot afford to lose the foreign investors just at a time when our deficits are getting bigger. In addition to which we're getting this foreign investment to fight wars from countries that don't want us to fight these wars." - Felix Rohatyn in Stern Business (New York University), 2003.
"It is vital for America to find the right role for itself. ... If we attempt to put ourselves above or outside the international system, we invite everyone else to do so as well." - Madeline Albright in her book "Madame Secretary."
"Everyone looks to the United States, for good or ill, and the question is, 'How does the United States respond?' I think there are competing impulses: ... respond with power... [or] respond with our strength - our moral leadership - which derives from our values embedded in the rule of law." - Harold Hongju Koh, Dean, Yale Law School (The New York Times, Nov. 11, 2003).
U.S. Public DiplomacyOne final PR entry on how America is now "fitting into the world" - the subject of public diplomacy. For several decades after World War II, America was represented abroad quite capably by the U.S. Information Agency (USIA). With the end of the Cold War, the government decided to fold USIA into the U.S. State Department. To many observers - including some of us who served on Harold Burson's USIA Private Sector Advisory Committee during the Reagan administration - this reorganization seemed to be a mistake. We have come to believe that since this reorganization, public diplomacy has not been central to this country's foreign relations policies.
There is some hope that this will change - that the opinions of audiences whose hearts and minds America hopes to win, or win over again - will be factored into the development of foreign policy. For example, the Bush administration's decision this past November to accelerate the transfer of control of Iraq to Iraqis appears to be somewhat based on opinion polls in that country.
Global InterdependencePerhaps a final, comprehensive response to the question of where we fit in the world was offered in the 1980s by a distinguished citizen of America and citizen of the world - Gen. Vernon Walters. After an outstanding military career, Walters represented the United States in many diplomatic assignments, touring the world and absorbing the essentials of its many cultures, religions and political institutions. He left us with advice that may provide a point of departure as we address the global challenges of the 21st century: "Let us work to make the world so economically interdependent that war will go out of style."
This article was adapted from a presentation at PRSA's International Professional Interest Section Symposium, "Beyond War and Terrorism: Rebuilding Global Communications Links," at the United Nations, New York City, Dec. 5, 2003.