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Communicating on public issues: The CEO's changing role
J a m e s F. F o x - - F a r l e y Manning L e c t u r e
Communicating On Public Issues: The CEO's Changing Role Many corporate public affairs directors look on the new breed of "out-in-the-arena" CEOs with a mixture of skepticism and excitement and, in some cases, alarm. No longer convinced that the inner sanctums of board rooms are the most effective places to be, a growing number of CEOs are taking the responsibility of being their corporatioii's-issues manager and chief spokesman. This type of philosophy and corresponding activity on tlre part of CEOs have raised the stakes for their public affairs counsel and have moved that relationship into a new reahn. In this Farley Manning Fellowship Address, James F. Fox urges public relations cormselors to seize tlte opportunities offered by this shift. Rather than being eclipsed by the emergence of tlre chief executive officer as corporate spokesman, Mr. Fox foresees the potential of strengthening the frequency and broadening the range of public relations" contributions to corporate strategies. Mr. Fox delivered this address to the PRSA Cormselors' Academy, May 10, 1982, in Colorado Springs, Colo. He is the chairman of Fox Public Relations, Inc., New York.
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n 1962, President John F. Kennedy called Roger Blough "a son of a bitch. ''~ By that single statement, he may have politicized American industry, changed the job description of the chief executive officer, and set the future course of public relations. In the past two decades we have witnessed the growing involvement of industry in the political process, the emergence of the chief executive officer as spokesperson and political activist, and observed a shift from communications to problem-solving and issues management in our o w n activity. Not without reason, these changes have created some anxiety--most of it u n w a r r a n t e d - - a m o n g those who call themselves "public relations specialists." To save the suspense, let me say that all the evidence is that chief executive officers are committed to involvement in the public policy process, and that to accomplish their objectives, they will turn to those best able to implement their strategies. If you have the skills, the knowledge, the creativity and the energy to perform, if you can relieve the pressure where it hurts, you have nothing to fear. The worst that can happen to you is a 1I
Public Relations Review
change in your title. If you lack these skills and are unable to develop them, you still can make a very good and honorable living, as most public relations people do, by continuing to deal in product publicity and media relations. I have filled a file drawer with information on public affairs and issues m a n a g e m e n t - - m u c h more than I can comment on today. The basis of what I do have to say comes from extensive reading in the information files of the American Management Association, the Conference Board, the Public Relations Society of America, the Public Affairs Council and the Committee for Economic Development. It comes from scores of informal interviews with corporate executives, intellectuals, and public relations professionals. Those parts that are not m y personal, subjective opinion (and there is a considerable amount of that), have been verified by a survey of executives of 60 of the nation's largest corporations. And what a remarkable survey that is! I sent a three-page questionnaire to 90 corporations. All but 30 responded, which itself is an indication of the interest in the subject. All but two of the respondents identified themselves, which they were not asked to do. More than half wrote letters discussing their programs and sent along instructive materials. There is one feature of the survey that should be of exceptional interest to you. The definitive, scientific analysis of public affairs is being undertaken 9by. the Futures Group of Boston University. 2 That survey is a study of corporations who are members of the Public Affairs Council--in other words, people who consider themselves to be in the public affairs business. My survey was among top staff executives who, throughout their careers have identified themselves, as for the most part, "public relations professionals." Moreover, whatever their current titles, they still identify enough with public relations to belong to the Public Relations Seminar or other elite groups that use the public relations label. The public relations people who answered m y questionnaire are not concerned about the future of their employment. They heavily endorse the public affairs/public issues movement. They do not see issues management as a separate function. It was in 1965 that Louis B. Lundborg, then chairman of the Bank of America, warned us at the PRSA Conference in Denver, "It's possible that the average public relations practitioner of today might be headed straight toward the junk heap of obsolescence unless he develops some new and creative ideas about his place in our society." Lundborg's background was public relations. The historians can trace business involvement in government back to Alexander Hamilton, through the 19th century, and forward into this one. But, consider that the company now called Exxon3 did not have a public relations department until the mid-30s. Du Pont had no such activity until 1934, and the department did not come into existence until 1938. In the late '40s, the leading management consulting firms refused to recognize public relations as a function on the organization charts they were drawing. While 12
CEO's Changlng. R o l e the development of public relations and its widespread growth just after World War II was caused, at least in part, by management's desire to win public support as a barrier against government intervention, the kind of chief executive involvement that characterizes public affairs activity today is a more recent phenomenon. Glen Perry 4 tells me that w h e n he joined the Du Pont Company in the fall of 1944, "'Walter Carpenter was president and the principle of ultimate public responsibility lying in the president's hands was firmly established.'" It was Du Pont that first demonstrated the credibility of the chief executive officer in Washington. The government had charged that Du Pont had conspired to control General Motors and U.S. Rubber, companies in which it held a substantial stock interest. The court ordered the company to distribute those shares to its stockholders. Under the existing law, that distribution would be taxed as ordinary income. The problem Du Pont faced was to persuade a Democratic Congress to pass special legislation to permit the distribution as a return on capital. Crawford Greenewalt, president of Du Pont, travelled to Washington and called on every member of the Senate, unaccompanied by lawyers, lobbyists or public relations people. He also made contact with all the important leaders of the House. Glen recounts an amazing true story of the result: "'An official of the U.S. Chamber of Commerce was walking through the Congressional halls one day w h e n he encountered the Speaker, who stopped him with the observation that he had just had a unique experience: The president of Du Pont Company had called to see him in regard to a problem that could only be solved by legislation. " 'In all my years in Congress," he said, 'this is the first time the head of a big company came to see me. Not a lobbyist, or a lawyer, or a rack---the top man. He sat d o w n and explained the situation. He convinced me, and I am on my way right now to ask the chairman of the Rules Committee to do something for those people.' "The legislation passed, and the stockholders of Du Pont got fair treatment. They could have never done it had not Crawford Greenewalt unhesitatingly taken up a public relations responsibility and seen it through. ''S This classic example of the importance of the CEO in political relationships set the pattern for the operations of the Business Roundtable, which, of course, did not then exist. Public affairs, as we know it today, had its beginnings in the early "60s. Executive interest in identifying emerging issues and responding formally to them developed in the '70s, a period of immense growth in government regulation. It is m y thesis that the chief executive officer has been politicized. At a minimum, he has become a spokesperson on issues of public policy that are relevant to his company. In some instances, he has become a political activist, more directly involved in the political process. A growing amount of executive time is being devoted to public policy matters. The changes are subtle. They deal with the intensity and breadth of involvement; they deal with the order of priorities; they deal with individual company initia13
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tives rather then dependence on leadership groups, although I can foresee a n e w growth of industry associations. These changes are documented in the several studies that the Conference Board 6 has conducted among public affairs specialists and corporate executives. PR ReporteFhas published annual surveys over 17 years that confirm the trend. The changes are verified by studies conducted by Howard Chase, 8 in which executives say that they now spend as much as 50 percent of their time on external affairs--social responsibility programs, issues management, government relations, regulatory matters, spokesmanship, media contacts--the entire broad range of activities that come under the public relations/public affairs label. Not too long ago, it was only 10 percent. Several observers, including the executives themselves, believe that chief executive officers may well be selected in the future for their ability to handle the spokesmanship role? When President Kennedy publicly denounced Roger Blough, then head of the United States Steel Corporation, he was an angry, frustrated president. U.S. Steel had announced a price increase as a follow-up to a wage settlement, which the U.S. government had helped to negotiate. The President unleashed all the forces of the U.S. government against Blough and forced U.S. Steel and the companies which had followed its lead to withdraw the increase.
Every President since has been just as frustrated by the failure of industry to actively support the government's fiscal and monetary policies directed against inflation. But the incidents of those few days in 1962 may well mark the beginning of the corporate public affairs movement. The Effective Citizens Organization (ECO), which was to become the Public Affairs Council, was an early manifestation of business interest in politics. It was formed in the mid-50s. By 1960, Ford Motor Company and some other large industrial corporations were urging their employees to make political contributions on a nonpartisan, non-issue basis. These requests were forerunners of the activities of today's Political Action Committees (PACs). Chase Manhattan Bank adopted a program based heavily on Ford's experience and urged it on the bank's big industrial customers. The idea of a businessman and a politician knowing each other and talking over their mutual interests was a strange, if not alien, idea at the time. But it was Roger Blough who was to advocate political action, in the tradition of Crawford Greenewalt. Blough was a man of great gentleness, intelligence and dignity. He did not react quickly. He even made several conciliatory speeches advocating cooperation with government. He said at the time that he knew nothing of politics and was surprised at Kennedy's reaction. After a period of gestation, Blough became a prime mover in the organization of two seminal committees which sought to defeat the common-site picketing law and to control growing plant construction costs. 14
CEO's C h a n g i n ~ R o l e The significance of these developments is that in 1973 these two groups merged to become the Business Roundtable, heralding a new era in business/government-relations. For the first time, corporate leaders, joining forces, developed workable strategies for influencing public policies. While the Business Roundtable was discovering the power of carefullyresearched position papers and of direct contact between top executives and legislators, two other developments were taking place. One was the emergence of something called "Futures Studies," largely a product of the "think tanks" of the post-World War II era. While futures research overall has either been discredited or rejected as a useful tool for policymakers, certain techniques of the futurists are now well embedded in the public affairs programs of large corporations and business associations. General Electric was a pioneer in issues analysis, findings which Bob Fegley and Ian Wilson 1~have shared with us. The Institute of Life Insurance created the Trends Analysis Report (TAP) which is a system of monitoring issues. Graham T. Molitar, then a consultant to General Mills and now president of Public Policy Forecast, Inc., Potomac, Md., developed and applied the theory of early warning signs and leading indicators. In the early "60s, Dr. James Bright spoke to the Public Relations Seminar on long-range strategic planning, emphasizing the emerging practice of the management of technological change. W. Howard Chase, alone among the several score public relations professionals who heard Bright's speech, acted on it. With Bright as a resource, Chase began advocating the management of change in economic, social and political matters. Thus, today we have three forces at work which are shaping the future of what we do: 9 The identification and tracking of issues within corporate staff before legislation is proposed; 9 The formulation of corporate policies and communication of these policies to modify or forestall restrictive legislation--the management of industry's response to change; 9 The emergence of the chief executive officer as corporate spokesperson, as exemplified by members of the Business RoundtabIe, and the assumption by chief executives of responsibility for direct involvement in public policy issues. Twenty years ago, an executive might be an active speaker without being a spokesman. Although his speech might be on a subject of national or industrial interest, his purpose most likely was to establish a personal reputation as an industry leader or to position his company as an informed citizen. Many were full of broad generalizations attacking labor or government, labor leaders or politicians. They were personal opinions strung together with little or no supporting evidence. As I see it, the attributes of a spokesmanship program today are these: 9 Issues and trends are analyzed. 15
Public Relations Re~iew 9 Positions are taken on the issues rationally, not emotionally. One result of this is that industry leaders may take uncommon positions, such as, the Quaker Oats Company's split with its industry's position on children's TV advertising. 9 The spokesman deals with ideas, not personalities. He restricts himself to issues that are important to his industry and his company. 9 The spokesman offers information and evidence, not personal opinions, to make his argument. 9 The spokesman does not accept random speaking dates or media appearances offered to him unless, by chance, they accommodate his strategy. Rather, he seeks out specific platforms that suit his purposes. 9 His activity is part of a planned, overall, communications strategy that may include advertising, public relations, government relations, lobbying films, books, and other communications techniques. Some executives go beyond the spokesmanship role to direct political action. They may be willing to make public pronouncements on broad public issues; however, in most cases today, executives interested in broader issues work anonymously through leadership groups such as the National Association of Manufacturers (NAM) and the U.S. Chamber of Commerce or business associations. It would be an error to say that the forces I have described are the only ones that have shaped the corporate communications world of 1982. Similarly, it would be a mistake to believe that these new practices are universal. The bellwether companies were Du Pont, General Electric, Exxon, General Motors, and AT&T, followed by Rexnord, Allstate Insurance, Sears Roebuck and others. The expansion of the Public Affairs Council's membership, the rapid growth of the Public Affairs section of PRSA, and the response to the formation of the Issues Management Association indicate that we are talking about several hundred companies today. One observer foresees 2,000 corporations with issues managers by 1990. We now are talking about only a few hundred companies, but we may be talking in terms of a high percentage of the nation's industrial wealth, since we know that the 500 largest industrial corporations control nearly 70 percent of industrial assets, the 50 largest banks hold 60 percent of commercial bank deposits and the 50 largest life insurance companies have 78 percent of all life insurance assets." Based on m y research, and particularly the statistical studies by the Conference Board, 12along with the responses I received to my own survey, I have come to some conclusions about the current state of.a~0~rs.
We are not engaged in "internecine foolishness," but we do have a semantic dilemma, with blurred definitions of public relations, public affairs, corporate communications, issues management, external relations and the like. This semantic problem bears not one whit on what we do, on the survival of your firm, on the future of corporate public relations specialists, or on your individual future. 16
CEO's Changing Role
Richard Armstrong, president of the Public Affairs Council, 1~ observes that "there has been continuous--and often fruitless--discussion about distinctions between public relations and public affairs . . . . It is unfortunate that so m u c h time and energy has been wasted in pointless discussion." I hope you agree with him, as I do. Many years ago a very wise man, Milton Fairman ~ said, "Public relations is what a public relations person does." And so, public affairs is what a public affairs person does. Much of it may be public relations, and vice versa. Twenty years ago, Edward T. (Hap) Hetzler (then vice president for public relations of Bankers Trust Company of New York), Lewis Lapham (vice chairman of the Board), and I had several discussions about the role of the chief executive in public relations. What we concluded--and it became the subject of a speech by Lapham to the Bank Marketing Association--is that public relations is the responsibility of the chief executive officer. He delegates reluctantly--and gingerly--and it is the last function he will delegate. In a crisis, he is apt to draw it back to the executive suite. At least one corporation has spelled it out in the corporate by-laws. ~3 An academic, a Jesuit, says "there is no such function," that public relations is "an interest" of management. Jack O'Dwyer has aptly called it "this group of disciplines" with which we work.
This group of disciplines with which we work is the responsibility of the chief executive officer and ours is a staff role. It is a lesson that some public relations specialists have found hard to accept. They seem to feel, as Carl Sandburg 16would have put it, that public relations is a little gray mouse that you can put in the pocket of your blouse and take home with you and in the quiet of your room you can bring it out and look at it from time to time. Corporate executives have repeatedly told the Conference Board that they acknowledge this responsibility. It is also acknowledged by the respondents to m y survey. Business has found its voice, and the voice is that of the chief executive officer. Executives whose backgrounds were in public relations are not barred from becoming the executive in charge of public affairs and public policy. In fact, many of the most capable head departments that include the various disciplines, even w h e n the department name has been changed to public affairs, corporate communications or some other umbrella term. The majority of the respondents to my survey, mostly executives who were once in charge of public relations, have not been submerged, even when the function labeled "public relations" has been. Their duties are expanding, not contracting. However, they not only recognize the supremacy of the chief executive officer but know that they are engaged in providing counsel and assistance. Further, and this is important, they recognize that they share these staff operations with others. 17
Public Relations Review
The disciplines we are talking about are shared mainly with lawyers, government relations experts and lobbyists. Since most of the issues involved are legislative issues, do you wonder that lawyers play a central role? A public affairs officer, unless he himself is a lawyer (and many are) would be foolish to ignore the legal aspects of this work. Whatever the relationships of the past, there should be no interpersonal problems with lawyers today on the substance of what we are doing. Richard A. Givens, a member of a prestigious New York law firm and former director of the New York region of the Federal Trade Commission, has written a book for lawyers called Advocacy ~7 in which he says lawyers must be advocates to the public as well as to the courts in corporate matters. Study the book. His lessons in advocacy are ones public relations professionals, too, can apply. Givens says wisely that "Decision making tends to be concentrated in those with the great input into the decisions, usually those at the center." I might observe that the CEO sits at the top of an information pyramid. These disciplines are also shared with social and political scientists, futurists, consumer advocates, economists, planning experts and others. These people share the responsibility for monitoring, analyzing, counseling and communicating. The function is also shared with line m a n a g e m e n t - and that includes line management all the way to the plant manager level. In fact, many companies depend on line management to identify the issues that concern them, rather than having them suggested by a staff "'braintrust.'" An increasing number of companies have organized public issues committees which cut across several department lines. The executive in charge of the function may or may not serve as chairman of the committee. The idea is that the input should come from those who have knowledge or whose business will be affected. Others have "Committees of the Board." There may be as many as 200 such committees in existence, with various labels ranging from "Social Responsibility Committee" to "Public Policy Committee." Jim Bowling of Phillip Morris, who is a director of his company and chairman of his company's board committee, believes placing it at the board level is essential. TM Everyone in m y survey agreed that the buck stops with the CEO, but no one said that the decisions on public policy issues are made independently. The CEO is most likely to make decisions based on recommendations from his public relations or public affairs advisor, frequently (but not in the majority of cases) with participation from legal. A few companies do not lobby, but the majority of them do, directly at the Federal level and through business associations. A slightly smaller number lobby at the state and local levels and with government agencies. To me, one of the surprising findings of the survey is that communication on public issues is directed primarily to members of management. I gather this is because they are frequent spokesmen, both on the platform and in 18
CEO's C h a n g i n g R o l e informal situations. Next in importance is the employee audience and, third, the stockholders. Only a few companies reported that policies are changed, that corporate objectives are changed, or that the company's systems of rewards and penalties are changed, as a result of the analysis of public issues. Most of the respondents reported that once a position is taken on an issue of public policy, it is unlikely to be communicated to the general public. Some said that it could be misunderstood. Others considered it of interest only to influence leaders. When it is the policy to communicate publicly, the most likely m e d i u m used is newspaper publicity, and this frequently is in the nature of a report or a speech. Other tools of communication used are issues advertising, radio-TV, films, booklets, seminars, speeches, interviews, newsletters, company publications to customers, dealers, employees, trade magazines, video tapes, and Congressional testimony. Others reported using audits, community participation and grass roots work at the plant level. There is a widespread use of monitoring and issues analysis in the companies w h o responded to m y survey. These are the companies who have formal programs to deal with public policy issues--about half the respondents. But, many companies use more casual techniques and, until now, have found them adequate. Most frequently, issues are researched by the public relations department. In other cases, there is input from operating management, counsel by agencies, 'the Washington office, trade associations, legal, and in a significant number of instances, by interdepartmental committees. Most of the respondents agreed that the interest of corporations in interceding in issues of public policy is growing rapidly, in the very high area of 80 percent. Four said, yes, it is growing, but gradually. A few who dissented commented that it was a phenomenon of the '70s, or that the motivation had passed with the arrival of Ronald Reagan. Those who voted for rapid growth have on their side the Conference Board studies and the reports of the Public Affairs Council and the Issues Management Association. My final question was critical. It asked, "Will it be a function of the public relations department?" A large number of respondents--about half--said flatly that it would stay in public relations. Another group of equal size gave a qualified "yes" or said that the function would be shared. The remainder gave a variety of answers: "a new department" to "CEO,'" "government affairs" and "'legal." Keeping in mind that most of the respondents are public-relations oriented, they show no signs of anxiety. Even w h e n the actual work is done in other departments, m a n y of these respondents appear to see public relations serving as the "'catalyst." What, then, of the public relations counsel? There are m a n y indications that corporate executives find it more difficult to use outside public relations counsel to carry out these new programs
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than was true with traditional public relations tasks. On the other hand, Harold Burson has reported 19 signs that corporate executives are using public relations firms to execute specific projects; some, faced with the higher corporate salaries, are turning more heavily to the counselors for broad programs. Bob Fegley has written 2~ that if the CEOs are changing, then public. relations practitioner, too, must be intellectually broader, more articulate, able to find more solutions to social concerns, and politically sophisticated, If they do their homework, there is no question in my mind that they can continue to prosper. In the first place, a consultant need not be concerned about the semantics. Public relations services are whatever services he or she offers. There is an endless assortment of possible tasks: training for staff and line management, organization and planning, intelligence services, issues scanning, lobbying, recommending policy changes, speechwriting, economic education programs, newsletters, issues advertising, and, of course, media relations. Recently, there have been three developments that deserve close attention. One is the formation of the Issues Management Association. 2~Its stated purpose is "'To serve as a national and international association to encourage the development and exchange of the state-of-the-art theory and practice in issues management." I endorse the Association; I have joined. It should not go unobserved that the Issues Management Association is not an association of public relations people, or even of corporate people. The second development is the publication last January of Corporate Performance: The Key to Public Trust by Francis W. Steckmest. z~Observe that the book was written with a resource and review committee and for the Business Roundtable. It may not quite be the Silent Spring of public relations, nor a manifesto for public affairs, but it is apt to be one of the most influential books on public affairs yet to appear, simply because of its sponsorship. Steckmest has performed a monumental task; public relations consultants will not be informed until they read it. The third development is the publication of Business Pozoer and Public Policy, by Dr. Alfred C. Neal. z3 Dr. Neal was president of the Committee for Economic Development from 1956 to 1976. These three events underscore for me a statement made by Rep. Alfred Gore, Jr. of Tennessee: "Things have reached the point where the process of change itself is the challenge." Just w h e n we are settling nicely into the concepts of issues management and corporate intervention in public policy matters, along comes Dr. Neal, who questions the political activism of corporations. He finds it dangerous and apt to be counterproductive. He observes that corporate power is concentrated in a few hundred individuals, a group that Washington would find it practical to consult. Consultation can make business executives part of the solution, rather than part of the problem, as Kennedy found and 20
CEO's C h a n g i n g . R o l e Reagan is finding them to be. Since corporations have the power to make or break the government s anti-inflation policies, Neal is recommending a consultative relationship between the two, on its own and as an alternative to political activism. His is an idea that is being discussed today in board rooms. I suggest that public relations counsel read the book before their clients do. In a letter following a discussion at his office, Dr. Neal took exception to several points in the outline for this speech. First, he observed that I had not raised the question of working within leadership organizations. It was a pointed observation. I had not raised it because of a personal conclusion that such organizations have been losing ground to internal corporate activities. I was wrong. Most of the respondents to m y survey continue to work with such groups, particularly on highly controversial issues and issues that are broader than the corporation's direct interests. I predict that these organizations will have a resurgence as the costs of public affairs/issues analysis programs grow. Dr. Neal found passive and negative the idea of issues management to "modify or forestall restrictive legislation" (the words I had used). His suggestion: "Since legislation includes taxes and other costly matters, don't you need additional objectives: to obtain public policy, including regulation and taxation, that will secure results that represent the common objectives of industry and government?" Finally, Dr. Neal believes we have a need to draw a vision of the future that tells what our achievements can be--if we do the right things. Dr. Neal's observations make it clear to me that it would be unfortunate if any of us, watching the developments of the past decade in our field of work, were to conclude that evolution stops here. The challenge for all of us is the process of change, just as it is for America's greatest institutions. Both m y wife and I like to obey The Law of Contrary Opinion. That law dictates that one should follow exactly the opposite of what the public or the majority consider the correct, wise or popular course. To illustrate, that law would have screamed to you that when the public was loading up with gold, the smart money was moving out. Some, like Dr. Neal, may have contrary opinions. Even if one agrees with the corporate political moves, one ought to have no illusions about politics.
The Wall Street Journal on November 17, 1981, reported the pending expropriation of the Rothschild b a n k - - t h e wealth and holdings of the famfly--by France's new socialist government. The paper observed that "not withstanding the family's great wealth and a history in France that dates to the early 19th century, including a long-celebrated reputation for generous support of cultural and philanthropic causes, the Rothchilds remain highly vulnerable to the political winds of fortune." I hope no American executives missed the somber implication of that observation. Nor should those who counsel them. 21
Public Relations Re~iew References 1See Kennedy by Theodore C. Sorensen, Harper, New York, 1965. "It was at this time," reports Sorensen, "that Kennedy said his father had told him that 'all steel men were sonsof-bitches, but I never realized until now how right he was.' " There are other versions of the story. This one is quoted by L.L.L. Golden in Only By Public Consent--American Corporations Searchfor Favorable Opinion. Hawthorn, New York, 1968. The book contains a full account of the U. S. Steel encounter with the Kennedy administration. Golden also describes the public relations operations of AT&T, Du Pont, Jersey Standard, and General Motors. 2A detailed report of the findings of this study to date appears in PublicAffairs Review, 1982, published by the Public Affairs Council. 3Golden on Jersey Standard and Du Pont, op. cit. 4Letter to the author from Glen Perry, former vice president-public relations of Du Pont. 5Golden, op. cit. 6The relevant publications of the Conference Board are: Political Activism: The Chief Executive's Role, IB 71 Business Involvement With Local Government, IB 30 Develophzg EmployeePolitical Awareness, IB 80 The Chief Executive and His Job, 214 Private Enterprise Looks at Its hnage, 526 Managing CorporateExternal Relations, 679 Business Credibility: The Critical Factors, 701
Business~Government Partnership in Local Economics DevelopmentPlanning, 704 The Future Role of Business in Society, 710 Action Plans for Public Affairs, 733 Planning Under Uncertainty, 741 "Redefining Corporate-FederalRelations, 757 The Business of Issues, 758 Regulatory Programsand Regulatory Reform, 769 Polities and the CorporateChief Executive, 777 U. S. Business Leaders:A Study of Opinions and Characteristics, 786 Assessing the Political Environment, 794 Guidelines for Managing CorporateIssues Programs, 795 Managerial Competence:The Public Affairs Aspects, 805 rI'he most recent was in late 1981. ~Felephone conversation with Howard Chase. Others make similar statements. Obviously, the figures are not exact, but the trend is unmistakable. 9Such observations appear in the Conference Board studies, and in several speeches by Business Roundtable leaders. Interestingly, the farther down the executive ladder, the less the agreement with this premise. ~~ work has been reported in private documents he has made available to public relations people, but see "Business and the Future: Social Challenge, Corporate Response" in The Next 25 Years, published by The World Future Society, Washington, D.C. 1975. UAlfred C. Neal, Bushzess Power and Public Policy. New York: Praeger Publishers, 1981. 12See the Conference Board studies listed in Reference 6. ~3The statement is taken from a pamphlet titled '.'The Public Affairs Council, 1982." It is my assumption that Armstrong wrote it. ~4Milton Fairman was vice president for public relations of the Borden Company. He was a past president of PRSA. ~sSee Golden's account of U. S. Steel op. cit. ~6The words are a paraphrase from Carl Sandburg's poem, "Little Word, Little White Bird." ~rRichard A. Givens, Advocacy: The Art of Pleading a Case, Colorado Springs: Shepard's/ McGraw-Hill, 1980. ~8"Managing Public Affairs: New Dimensions," speech by James C. Bowling, Public Affairs Conference of the Conference Board, January 15, 1981. Reprint available from Corporate Relations, Phillip Morris, Inc., 100 Park Avenue, New York, N.Y. 10017.
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CEO's C h a n ~ i n ~ R o l e 19Thecomments were made in a speech to the New York Chapter, PRSA and reported in the Chapter Bulletin and by O'Dwyer. 2~ L. Fegley, "When Your Chief Executive Goes Public." Public Relations Quarterly, Summer 1979. 21Forinformation write to Ray Ewing, Allstate Plaza North, F-3, Northbrook, Ill. 60062. A report on the association's first membership meeting appears in Corporate Public Issues, April 15, 1982. Z~Francis W. Steckmest, Corporate Performance: The Key To Public Trust. McGraw-Hill, New York, 1982. 23Neal, op. cit.
Editorial Rex~ew Committee Robert L. Bisl~op, University of Georgia John E. Bowes, University of Washington Glen Broom, San Diego State University Allen H. Center, San Diego State University Hugh M. Culbertson, Ohio University Scott M. Cutlip, University of Georgia .William P. Ehling, Syracuse University William R. Faith, University of Southern California James E. Grunig, University of Maryland Carl F. Hawver, Parker Nash & Associates Michael B. Hesse, University of Alabama Frank B. Kalupa, University of Georgia Philip Lesly, The Philip Lesly Company Walter K. Lindenmann, Hill & Knowlton, Inc. Adolph Mayer, University of Denver Douglas Ann Newsom, Texas Christian University Carol Oukrop, Kansas State University F. John Pessolono, Council in Public Relations & Public Affairs Marion K. Pinsdorf, INA Corporation Betsy Ann Plank, Illinois Bell John C. Pollock, Research & Forecast, Inc. Kenneth H. Rabin, E. R. Squibb & Sons, Inc. John G.N. Rushbrook, Phillips Petroleum Company Raymond Simon, Utica College of Syracuse University Kenneth Owlet Smith, University of Southern California Leonard J. Snyder, San Francisco State University Carlton E. Spitzer, Spitzer Associates William B. Toran, Ohio State University Judy Van Slyke, Syracuse University James K. VanLeuven, Washington State University Francis E. Walsh, University of Texas at Austin Dennis L. Wilcox, San Jose State University Frank W. Wylie, California State University at Los Angeles
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Communicating On Public Issues: The CEO's Changing Role Many corporate public affairs directors look on the new breed of "out-in-the-arena" CEOs with a mixture of skepticism and excitement and, in some cases, alarm. No longer convinced that the inner sanctums of board rooms are the most effective places to be, a growing number of CEOs are taking the responsibility of being their corporatioii's-issues manager and chief spokesman. This type of philosophy and corresponding activity on tlre part of CEOs have raised the stakes for their public affairs counsel and have moved that relationship into a new reahn. In this Farley Manning Fellowship Address, James F. Fox urges public relations cormselors to seize tlte opportunities offered by this shift. Rather than being eclipsed by the emergence of tlre chief executive officer as corporate spokesman, Mr. Fox foresees the potential of strengthening the frequency and broadening the range of public relations" contributions to corporate strategies. Mr. Fox delivered this address to the PRSA Cormselors' Academy, May 10, 1982, in Colorado Springs, Colo. He is the chairman of Fox Public Relations, Inc., New York.
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n 1962, President John F. Kennedy called Roger Blough "a son of a bitch. ''~ By that single statement, he may have politicized American industry, changed the job description of the chief executive officer, and set the future course of public relations. In the past two decades we have witnessed the growing involvement of industry in the political process, the emergence of the chief executive officer as spokesperson and political activist, and observed a shift from communications to problem-solving and issues management in our o w n activity. Not without reason, these changes have created some anxiety--most of it u n w a r r a n t e d - - a m o n g those who call themselves "public relations specialists." To save the suspense, let me say that all the evidence is that chief executive officers are committed to involvement in the public policy process, and that to accomplish their objectives, they will turn to those best able to implement their strategies. If you have the skills, the knowledge, the creativity and the energy to perform, if you can relieve the pressure where it hurts, you have nothing to fear. The worst that can happen to you is a 1I
Public Relations Review
change in your title. If you lack these skills and are unable to develop them, you still can make a very good and honorable living, as most public relations people do, by continuing to deal in product publicity and media relations. I have filled a file drawer with information on public affairs and issues m a n a g e m e n t - - m u c h more than I can comment on today. The basis of what I do have to say comes from extensive reading in the information files of the American Management Association, the Conference Board, the Public Relations Society of America, the Public Affairs Council and the Committee for Economic Development. It comes from scores of informal interviews with corporate executives, intellectuals, and public relations professionals. Those parts that are not m y personal, subjective opinion (and there is a considerable amount of that), have been verified by a survey of executives of 60 of the nation's largest corporations. And what a remarkable survey that is! I sent a three-page questionnaire to 90 corporations. All but 30 responded, which itself is an indication of the interest in the subject. All but two of the respondents identified themselves, which they were not asked to do. More than half wrote letters discussing their programs and sent along instructive materials. There is one feature of the survey that should be of exceptional interest to you. The definitive, scientific analysis of public affairs is being undertaken 9by. the Futures Group of Boston University. 2 That survey is a study of corporations who are members of the Public Affairs Council--in other words, people who consider themselves to be in the public affairs business. My survey was among top staff executives who, throughout their careers have identified themselves, as for the most part, "public relations professionals." Moreover, whatever their current titles, they still identify enough with public relations to belong to the Public Relations Seminar or other elite groups that use the public relations label. The public relations people who answered m y questionnaire are not concerned about the future of their employment. They heavily endorse the public affairs/public issues movement. They do not see issues management as a separate function. It was in 1965 that Louis B. Lundborg, then chairman of the Bank of America, warned us at the PRSA Conference in Denver, "It's possible that the average public relations practitioner of today might be headed straight toward the junk heap of obsolescence unless he develops some new and creative ideas about his place in our society." Lundborg's background was public relations. The historians can trace business involvement in government back to Alexander Hamilton, through the 19th century, and forward into this one. But, consider that the company now called Exxon3 did not have a public relations department until the mid-30s. Du Pont had no such activity until 1934, and the department did not come into existence until 1938. In the late '40s, the leading management consulting firms refused to recognize public relations as a function on the organization charts they were drawing. While 12
CEO's Changlng. R o l e the development of public relations and its widespread growth just after World War II was caused, at least in part, by management's desire to win public support as a barrier against government intervention, the kind of chief executive involvement that characterizes public affairs activity today is a more recent phenomenon. Glen Perry 4 tells me that w h e n he joined the Du Pont Company in the fall of 1944, "'Walter Carpenter was president and the principle of ultimate public responsibility lying in the president's hands was firmly established.'" It was Du Pont that first demonstrated the credibility of the chief executive officer in Washington. The government had charged that Du Pont had conspired to control General Motors and U.S. Rubber, companies in which it held a substantial stock interest. The court ordered the company to distribute those shares to its stockholders. Under the existing law, that distribution would be taxed as ordinary income. The problem Du Pont faced was to persuade a Democratic Congress to pass special legislation to permit the distribution as a return on capital. Crawford Greenewalt, president of Du Pont, travelled to Washington and called on every member of the Senate, unaccompanied by lawyers, lobbyists or public relations people. He also made contact with all the important leaders of the House. Glen recounts an amazing true story of the result: "'An official of the U.S. Chamber of Commerce was walking through the Congressional halls one day w h e n he encountered the Speaker, who stopped him with the observation that he had just had a unique experience: The president of Du Pont Company had called to see him in regard to a problem that could only be solved by legislation. " 'In all my years in Congress," he said, 'this is the first time the head of a big company came to see me. Not a lobbyist, or a lawyer, or a rack---the top man. He sat d o w n and explained the situation. He convinced me, and I am on my way right now to ask the chairman of the Rules Committee to do something for those people.' "The legislation passed, and the stockholders of Du Pont got fair treatment. They could have never done it had not Crawford Greenewalt unhesitatingly taken up a public relations responsibility and seen it through. ''S This classic example of the importance of the CEO in political relationships set the pattern for the operations of the Business Roundtable, which, of course, did not then exist. Public affairs, as we know it today, had its beginnings in the early "60s. Executive interest in identifying emerging issues and responding formally to them developed in the '70s, a period of immense growth in government regulation. It is m y thesis that the chief executive officer has been politicized. At a minimum, he has become a spokesperson on issues of public policy that are relevant to his company. In some instances, he has become a political activist, more directly involved in the political process. A growing amount of executive time is being devoted to public policy matters. The changes are subtle. They deal with the intensity and breadth of involvement; they deal with the order of priorities; they deal with individual company initia13
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tives rather then dependence on leadership groups, although I can foresee a n e w growth of industry associations. These changes are documented in the several studies that the Conference Board 6 has conducted among public affairs specialists and corporate executives. PR ReporteFhas published annual surveys over 17 years that confirm the trend. The changes are verified by studies conducted by Howard Chase, 8 in which executives say that they now spend as much as 50 percent of their time on external affairs--social responsibility programs, issues management, government relations, regulatory matters, spokesmanship, media contacts--the entire broad range of activities that come under the public relations/public affairs label. Not too long ago, it was only 10 percent. Several observers, including the executives themselves, believe that chief executive officers may well be selected in the future for their ability to handle the spokesmanship role? When President Kennedy publicly denounced Roger Blough, then head of the United States Steel Corporation, he was an angry, frustrated president. U.S. Steel had announced a price increase as a follow-up to a wage settlement, which the U.S. government had helped to negotiate. The President unleashed all the forces of the U.S. government against Blough and forced U.S. Steel and the companies which had followed its lead to withdraw the increase.
Every President since has been just as frustrated by the failure of industry to actively support the government's fiscal and monetary policies directed against inflation. But the incidents of those few days in 1962 may well mark the beginning of the corporate public affairs movement. The Effective Citizens Organization (ECO), which was to become the Public Affairs Council, was an early manifestation of business interest in politics. It was formed in the mid-50s. By 1960, Ford Motor Company and some other large industrial corporations were urging their employees to make political contributions on a nonpartisan, non-issue basis. These requests were forerunners of the activities of today's Political Action Committees (PACs). Chase Manhattan Bank adopted a program based heavily on Ford's experience and urged it on the bank's big industrial customers. The idea of a businessman and a politician knowing each other and talking over their mutual interests was a strange, if not alien, idea at the time. But it was Roger Blough who was to advocate political action, in the tradition of Crawford Greenewalt. Blough was a man of great gentleness, intelligence and dignity. He did not react quickly. He even made several conciliatory speeches advocating cooperation with government. He said at the time that he knew nothing of politics and was surprised at Kennedy's reaction. After a period of gestation, Blough became a prime mover in the organization of two seminal committees which sought to defeat the common-site picketing law and to control growing plant construction costs. 14
CEO's C h a n g i n ~ R o l e The significance of these developments is that in 1973 these two groups merged to become the Business Roundtable, heralding a new era in business/government-relations. For the first time, corporate leaders, joining forces, developed workable strategies for influencing public policies. While the Business Roundtable was discovering the power of carefullyresearched position papers and of direct contact between top executives and legislators, two other developments were taking place. One was the emergence of something called "Futures Studies," largely a product of the "think tanks" of the post-World War II era. While futures research overall has either been discredited or rejected as a useful tool for policymakers, certain techniques of the futurists are now well embedded in the public affairs programs of large corporations and business associations. General Electric was a pioneer in issues analysis, findings which Bob Fegley and Ian Wilson 1~have shared with us. The Institute of Life Insurance created the Trends Analysis Report (TAP) which is a system of monitoring issues. Graham T. Molitar, then a consultant to General Mills and now president of Public Policy Forecast, Inc., Potomac, Md., developed and applied the theory of early warning signs and leading indicators. In the early "60s, Dr. James Bright spoke to the Public Relations Seminar on long-range strategic planning, emphasizing the emerging practice of the management of technological change. W. Howard Chase, alone among the several score public relations professionals who heard Bright's speech, acted on it. With Bright as a resource, Chase began advocating the management of change in economic, social and political matters. Thus, today we have three forces at work which are shaping the future of what we do: 9 The identification and tracking of issues within corporate staff before legislation is proposed; 9 The formulation of corporate policies and communication of these policies to modify or forestall restrictive legislation--the management of industry's response to change; 9 The emergence of the chief executive officer as corporate spokesperson, as exemplified by members of the Business RoundtabIe, and the assumption by chief executives of responsibility for direct involvement in public policy issues. Twenty years ago, an executive might be an active speaker without being a spokesman. Although his speech might be on a subject of national or industrial interest, his purpose most likely was to establish a personal reputation as an industry leader or to position his company as an informed citizen. Many were full of broad generalizations attacking labor or government, labor leaders or politicians. They were personal opinions strung together with little or no supporting evidence. As I see it, the attributes of a spokesmanship program today are these: 9 Issues and trends are analyzed. 15
Public Relations Re~iew 9 Positions are taken on the issues rationally, not emotionally. One result of this is that industry leaders may take uncommon positions, such as, the Quaker Oats Company's split with its industry's position on children's TV advertising. 9 The spokesman deals with ideas, not personalities. He restricts himself to issues that are important to his industry and his company. 9 The spokesman offers information and evidence, not personal opinions, to make his argument. 9 The spokesman does not accept random speaking dates or media appearances offered to him unless, by chance, they accommodate his strategy. Rather, he seeks out specific platforms that suit his purposes. 9 His activity is part of a planned, overall, communications strategy that may include advertising, public relations, government relations, lobbying films, books, and other communications techniques. Some executives go beyond the spokesmanship role to direct political action. They may be willing to make public pronouncements on broad public issues; however, in most cases today, executives interested in broader issues work anonymously through leadership groups such as the National Association of Manufacturers (NAM) and the U.S. Chamber of Commerce or business associations. It would be an error to say that the forces I have described are the only ones that have shaped the corporate communications world of 1982. Similarly, it would be a mistake to believe that these new practices are universal. The bellwether companies were Du Pont, General Electric, Exxon, General Motors, and AT&T, followed by Rexnord, Allstate Insurance, Sears Roebuck and others. The expansion of the Public Affairs Council's membership, the rapid growth of the Public Affairs section of PRSA, and the response to the formation of the Issues Management Association indicate that we are talking about several hundred companies today. One observer foresees 2,000 corporations with issues managers by 1990. We now are talking about only a few hundred companies, but we may be talking in terms of a high percentage of the nation's industrial wealth, since we know that the 500 largest industrial corporations control nearly 70 percent of industrial assets, the 50 largest banks hold 60 percent of commercial bank deposits and the 50 largest life insurance companies have 78 percent of all life insurance assets." Based on m y research, and particularly the statistical studies by the Conference Board, 12along with the responses I received to my own survey, I have come to some conclusions about the current state of.a~0~rs.
We are not engaged in "internecine foolishness," but we do have a semantic dilemma, with blurred definitions of public relations, public affairs, corporate communications, issues management, external relations and the like. This semantic problem bears not one whit on what we do, on the survival of your firm, on the future of corporate public relations specialists, or on your individual future. 16
CEO's Changing Role
Richard Armstrong, president of the Public Affairs Council, 1~ observes that "there has been continuous--and often fruitless--discussion about distinctions between public relations and public affairs . . . . It is unfortunate that so m u c h time and energy has been wasted in pointless discussion." I hope you agree with him, as I do. Many years ago a very wise man, Milton Fairman ~ said, "Public relations is what a public relations person does." And so, public affairs is what a public affairs person does. Much of it may be public relations, and vice versa. Twenty years ago, Edward T. (Hap) Hetzler (then vice president for public relations of Bankers Trust Company of New York), Lewis Lapham (vice chairman of the Board), and I had several discussions about the role of the chief executive in public relations. What we concluded--and it became the subject of a speech by Lapham to the Bank Marketing Association--is that public relations is the responsibility of the chief executive officer. He delegates reluctantly--and gingerly--and it is the last function he will delegate. In a crisis, he is apt to draw it back to the executive suite. At least one corporation has spelled it out in the corporate by-laws. ~3 An academic, a Jesuit, says "there is no such function," that public relations is "an interest" of management. Jack O'Dwyer has aptly called it "this group of disciplines" with which we work.
This group of disciplines with which we work is the responsibility of the chief executive officer and ours is a staff role. It is a lesson that some public relations specialists have found hard to accept. They seem to feel, as Carl Sandburg 16would have put it, that public relations is a little gray mouse that you can put in the pocket of your blouse and take home with you and in the quiet of your room you can bring it out and look at it from time to time. Corporate executives have repeatedly told the Conference Board that they acknowledge this responsibility. It is also acknowledged by the respondents to m y survey. Business has found its voice, and the voice is that of the chief executive officer. Executives whose backgrounds were in public relations are not barred from becoming the executive in charge of public affairs and public policy. In fact, many of the most capable head departments that include the various disciplines, even w h e n the department name has been changed to public affairs, corporate communications or some other umbrella term. The majority of the respondents to my survey, mostly executives who were once in charge of public relations, have not been submerged, even when the function labeled "public relations" has been. Their duties are expanding, not contracting. However, they not only recognize the supremacy of the chief executive officer but know that they are engaged in providing counsel and assistance. Further, and this is important, they recognize that they share these staff operations with others. 17
Public Relations Review
The disciplines we are talking about are shared mainly with lawyers, government relations experts and lobbyists. Since most of the issues involved are legislative issues, do you wonder that lawyers play a central role? A public affairs officer, unless he himself is a lawyer (and many are) would be foolish to ignore the legal aspects of this work. Whatever the relationships of the past, there should be no interpersonal problems with lawyers today on the substance of what we are doing. Richard A. Givens, a member of a prestigious New York law firm and former director of the New York region of the Federal Trade Commission, has written a book for lawyers called Advocacy ~7 in which he says lawyers must be advocates to the public as well as to the courts in corporate matters. Study the book. His lessons in advocacy are ones public relations professionals, too, can apply. Givens says wisely that "Decision making tends to be concentrated in those with the great input into the decisions, usually those at the center." I might observe that the CEO sits at the top of an information pyramid. These disciplines are also shared with social and political scientists, futurists, consumer advocates, economists, planning experts and others. These people share the responsibility for monitoring, analyzing, counseling and communicating. The function is also shared with line m a n a g e m e n t - and that includes line management all the way to the plant manager level. In fact, many companies depend on line management to identify the issues that concern them, rather than having them suggested by a staff "'braintrust.'" An increasing number of companies have organized public issues committees which cut across several department lines. The executive in charge of the function may or may not serve as chairman of the committee. The idea is that the input should come from those who have knowledge or whose business will be affected. Others have "Committees of the Board." There may be as many as 200 such committees in existence, with various labels ranging from "Social Responsibility Committee" to "Public Policy Committee." Jim Bowling of Phillip Morris, who is a director of his company and chairman of his company's board committee, believes placing it at the board level is essential. TM Everyone in m y survey agreed that the buck stops with the CEO, but no one said that the decisions on public policy issues are made independently. The CEO is most likely to make decisions based on recommendations from his public relations or public affairs advisor, frequently (but not in the majority of cases) with participation from legal. A few companies do not lobby, but the majority of them do, directly at the Federal level and through business associations. A slightly smaller number lobby at the state and local levels and with government agencies. To me, one of the surprising findings of the survey is that communication on public issues is directed primarily to members of management. I gather this is because they are frequent spokesmen, both on the platform and in 18
CEO's C h a n g i n g R o l e informal situations. Next in importance is the employee audience and, third, the stockholders. Only a few companies reported that policies are changed, that corporate objectives are changed, or that the company's systems of rewards and penalties are changed, as a result of the analysis of public issues. Most of the respondents reported that once a position is taken on an issue of public policy, it is unlikely to be communicated to the general public. Some said that it could be misunderstood. Others considered it of interest only to influence leaders. When it is the policy to communicate publicly, the most likely m e d i u m used is newspaper publicity, and this frequently is in the nature of a report or a speech. Other tools of communication used are issues advertising, radio-TV, films, booklets, seminars, speeches, interviews, newsletters, company publications to customers, dealers, employees, trade magazines, video tapes, and Congressional testimony. Others reported using audits, community participation and grass roots work at the plant level. There is a widespread use of monitoring and issues analysis in the companies w h o responded to m y survey. These are the companies who have formal programs to deal with public policy issues--about half the respondents. But, many companies use more casual techniques and, until now, have found them adequate. Most frequently, issues are researched by the public relations department. In other cases, there is input from operating management, counsel by agencies, 'the Washington office, trade associations, legal, and in a significant number of instances, by interdepartmental committees. Most of the respondents agreed that the interest of corporations in interceding in issues of public policy is growing rapidly, in the very high area of 80 percent. Four said, yes, it is growing, but gradually. A few who dissented commented that it was a phenomenon of the '70s, or that the motivation had passed with the arrival of Ronald Reagan. Those who voted for rapid growth have on their side the Conference Board studies and the reports of the Public Affairs Council and the Issues Management Association. My final question was critical. It asked, "Will it be a function of the public relations department?" A large number of respondents--about half--said flatly that it would stay in public relations. Another group of equal size gave a qualified "yes" or said that the function would be shared. The remainder gave a variety of answers: "a new department" to "CEO,'" "government affairs" and "'legal." Keeping in mind that most of the respondents are public-relations oriented, they show no signs of anxiety. Even w h e n the actual work is done in other departments, m a n y of these respondents appear to see public relations serving as the "'catalyst." What, then, of the public relations counsel? There are m a n y indications that corporate executives find it more difficult to use outside public relations counsel to carry out these new programs
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than was true with traditional public relations tasks. On the other hand, Harold Burson has reported 19 signs that corporate executives are using public relations firms to execute specific projects; some, faced with the higher corporate salaries, are turning more heavily to the counselors for broad programs. Bob Fegley has written 2~ that if the CEOs are changing, then public. relations practitioner, too, must be intellectually broader, more articulate, able to find more solutions to social concerns, and politically sophisticated, If they do their homework, there is no question in my mind that they can continue to prosper. In the first place, a consultant need not be concerned about the semantics. Public relations services are whatever services he or she offers. There is an endless assortment of possible tasks: training for staff and line management, organization and planning, intelligence services, issues scanning, lobbying, recommending policy changes, speechwriting, economic education programs, newsletters, issues advertising, and, of course, media relations. Recently, there have been three developments that deserve close attention. One is the formation of the Issues Management Association. 2~Its stated purpose is "'To serve as a national and international association to encourage the development and exchange of the state-of-the-art theory and practice in issues management." I endorse the Association; I have joined. It should not go unobserved that the Issues Management Association is not an association of public relations people, or even of corporate people. The second development is the publication last January of Corporate Performance: The Key to Public Trust by Francis W. Steckmest. z~Observe that the book was written with a resource and review committee and for the Business Roundtable. It may not quite be the Silent Spring of public relations, nor a manifesto for public affairs, but it is apt to be one of the most influential books on public affairs yet to appear, simply because of its sponsorship. Steckmest has performed a monumental task; public relations consultants will not be informed until they read it. The third development is the publication of Business Pozoer and Public Policy, by Dr. Alfred C. Neal. z3 Dr. Neal was president of the Committee for Economic Development from 1956 to 1976. These three events underscore for me a statement made by Rep. Alfred Gore, Jr. of Tennessee: "Things have reached the point where the process of change itself is the challenge." Just w h e n we are settling nicely into the concepts of issues management and corporate intervention in public policy matters, along comes Dr. Neal, who questions the political activism of corporations. He finds it dangerous and apt to be counterproductive. He observes that corporate power is concentrated in a few hundred individuals, a group that Washington would find it practical to consult. Consultation can make business executives part of the solution, rather than part of the problem, as Kennedy found and 20
CEO's C h a n g i n g . R o l e Reagan is finding them to be. Since corporations have the power to make or break the government s anti-inflation policies, Neal is recommending a consultative relationship between the two, on its own and as an alternative to political activism. His is an idea that is being discussed today in board rooms. I suggest that public relations counsel read the book before their clients do. In a letter following a discussion at his office, Dr. Neal took exception to several points in the outline for this speech. First, he observed that I had not raised the question of working within leadership organizations. It was a pointed observation. I had not raised it because of a personal conclusion that such organizations have been losing ground to internal corporate activities. I was wrong. Most of the respondents to m y survey continue to work with such groups, particularly on highly controversial issues and issues that are broader than the corporation's direct interests. I predict that these organizations will have a resurgence as the costs of public affairs/issues analysis programs grow. Dr. Neal found passive and negative the idea of issues management to "modify or forestall restrictive legislation" (the words I had used). His suggestion: "Since legislation includes taxes and other costly matters, don't you need additional objectives: to obtain public policy, including regulation and taxation, that will secure results that represent the common objectives of industry and government?" Finally, Dr. Neal believes we have a need to draw a vision of the future that tells what our achievements can be--if we do the right things. Dr. Neal's observations make it clear to me that it would be unfortunate if any of us, watching the developments of the past decade in our field of work, were to conclude that evolution stops here. The challenge for all of us is the process of change, just as it is for America's greatest institutions. Both m y wife and I like to obey The Law of Contrary Opinion. That law dictates that one should follow exactly the opposite of what the public or the majority consider the correct, wise or popular course. To illustrate, that law would have screamed to you that when the public was loading up with gold, the smart money was moving out. Some, like Dr. Neal, may have contrary opinions. Even if one agrees with the corporate political moves, one ought to have no illusions about politics.
The Wall Street Journal on November 17, 1981, reported the pending expropriation of the Rothschild b a n k - - t h e wealth and holdings of the famfly--by France's new socialist government. The paper observed that "not withstanding the family's great wealth and a history in France that dates to the early 19th century, including a long-celebrated reputation for generous support of cultural and philanthropic causes, the Rothchilds remain highly vulnerable to the political winds of fortune." I hope no American executives missed the somber implication of that observation. Nor should those who counsel them. 21
Public Relations Re~iew References 1See Kennedy by Theodore C. Sorensen, Harper, New York, 1965. "It was at this time," reports Sorensen, "that Kennedy said his father had told him that 'all steel men were sonsof-bitches, but I never realized until now how right he was.' " There are other versions of the story. This one is quoted by L.L.L. Golden in Only By Public Consent--American Corporations Searchfor Favorable Opinion. Hawthorn, New York, 1968. The book contains a full account of the U. S. Steel encounter with the Kennedy administration. Golden also describes the public relations operations of AT&T, Du Pont, Jersey Standard, and General Motors. 2A detailed report of the findings of this study to date appears in PublicAffairs Review, 1982, published by the Public Affairs Council. 3Golden on Jersey Standard and Du Pont, op. cit. 4Letter to the author from Glen Perry, former vice president-public relations of Du Pont. 5Golden, op. cit. 6The relevant publications of the Conference Board are: Political Activism: The Chief Executive's Role, IB 71 Business Involvement With Local Government, IB 30 Develophzg EmployeePolitical Awareness, IB 80 The Chief Executive and His Job, 214 Private Enterprise Looks at Its hnage, 526 Managing CorporateExternal Relations, 679 Business Credibility: The Critical Factors, 701
Business~Government Partnership in Local Economics DevelopmentPlanning, 704 The Future Role of Business in Society, 710 Action Plans for Public Affairs, 733 Planning Under Uncertainty, 741 "Redefining Corporate-FederalRelations, 757 The Business of Issues, 758 Regulatory Programsand Regulatory Reform, 769 Polities and the CorporateChief Executive, 777 U. S. Business Leaders:A Study of Opinions and Characteristics, 786 Assessing the Political Environment, 794 Guidelines for Managing CorporateIssues Programs, 795 Managerial Competence:The Public Affairs Aspects, 805 rI'he most recent was in late 1981. ~Felephone conversation with Howard Chase. Others make similar statements. Obviously, the figures are not exact, but the trend is unmistakable. 9Such observations appear in the Conference Board studies, and in several speeches by Business Roundtable leaders. Interestingly, the farther down the executive ladder, the less the agreement with this premise. ~~ work has been reported in private documents he has made available to public relations people, but see "Business and the Future: Social Challenge, Corporate Response" in The Next 25 Years, published by The World Future Society, Washington, D.C. 1975. UAlfred C. Neal, Bushzess Power and Public Policy. New York: Praeger Publishers, 1981. 12See the Conference Board studies listed in Reference 6. ~3The statement is taken from a pamphlet titled '.'The Public Affairs Council, 1982." It is my assumption that Armstrong wrote it. ~4Milton Fairman was vice president for public relations of the Borden Company. He was a past president of PRSA. ~sSee Golden's account of U. S. Steel op. cit. ~6The words are a paraphrase from Carl Sandburg's poem, "Little Word, Little White Bird." ~rRichard A. Givens, Advocacy: The Art of Pleading a Case, Colorado Springs: Shepard's/ McGraw-Hill, 1980. ~8"Managing Public Affairs: New Dimensions," speech by James C. Bowling, Public Affairs Conference of the Conference Board, January 15, 1981. Reprint available from Corporate Relations, Phillip Morris, Inc., 100 Park Avenue, New York, N.Y. 10017.
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CEO's C h a n ~ i n ~ R o l e 19Thecomments were made in a speech to the New York Chapter, PRSA and reported in the Chapter Bulletin and by O'Dwyer. 2~ L. Fegley, "When Your Chief Executive Goes Public." Public Relations Quarterly, Summer 1979. 21Forinformation write to Ray Ewing, Allstate Plaza North, F-3, Northbrook, Ill. 60062. A report on the association's first membership meeting appears in Corporate Public Issues, April 15, 1982. Z~Francis W. Steckmest, Corporate Performance: The Key To Public Trust. McGraw-Hill, New York, 1982. 23Neal, op. cit.
Editorial Rex~ew Committee Robert L. Bisl~op, University of Georgia John E. Bowes, University of Washington Glen Broom, San Diego State University Allen H. Center, San Diego State University Hugh M. Culbertson, Ohio University Scott M. Cutlip, University of Georgia .William P. Ehling, Syracuse University William R. Faith, University of Southern California James E. Grunig, University of Maryland Carl F. Hawver, Parker Nash & Associates Michael B. Hesse, University of Alabama Frank B. Kalupa, University of Georgia Philip Lesly, The Philip Lesly Company Walter K. Lindenmann, Hill & Knowlton, Inc. Adolph Mayer, University of Denver Douglas Ann Newsom, Texas Christian University Carol Oukrop, Kansas State University F. John Pessolono, Council in Public Relations & Public Affairs Marion K. Pinsdorf, INA Corporation Betsy Ann Plank, Illinois Bell John C. Pollock, Research & Forecast, Inc. Kenneth H. Rabin, E. R. Squibb & Sons, Inc. John G.N. Rushbrook, Phillips Petroleum Company Raymond Simon, Utica College of Syracuse University Kenneth Owlet Smith, University of Southern California Leonard J. Snyder, San Francisco State University Carlton E. Spitzer, Spitzer Associates William B. Toran, Ohio State University Judy Van Slyke, Syracuse University James K. VanLeuven, Washington State University Francis E. Walsh, University of Texas at Austin Dennis L. Wilcox, San Jose State University Frank W. Wylie, California State University at Los Angeles
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