McKinsey makes some key points about what companies need to do on the reputation side.

"As a result, responses to reputational issues can be short term, ad hoc, and defensive–a poor combination today given the intensity of public concern. And therein lies a problem that companies must solve quickly: even as reputational challenges boost the importance of good PR, companies will struggle if they rely on PR alone, with little insight into the root causes of or the facts behind their reputational problems."

But Paul Holmes picks up on the unsaid theme – that it’s a management consulting agency, not a PR agency, making these important points:

I wish I could push back more aggressively against this–the idea that public relations is about "spin" rather than "changing business operations and conducting two-way conversations" is particularly offensive–but the reality is that the authors seem to have formed a pretty accurate impression of how most corporate communications departments actually work.  (This is where I would ordinarily go into a rant about the inherent problem with naming public relations departments "corporate communications," which is that public relationships are defined not by communications, but by actions, but you’ve all heard it a hundred times before.)

Finally, he pulls another solid quote that outlines what the most effective PR counselors do (hint, communication is not at the top of the list, understanding audiences and recommending actions is).

The authors’ conclusion: "Companies should emphasize three priorities. First, they need to assemble enough facts–most important, perhaps, a rich understanding of key stakeholders, including consumers–and not only the product preferences but also the political attitudes of consumer groups. Second, companies should focus on the actions that matter most to stakeholders, something that may call for an exaggerated degree of transparency about corporate priorities or operations. Third, they must try to influence stakeholders through techniques that go beyond traditional PR approaches, with an emphasis on two-way dialogue."

In discussing public relations counsel, I often hear discussions focus on reputation over understanding the public.   However, some of the best reputations are earned by taking a PR approach that relies first on understanding the public, then by making business decisions around that understanding, and, finally, communicating those decisions and related actions.   An article on M&T Bank Corp in Fortune focuses in on this approach:

In the article, M&T Bank Corp. Chairman and CEO Robert Wilmers is quoted with the following take on public relations:

Bankers should do what he calls "public relations" – not burnishing an image but actually relating to the public and its needs. At M&T, regional banking heads live in their communities (vice chairman Michael Pinto is based in Baltimore, New York Metro head Kevin Pearson in New York City), and their employees get involved in everything from volunteering at a bake sale to schmoozing the local pols. Every area has its own advisory board made up of merchants who weigh in on key loans. President Mark Czarnecki, who started as a bank manager in 1977, says the bank has learned that the closer a customer lives to a retail branch, the better he performs on his loans and the more bank services he is likely to use.

There are a few very notable points about M&T Bank Corp’s approach to public relations:

1. Mr. Wilmers takes the time to understand his business’ audience in order to make the best decisions for his company and customers.  The result is a positive consumer reputation.  One could look at their local approach to management (placing senior executives in the markets they oversee) as a business move driven by both business and PR considerations as management understands that just locating executives near customers drives a reputation that results in more business.
2. Business decisions drive reputations.  This is a redundant point but it needs to be hammered home.  If you read the whole article, you’ll find that the result of a key business decision is, in fact, the desired image (a local bank that understands customers) and reputation (a solid business approach that others should consider emulating).   This is not a bank that makes business decisions then  wonders how to achieve a certain reputation and image. 
3. Research research research.  Understanding an audience takes research.  It can be a in-depth survey or having executives meet and talk to the public/audience (I tend to recommend both but, if only one, do the latter).

In government, communications people are policy people; they know the details as thoroughly as those charged with the implementation of the policy…In business, communicators aren’t always business people nor are they close to the strategy of the company.”  He added that many CEOs fail to understand the value of communications. 

In my experience, the public relations counselor with the full grasp of the company’s strategy and technical understanding of its business are also able to relate the strategic value of communications to their CEOs.   PR counselors without this knowledge base are often seen in a tactical function and brought in after the strategy has been set. 

As is the ongoing theme of this blog, the PR skill required to be at the C-level table includes the strongest possible understanding of business in general, an analyst like knowledge of industries, a C-level understanding of a client’s (internal or external) business model and the ability to use this knowledge to help the C-level management manage a company’s reputation.

No social media decision should be led with tool selection. Companies need to first consider their corporate objectives, then determine where their customers, partners and competitors are, and also consider how such use of tools ties to the corporate culture

This was based on the results of companies taking a survey on their agency’s performance.  The quote was, in part, the result of companies not seeing their agencies as looking at the broader universe of media to make sure they were targeting the right places for he audience (and not just what is hot…like Twitter).

Agencies should be focused on working with a company to determine what their desired reputation is, determine the business actions that need to be taken to deserve that reputation, and then effectively communicate both the strategic reputation goals of the company  and the business actions that back up those goals.   Only in the last part should social media tools be considered (and used if research says its the right way to go.

But maybe the agencies are doing the right job.  The ZDNet writer has now posted a survey for agencies.  I took it and am looking forward to seeing the results.  You can find it at http://blogs.zdnet.com/feeds/?p=605.

Bill George, former CEO of Medtronic; and professor at the Harvard Business School

[Siemen’s] competitors should have come out and stated their own anti-corruption principles…CEOs need to face reality…CEO’s often go into denial, and that’s the worst thing they can do.  it’s a huge mistake to hire a PR firm and ask it to restore your image – Bill George, former CEO of Medtronic and currently a professor of management at Harvard Business School.

Mr. George not only provided some very good PR counsel, he also highlighted a reputation problem with the PR agency industry’s reputation (yes, ironically).   Hiring a PR agency is often seen as a way to order a good reputation.  As this quote shows, smart executives know that is not the case.  

PR counselors, and in particular agency based executives, need to be consistently clear that reputation is not a function of communication, but is a function of communicating business action.  Mr. George understands this, but obviously does not see PR agencies as a source of this type of business counsel.

The level of respect for an agency’s work always goes up when clients see that clear, specialized business counsel, not simply PR counsel, is being provided.   Bill George’s quote is a strong reminder of the importance of this approach.  

Of course, for this to happen agencies have to start hiring based on strategic business smarts and not simply tactical smarts.  But that’s or another post…

P.S., I was recently asked why, as an PR agency owner, I would post advice to other agencies.  Simple, these are PR industry issues which, if solved by more agencies addressing them, would result in more and better business for all of us.

So if 2009 is the year of doom and gloom, how does a business put on a positive, confident face without seeming out of touch with reality?

One fantastic, and fun, example comes from First Round Capital.  Their message is simple, effective and to the point – do your best to have a good year in 2009 and stay on your toes.  They are not saying have a good year or that they will do well.  They are saying you should focus your energy that way but be vigilant (it reminds me of a favorite Ronald Reagan phrase – Trust, But Verify).

Here’s their terrific holiday video, with their portfolio companies, that sums it up.  Watch to the end.

http://holiday.firstround.com/

Thank you to Fred Destin who’s blog brought this to my attention: http://www.freddestin.com/blog/2008/12/from-firstroundcapital—finally-a-2009-cheer-that-makes-we-want-to-post.html

1. [Businesses] think they can tell portions of their story, leaving out the personal, messy, or confusing parts, and still have the media (and the public) consider their comments "truthful." The problem is, whatever you leave out of your story will be filled in—if not with facts, then with conjecture, rumor, or opinion. Is that unfair? It doesn’t matter. The media’s job is to tell a complete story. Your job, if you’re in the public eye, is to protect yourself by helping them get it, warts and all, with your perspective attached every step of the way.

2. Have you transmitted the same message to everyone? If there is one mistake that practically guarantees negative publicity, it’s adjusting your point of view for different audiences. Barack Obama, for instance, took a barrage of criticism when, after praising the values of religious worship and gun ownership at Midwestern rallies, he derided the same at a private fund-raising party in San Francisco.

3. Finally, have you taken your media coverage into your own hands? Time was, the media had the last word. The Web made it so there are no more last words. Sure, it can be used against you in a media firestorm, what with thousands of amateur news sites and blogs. But that’s all the more reason to use the Web for your own defense, if not offense. Celebrities now speak directly to the public about rumors; companies are doing the same. Individuals who feel maligned now have this option. You may not be able to change the course of your media coverage to your complete liking, but at least you’ll have an active role in it—in your own words.

The other night I was unpleasantly surprised to hear The Gap offer me a new credit card using an automated dial out message.  Hearing this, all I could think was “dear Gap, just how dumb are you?”

Companies often do not put business decisions that impact public perception through the PR ringer.  They should.  Maybe The Gap would have done this anyway but I can’t image The Gap wants it’s brand to be seen as one known for harassing people at home to buy a credit card using automatic messages.  First, these calls come across as very low end.  Second, it’s bad enough to disturb the dinner hour, but to not have the decency to do it with a real person adds insult to injury and sends the message that we have no personal touch.

Next time someone brings up The Gap, this phone is what will illustrate my opinio.

There are a few key areas that stood out in terms of what senior level public relations professionals

1. More than a quarter of respondents reported that they have international or global authority over their organization’s PR activities.
2. Reporting to the CEO, Chair or COO is the preferred structure. 
3. Reporting to the c-suite also means having greater responsibility, influence and budget.
4. There is still inadequate resources devoted to PR evaluation.  This is despite increasing press to show value. 
5. PR organizations that reported to the c-suite where more strategic in their evaluation.  For example, evaluation may include contribution to market share and  stakeholder opinion.  PR organizations that reported to marketing were more tactical and focused on clips.

 
There were no major surprises though I think it’s important to see the difference in how PR measures itself based on wether it reports to the c-suite or to marketing.  It seemed to highlight how PR can be a marketing tactic or a strategic center of excellence.  In the past I’ve found many that use PR both ways with corporate communications being the strategic center of PR excellence and public relations being the marketing department.

When reading the report for the purposes of creating a more strategic, c-level public relations function, think about what skills are needed in both the senior PR executive and staff.  Most public relations and corporate communications departments have most of the tactical skills down (e.g., media and blogger relations).  However, there is a separate list of critical skills (survey and other research skills, reputation modeling and risk management, message analysis and more) needed to qualify for the c-suite level of public relations and corporate communications.   

(Thank you to Professor Jerry Swerling who led the study).

Today’s New York Times covers Kohlberg’s partnership with the Environmental Defense Fund to improve the performance of the companies in which the private equity firm invests.  The move shows that being environmentally friendly is not simply a reputation issue but a bottom line business issue.  How the value of being an eco-friendly company may differ depending on the business – more sales for a consumer company, sustainable energy plans for a manufacturer – but the move by Kohlberg shows that there is real financial value to be found in being eco-friendly.  The result, first for Kohlberg and potential for their companies, a greener reputation.

This is the cart and horse lesson for companies.  Kohlberg and the Environmental Defense Fund did not first do a PR push to say how they will become green.  They announced a specific business move the commits the private equity firm to pushing its companies to be environmentally friendly in a way that has  positive business impact.  The PR driven reputation can then come from the business moves being made.

Hopefully, we will soon see examples from this partnership that provide additional lessons from corporate America.  Reputation does not simply result from a strong public relations and reputation management strategy, but from a strategy that is wrapped around real, substantial business moves.  If you’re in corporate communications the question you should be asking yourself is "would my company have me suggest a similar move or do a reputation evaluation of such a move that would be considered by senior management."  If the answer is yes, then you’re a business executive with PR expertise that sits at the table.  If the answer is no, then your are  PR executive waiting to execute what those at the table decide.