Public relations’ role as the ethical conscience of a business has long been debated. Never has this question been more pertinent with the rise of corporate governance, along with fervent debate surrounding the sustainability of business practice. Last night a debate at the House of Commons, organised by The Debating Group and sponsored by the CIPR, proposed the following motion:
“Business best serves society by focusing on its bottom line”
In the chair: Rt Hon Lord McNally
For the motion
- Dr Jamie Whyte
Research Director, Institute of Economic Affairs
- Valentina Kristensen
Director of Growth and Communications, Oaknorth Bank
Against the motion
- Sarah Hall
CIPR 2018 President, Sarah Hall Consulting Ltd
- Professor Anne Gregory
Chair of Corporate Communication, Huddersfield Business School
The last time business’ responsibility towards society was alluded to in a motion by The Debating Group was in 2013. Social responsibility was positioned as a means of gaining a commercial advantage. In the five years since this debate, it’s clear to see that business’ responsibility to society goes beyond commercial advantage, but a matter of survival.
Last night I was for the motion. I explain why in this post.
My reasoning starts with focusing on the first part of last night’s motion:
Do all businesses have a social purpose, on which to serve society?
To serve society, we have to first evaluate whether a business has a social purpose. The business world is vast, as is the brief for PR practitioners who serve those businesses. If we take the unadulterated definition of PR as a reputation management discipline, then this is the main objective.
Recall the infamous story of ex-CEO of The Ratners Group, Gerald Irving Ratner, speech at an Institute of Directors conference on 23rdApril 1991, where he described the Group’s jewellery products as ‘crap’? It should haunt corporate minds. The ill-judged joke caused the Groups’ value to plummet by £500 million.
Reputation is built through years, tarnished in seconds.
The story doesn’t just highlight this fact but also reveals that the measurement of reputation has to include meaningful business impact, sales. Given this, you might be a business trying to sell biscuits, trade weapons, or the task may simply be to maintain investor confidence –the task of a PR practitioner is mixed. There is never just one measure.
Reputation matters. Sales matter. Perceptions matter.
More than this, the role of PR isn’t just managing perceptions. In my view, it’s about being the ethical conscience of a business. It’s about getting under the skin of an organisation, understanding each stakeholder, so that a social purpose can be identified and communicated.
10 years ago, as an undergraduate, our lecturers used to challenge our ethical persuasions. Usually by asking if we would consider working for a short-term lender, a military manufacturing arm, chemicals company… the list goes on.
Today I have advised all aforementioned organisations, each has had a social purpose. By that, I take the definition of social purpose as laid out by Claire Maloney in a recent Kekst CNC post,
“Purpose is not a PR and marketing push. It should frame the way a business conducts itself, uniting an entire organisation in its mission. And it should be seen as a critical component in long-term, sustainable growth.”
By PR being recognised as a strategic management discipline, each company actively sought out communications advice. Examples of this internal purpose-led DNA can be seen through some of their activities:
- The short-term lender set-up an independent advisory board, including the Church of England, in order to help people out of poverty; de-Wonga’fying the industry.
- The military manufacturing arm constructed bridges that could be quickly deployed in active service. In addition, they connected disparate communities across Africa.
- The chemicals company produced a chemical 8,000 times more potent to the atmosphere than Carbon Dioxide. However, its chemical in fire safety protects thousands of lives and again, has a strong military application.
These examples show ‘social purpose’ can exist in companies, even if their product may cause some to question their true value to society. The role of PR is to communicate these stories in a way that generates long-term business growth, through managing reputation.
How should a business serve society?
Having established businesses can all have a social purpose, it’s now about communicating it in a way that serves society. This is best and only done by focusing on the bottom line.
To understand this, we need to look at the rise of corporate governance.
Corporate governance is about ensuring an organisation has the right rules, practices, and processes in place. One of the defining moments in business history was the publication of the Cadbury Report in December 1992 (the year after doing a Ratner), officially titled “The financial aspects of corporate governance”.
The report mentions,
“Bringing greater clarity to the respective responsibilities of directors, shareholders and auditors will also strengthen trust in the corporate system. Companies whose standards of corporate governance are high are the more likely to gain the confidence of investors and support for the development of their businesses.”
In 2018 we can go a step further, companies with the right corporate governance processes in place won’t just gain the attention of internal stakeholders – they will be so focused on long-term gain that serving society will be the only way they can reach meet the bottom-line.
Ultimately the night’s debate hinged on a single question: will the bottom line of a business be impacted if reputation isn’t upheld?
As PR practitioners, the answer would have to be an astounded ‘yes!’. It’s the very cornerstone of our practice. In that case, focusing on the bottom line is precisely about serving society. It’s the only way to ensure long-term profitability.
The verdict was defeated with a clear majority. There was an agreement that businesses need to live their values, but ultimately businesses have a civic duty; even suggestions that business must be given a license to operate by society.
Extreme examples of CEO remuneration were provided, poor customer service where the bottom line was the only focus, and the need for social purpose to exist outside of prolonged austerity. For a fuller picture for the against, read Sarah Hall’s post.
In my view, the only way business can operate is by focusing on the bottom line. In fact, it’s dangerous for PR to not advocate for the focus on the financial business outcome. As reputation managers, ultimately perception change should be measured by financial performance and protection. Only then can PR practitioners hope to be the ethical conscience of an organisation.