Communication Director by Steffi Portfolio

COMMUNICATION

www.communication-director.eu

DIRECTOR

Magazine for Corporate Communications and Public Relations

03/2010

On top of the game

COMMUNICATION DIRECTOR 03/2010

How reputation keeps your organisation above the crowd

Scoring a reputational goal at the 2010 World Cup

How corporate sponsorship spread the word about a South African bank

Tarring an entire industry with the same brush What the BP oil spill can teach us about allocating blame in a crisis

Blurring the lines between oďŹ&#x201E;ine and online image To avoid a media backlash, social media must be handled with care

EDITORIAL

nce you’ve lost your reputation, you can enjoy an uninhibited life. So says an old German pro verb, one that, unfortunately, does not apply to business. Companies remain at the mercy of their reputation, a message brought home to us by the ongoing global economic and f inancial market crisis. Companies need to be given the famous “license to operate” by stakeholder groups from all corners of society. Today‘s audiences are more wary, if not down-right scep tical, than ever before. Non-transparent and opaque corporate behaviour in the recent past, combined with howling communication disasters such as BP‘s Deepwater Horizon debacle, have generated a level of suspicion that, rather than focus on an individual party, sweeps across whole industries. Additionally, the number of channels through which a company‘s reputation can be af fected has grown, requiring increased levels of monitoring, if not an entirely new approach. The plethora of challenges presented by those developments must be tackled by communications professionals. Given the amount of variables involved in building up a company‘s good name – employee relations, crisis communications, CSR – reputation management is as much an art as a science, and therein lies the challenge for those of us whose job is to tell the story of an organisation to a critical audience. Among this issue’s articles, we look at how BP shows that once company’s troubles can af fect the global standing of an entire industry, how sponsorship of the World Cup helped South Africa’ First National Bank develop their image both internally and to international audiences, how Adidas respond to questions over its collaboration with overseas suppliers, and the serious reputational risks inherent in social media campaigns.

Marc-Oliver Voigt Editor -in-Chief m.voigt@communication-director.eu

03/2010

COMMUNICATION DIRECTOR

“Both print and television media picked up on the campaign almost immediately, bringing it into the living rooms and kitchens of Britain.”

AGENDA SETTER

“Orientalism is identiﬁed by Edward Said as the ineradicable perception of a distinction between Western superiority and strength, and Oriental inferiority and weakness.”

TEAM PLAYER

How to improve personnel management and your career

Communication ideas in the eyes of experts

Saving the British pub

Uploads and uprisings: history on Web 2.0

LEADERS

The practices taken up during tough times can be adapted and continued into a period of recovery

Leila Bulling Towne

The power of leadership An overview of the latest ﬁndings from the European Communication Monitor 2010

Ansgar Zerfaß, Ángeles Moreno, Dejan Vercic

CEOs in the eyes of the media

The best of times, the worst of times

CEO Stockwatch by CARMA International

BORDER CROSSER Experiencing the unknown

STRATEGIC THINKER The corporate and academic stand on communication

Interview with Pierre Goad

Global understanding Global communication must move beyond the Western bias that continues to shape it

STORY TELLER

Iris Rittenhofer

28 4

Experiencing the unknown – leading professionals working abroad

Looking at the important questions of communication

Different perspectives on PR The experience of Polish communicators proves that there is more than one way of deﬁning PR

Jerzy Oledzki

Reputational risks and rewards Corporate reputation is a long-term process, but crisis could undermine it at any time

Dafydd Phillips

03/2010

COMMUNICATION DIRECTOR

“Marketing activities in social media that are too aggressive and/or audicious can result in compromising other stakeholder relations activities.”

“ I think that a lot of journalists mistakenly believe that they know how to be a good communicator.”

Problems in common One company’s crisis can negatively affect people’s view of other companies in the same industry

The blame game A close reading of a letter by the CEO of AIG, and what it reveals about image and responsibility

William L. Benoit, Finn Frandsen and Winni Johansen

Reputation gatekeeper Maintaining good relations with all stakeholders is the key to protecting and promoting reputation

Chiara Valentini

Photos: Ken Lennox; Privat

Communications Reader

European Association of Communication Directors

QUESTIONS TO...

Corporate sponsorship in this year’s World Cup brought prominence to a South African bank

Welcoming scrutiny

BOOKS

European Association of Communication Directors

Scoring in South Africa Vicki Trehaeven

DSK bank prefers to use established channels in Bulgaria’s volatile media

ASSOCIATION

Handling social media with care Unless carefully used, innovative web 2.0 campaigns can backﬁre and attract negative publicity

Tried and true techniques Kamelia Velichkova

Dirk De Muynck

Reputation managers must recognise the public’s scepticism towards the motives behind CSR

C. B. Bhattacharya

Mike L. Barnett

Basing your good name on good deeds

The personal side of Communication Directors

Lígia Várzea Araújo

Proving the trustworthiness of outsourced suppliers is vital in establishing your integrity

Jan Runau

Team building exercise Led by the communications head, all departments must cooperate to foster the company’s standing

Alberto Andreu Pinillos 03/2010

COMMUNICATION DIRECTOR

AGENDA SETTER Communication ideas in the eyes of experts

SAVING THE BRITISH PUB The great British Pub has endured some turbulent times of late, but there is a rescue campaign at hand to save these beloved but embattled local institutions. by Neil Cranswick

ormer British Prime Minister John Major once famously said that “50 years on from now, Britain will still be the country of long shadows on cricket grounds, warm beer, invincible green suburbs, dog lovers and pools fillers and, as George Orwell said, ‘Old maids bicycling to holy communion through the morning mist’.” Central to the idea of ‘Britishness’ is the local pub. At the heart of the community for centuries, the ‘local’ acted as a communal sitting room, bringing together a wide variety of actors from diverse backgrounds in a participatory setting, in a way that churches, post offices or shops (those other community gathering points) were never able to manage. A recent survey by CAMRA (The Campaign For Real Ale) found that 84 per cent of British people believe that the pub is as essential to village life as a shop or post office.

TROUBLE BREWING But all is not well in Middle England. Pubs have been closing at a rapid rate. Increased duty on alcoholic beverages and the ban on smoking in pubs have made the traditional night out expensive, and, for smokers, riddled with frequent trips outside into the

Central to the idea of ‘Britishness’ is the local pub. At the heart of the community for centuries, the ‘local’ acted as a communal sitting room. 6 traditionally inhospitable British weather. Those who stay away choose to drink at home, fuelled by cheap alcohol sold in supermarkets, often priced below cost in an eﬀort to get shoppers through the doors. According to the latest ﬁgures from the British Beer & Pub Association (BBPA), 70 per cent of all alcohol is sold predominantly through 03/2010

COMMUNICATION DIRECTOR

supermarkets. Ten years ago, that ﬁgure was 53 per cent. At the start of 2009, over 50 pubs were closing per week across the country. Stuart Mills, a former Manager at Scottish & Newcastle (a famous British brewery, which is now Heineken UK Ltd after its joint acquisition by Heineken and Carlsberg), felt that he had an idea which would help reverse the trend. At the time, he said “We all know that pubs and clubs across the UK are having a tough time at the moment, but we also know that opportunities exist to help [them] improve the marketing of their outlet and oﬀer new services to their customers.”

SAVING THE LOCAL His idea won the support of his soon-to-beformer employers, and armed with their blessing and assistance, Mills worked on his business plan to halt the decline of the local. Part one of his plan was aimed at improving the marketing of pubs. For a small fee, pubs would be given their own website on the useyourlocal.com platform, as well as point of sale material to encourage their visitors to join the site, allowing the pubs to email news and oﬀers directly to members in their area. Whilst this was an important part of the plan, it was the so-called ‘Pint with

AGENDA SETTER

Photos: Ken Lennox

a Parcel’ feature which was the unique selling point of his campaign. As he outlined at the time: “Whilst the benefit of being able to promote their pubs online has undoubtedly struck a chord with licensees, it is the opportunity to have parcels delivered to their local that’s fuelling consumer interest in the initiative. With the Royal Mail alone making around 40 million unsuccessful first time deliveries a year, this is a very real problem and an incredible waste of time, effort and money for everyone. Most people regard a visit to their local pub as infinitely more appealing than the prospect of joining the queue at their ‘not-so-local’ sorting office on a wet Saturday morning and hopefully the trip will help people rediscover the delights of the great British pub!”

A GENUINE NEWS STORY Knowing that resources would be limited, and fully aware of the need for a strong PR campaign to bring his message to the public, Mills linked up with London-based Story PR. The planning of the campaign began in earnest in May 2009, with a launch set for August. Ailana Kamelmacher, Story PR’s founder, described how they approached their campaign: “We had a genuine news story on our hands, so we didn’t need to mimic any previous campaigns. It was a matter of deciding the key message (focusing on the parcel service) and picking a good time to sell it in.” Despite the various other services that useyourlocal.com oﬀer, this almost minimalist campaign ensured that the public would only see the parcel collection service, avoiding any potential over-complication or dilution of the message which could be caused by providing several messages to diﬀerent audiences at once. Both print and television media picked up the campaign almost immediately, bringing it into the living rooms and kitchens of Britain. The campaign refocused the debate on the current situation in the British pub industry, turning the prevailing mood of doom and gloom into one of excitement, as the public saw new life being breathed into the pub. The campaign has proven to be a success. Within one month, 500 pubs had signed up to useyourlocal.com, and by November the service had its 1000th member. By making pubs curious about how they could use useyourlocal.com’s parcel service to increase their footfall, pub landlords went to the website and found that not only could they hold parcels for their community but also take advantage of the other services available, such as being able to connect with their customers online. Potential pub customers, frustrated by disagreeable parcel collection facilities, saw their locals in a new light – as a service 03/2010

COMMUNICATION DIRECTOR

AGENDA SETTER

Strength in numbers This campaign reminded me of Ester Boserup’s quote “Necessity is the mother of invention”. Never has this rung more true than for pub industry worker Stuart Mills, who found himself set to join the growing multitudes being forced out of the sector thanks to dwindling revenues, caused by a mixture of changing healthcare policy and global economics. Mills realised the strength in collective numbers and that communal action by pubs could help to slow the pace of closures, if not turn the tide, and seized the moment with his venture. Highlighting the pub’s role as a crucial staple of quintessential British life was the starting point. However the stroke of genius was added with the notion of pubs acting as collection point for parcel deliveries and keeping spare sets of house keys for locals! The problems facing pubs are symbolic of other changes in British culture, something the mid-market and quality news channels are always interested in. The business offered a practical solution and some hope to a beleaguered industry while, media-wise, the public house setting is the perfect backdrop visually and aurally for strong content – as witnessed with the variety of coverage achieved. Story PR have done a fantastic job of getting this message out – by quickly honing in on a strong hook and clear key message, they ensured a clarity and consistency of message in their coverage, but also crucially gave the media an instant quirky sound bite for time-pressed news editors and producers to pounce on.

Use Your Local has already achieved a very high level of awareness in the UK pub trade. It is a great initiative, backed up by a strong campaign, and there is a combination of factors behind its success. The organisation has people involved who really understand the UK pub industry, with good contacts and strong roots in the trade. Use Your Local offers something new, but at the same time taps in on a vital and almost unique feature of British pubs – that they are right at the heart of every local community, and that they can adapt to change by using the web and building new niches when it comes to providing valuable local services for their customers. Pubs have changed hugely over the past 30 years, and as they continue to change, they will need tools like the Use Your Local website to highlight the new services that they provide. The campaign also taps into the huge goodwill towards pubs among the general public, using it as an opportunity to encourage customer visits in innovative ways. All of this has been built under a very attractive website and simple brand that both pubs and their customers can easily relate to. It also provides the wider pub industry with a valuable showcase of how pubs are meeting new customer needs and adapting to a challenging economic environment. It is an absolute winner all round.

Rick Guttridge

Neil Williams

Owner and Managing Director of Smoking Gun PR

Communications Manager, British Beer & Pub Association

Rick Guttridge is the owner and managing director of Smoking Gun PR. He previously enjoyed spells in full-service agencies, was managing director at a major consumer specialist PR outﬁt and has led accounts for many international brands. He has also worked for companies such as Royal Mail.

03/2010

Understanding the industry

COMMUNICATION DIRECTOR

Neil Williams is the communication manager for the British Beer & Pub Association (BBPA), which is the leading organisation representing the UK beer and pub sector, with members accounting for 98 per cent of beer brewed in the UK, and owning more than half of Britain‘s 54,000 pubs.

to the community, and something they can connect with online via Mills’ site.

BATTLE FOR SURVIVAL Since the completion of the ‘Pint with a Parcel campaign’, useyourlocal. com has teamed up with companies as diverse as Samsung and promoteyourpub.co.uk to increase the range of services they provide, and the website now has over 1500 pubs as members. However, according to the latest figures from the BBPA, the British pub industry is still struggling. In February 2010, they announced that pub closures were running at 39 per week. While this can be seen as an improvement on last year, the association also reported that the British pub industry had suffered 24,000 job losses over 2009. Mills feels that, if pubs work with useyourlocal.com, the worrying trend of pub closures can be reduced, and perhaps even reversed: “I genuinely believe that if pubs embrace the idea of working with their particular local communities to offer a range of services that are relevant to their area, then they will succeed. Time and time again we meet fantastic pubs that are really open to feedback, willing to try out new ideas, good at making their presence felt online and doing everything from keeping people’s spare keys through to offering the parcel collection service. It’s a fantastic industry and we believe that pubs can once again become an essential part of any local community.” His campaign has given the great British pub extra tools to use in their battle for survival. How they choose to use these will define the future of the British pub industry.

Photos: private; Fernando Manoso

EXPERT OPINION

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AGENDA SETTER

Poland’s San Markos created Facebook proﬁles for two young characters, Sosna (left) and Kostek, whose dramatic experiences during the Warsaw Uprising were followed online by thousands of friends and in mainstream media by the general public.

UPLOADS AND UPRISINGS: HISTORY ON WEB 2.O The Warsaw Uprising, an iconic ﬁght against oppression in WW2, was brought to life through cutting-edge communication tools and an innovative approach to storytelling.

ublic opinion research has shown that young Poles’ interest in the history of World War 2 is on the wane, and last year the numbers of people planning to actively celebrate the oﬃcial Warsaw Uprising anniversary were expected to be low. San Markos, an advertising agency based in Warsaw, took on the challenge of arresting this decline. Their idea was to harness the power of Poland’s nascent social media in order to connect with the young on their own terms, and thereby communicate the importance of the Warsaw Uprising to the state of the country today. “Our goal was to get across the history of the Uprising to young people, especially the inhabitants of Warsaw”, 03/2010

COMMUNICATION DIRECTOR

says Magdalena Czaja, CEO of San Markos. The campaign should “make them understand what their counterparts felt 65 years ago, and create a narrative which would make people eagerly wait to see what would happened in the end, engage them and revive their historical curiosity.” In what was for them an unusually preemptive move, San Markos took their vision to the City of Warsaw’s Promotions Department, who agreed to the proposal on the understanding that

Photos: private

by Dafydd Phillips

AGENDA SETTER

their own expectations were met. Andrzej Mańkowski, deputy director of the Promotion Department, said “In our campaigns commemorating the Warsaw Uprising, we want to engage with young people. We believe that preserving and cultivating tradition also means ﬁnding new ways of communicating it.”

to discuss the latest developments to add to the over-arching script in response to the latest comments and postings from the ﬁctional couple’s many followers. This user-generated direction lent an immediacy and verisimilitude to the story that made the two character’s fates seem very real, as well as satisfying the audience expectations; as Czaja puts it, the creative team “had to respond to what people were saying in their posts on Facebook during last week,

ART OF STORYTELLING San Markos created Facebook profiles of two insurgents, Sosna Dwadzieściacztery, 24, and Kostek Dwadzieściatrzy, 23. Through updates and postings that spanned the 63 days of the Warsaw Uprising, Sosna and Kostek would share their story ‘live’ from the Uprising. A virtual diary was created, its narrative developed with features familiar to us in the social media age – picture uploads, links, quizzes, period music-files, and quasi-documentary films captured on mobile phones. Sosna and Kostek became one of the most popular individuals on Polish Facebook with up to 4,000 friends out of a possible 10,000 – including celebrities, journalists and artists who commented on 800 posts and participated in 1,512 hours of discussions about the uprising. In this cutting-edge campaign, the old-fashioned art of storytelling was central, as Magdalena Czaja explains: “We were working on the campaign in the same manner as with a film. We prepared a main script which told a story of love between Kostek and Sosna during the Uprising. We also used historical books about insurgent troops from that time and in our script we implemented the most important events from the past.” Each week of the campaign’s duration, a creative team comprising two art directors and two moderators ‘performing’ the roles of Kostek and Sosna would meet

In our campaigns commemorating the Warsaw Uprising, we want to engage with young people. We believe that preserving and cultivating tradition also means finding new ways of communicating it. to fulfill their expectations and emotions.” Originally, San Markos considered approaching veterans of the uprising to act as moderators, but after initial meetings with several ex-combatants, it was decided that they would not be the best match for a social media-based campaign. Instead, the team listened to what the veterans had to share, and re-interpreted that in today’s language. So much for the message. As for the medium, the internet – and Facebook in particular – was the natural choice: 77.6 per cent of the target audience used the internet, and Facebook, being a relatively young phenomenon in Poland at the time of the campaign’s inception, is one of the fastest-growing social mediums in the country. “We also used tools such as films and music clips because we knew how that target group consumes media”, explains Czaja. “They want content to be multimedia and that they may talk, write, listen and watch at the same time.”

EMOTIONAL PAST This level of inventiveness is all the more remarkable because of the lack of budget. San Markos had to look for partners in this project and look for help from people who shared a passion for that period – for example, content from archives and museums were lent for free. San Markos’s sister company from the same communication group, On Board PR Ecco Network, also carried out PR work for the campaign on a pro bono basis. Andrzej Marìkowski credits the emotional power of the Uprising in Poland’s collective memory as an alternative source of motivation in this campaign: “The emotional attitude to Warsaw’s past helped a lot in this 63-day long effort and was a factor that in fact replaced financial motivation when creating the profiles of Sosna and Kostek” 03/2010

COMMUNICATION DIRECTOR

AGENDA SETTER

Acceleration effect To value the success of San Markos’ Polish team (just five people), one has to realise that modern public relations/adver tising was only introduced in transition economies such as Poland since the collapse of socialism/communism. That means that only 20 years have passed in which Polish professionals were able to accumulate experience. In 1990, the gap between PR’s “countr y of origin” (the United States) and transition economies such as Poland was 90 years. In 2010, a PR/adver tising agency based in Warsaw is able to beat the Western competition even in that countr y of origin, and even using the most modern tools of social media, including Facebook. This is the ultimate confirmation that the “acceleration effect” in increasing the level of professionalism works. The San Markos team behind the “Mate From the Past/1944 Live” campaign also deser ves additional recognition for their inventiveness in choosing the most appropriate formula for communicating with the target audience – in this case, young people for whom, both in Poland and other countries, histor y is a rather boring subject. By applying social media in the service of modern historical education, this team has shown the highest level of professionalism. Finally, the Promotion Depar tment of the City of Warsaw also deser ves special recognition for their imagination and efficiency in promoting Warsaw by reviving a historical event that may be somewhat unknown abroad, but is crucial for Polish histor y.

In relating to the young generation’s awareness of the Warsaw Uprising, traditional ways of accessing the youth with the historic message have so far proven none too successful. The attempts used to be based on dr y facts and dates, not on reallife experience. This situation was changed by the “Mate from the Past” campaign. The topic was popularised by means of the social networking por tal Facebook, the most influential website among the young. Facebook users were invited to make friends with Kostek Dwadziesciatrzy and Sosna Dwadziesciaczter y. Currently Kostek has 1644 “friends”, and Sosna 2688, which proves the broad interest in them. The users were then involved in vir tual par ticipation in the uprising, day after day. Thanks to this campaign, the uprising was shown through the eyes of its par ticipants, not by means of historical facts. The innovative and ver y efficient idea has been numerously awarded in Poland and abroad – and not without reason. The campaign is an excellent example of reaching a target group in a brilliant way and using the tools most easily relatable to it. The campaign has demonstrated how to communicate issues of significance to national heritage, based on a small budget and not using elegiac words. The word “patriotism” was not used even once; nonetheless, I am cer tain that not only did knowledge amongst Poles about the Warsaw Uprising increase hugely as a result of the campaign, but a generation of young patriots was bred as well.

Prof. Ryszard Ławniczak

Jacek Jakubczyk

Poznan University

Managing Director,

of Economics

TBC Communication

Ryszard Ławniczak is a professor and head of the Department of Economic Journalism and Public Relations at Poznan University of Economics. He is an expert in the ﬁelds of international public relations, foreign economic policy, and comparative analysis of economic systems.

03/2010

A generation of patriots

COMMUNICATION DIRECTOR

President and

Jacek Jakubczyk has managed ITBC Communication since 1999, supervising its business operations and strategic development. He has participated in dozens of communication projects for Polish and international companies, spanning various tasks from strategy development to corporate PR and crisis management.

The Mate From The Past campaign came to a close in August 2009. Its performance was measured by the range of responses from the many Facebook friends, the volume and intensity of online discussions, and the amount of posts generated by the public. Furthermore, as Czaja explains, “our campaign also generated Advertising Value Equivalent in traditional media worth over half a million Polish Zloty, and we also counted the reach. Press and TV materials telling the story about our idea and the campaign were watched by nearly ﬁve million people, and the stories could have also been read by several million readers of the Polish dailies. During that campaign we generated over 150 publications.” According to Andrzej Marìkowski, “From the City of Warsaw’s point of view, the key objective was to involve the media in discussing the Facebook project. We believe that the most important element of the campaign was the emotional involvement of the participants, as illustrated by the comments.” Furthermore, “Positive eﬀects of the campaign were - among many others - the several prizes won at PR and advertising festivals, and many internet articles in Poland and abroad.” Finally, campaigns such as Mate From The Past surely herald a new way of approaching and communicating history that should take hold around the globe, as witnessed by the range of national and international recognition awarded to the campaign. These include the Silver Drum at the Golden Drum 2009 festival, the Epica Award 2009. the Silver Spotlight Award 2009 and honours in the Mercury Award 2009 – the last two contests organised in the motherland of Facebook, the US.

Photos: Pozan University of Economics; ITBC Communication

AWARD WINNING CAMPAIGN

EXPERT OPINION

�� Gain international recognition for your PR work and celebrate with Europe’s communications community at the

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LEADERS CEOs in the eyes of the media

CEO STOCKWATCH Watching the people who run the commercial world provided by CARMA International

Fresh turbulence and uncertainty characterised the period covered by CARMA International’s latest survey of media coverage of the world’s leading CEOs – February 16 to July 9. In the Spring, volcanic ash from Iceland created havoc for airlines and passengers, Greece’s debt crisis threatened to drag the Eurozone into the abyss and the UK’s general election in May led to the ﬁrst hung parliament since the 1970s. The airlines took oﬀ again as the ash clouds dispersed, a bail-out package for Greece was agreed and the UK’s Conservative party formed a coalition government with the Liberal Democrats. In the UK, Prime Minister David Cameron and his new Chancellor of the Exchequer, George Osborne, ushered in a new age of austerity with swingeing cuts to public spending. After rallying until mid April, stock markets slid as fears of a ‘double dip’ recession unnerved investors. This was the background for media scrutiny of the activities of top CEOs. Besides a number of the usual suspects, eight names entered the

top twenty rankings from outside. One story dominated coverage over the period: the massive oil spill in the Gulf of Mexico that catapulted Tony Hayward, CEO of BP, to the top of the list. Caused by an explosion at BP’s Deepwater Horizon rig on April 20 that killed 11 workers, the oil spill came to be viewed as the world’s biggest environmental disaster. Blame focused on the hapless Hayward, who became America’s public enemy number one. The BP catastrophe diverted some attention from Akio Toyoda of Toyota, whose inept public relations handling of the recalls of faulty cars had helped tarnish the Japanese carmaker’s reputation. Media scrutiny of Toyoda continued in February and March as the CEO appeared at congressional hearings, but became sparser as media ire turned on Hayward. Nevertheless, Toyoda ﬁnished in seventh place, up from 11th last quarter. Apart from Hayward, the regulars appear in the remaining four top slots in CARMA’s global ranking. Warren Buﬀett of Berkshire Hathaway took second place (down from

Top 20 CEOs worldwide | Top CEOs by volume in Q1

Top 20 CEOs in Europe | Volume of coverage in Q1

Hayward / BP Buffett / Berkshire Hathaway Blankfein / Goldman Sachs Jobs / Apple Murdoch / News Corporation Thiam / Prudential Toyoda / Toyota Ambani / Reliance Industry Schmidt / Google Dimon / JP Morgan Walsh / British Airways Ghosn / Nissan/Renault Kloppers / BHP Billiton Albanese / Rio Tinto Ackermann / Deutsche Bank Zetsche / Daimler Withacre / General Motors Pandit / Citigroup Zuckerberg / Facebook Benmoshe / AIG

Hayward / BP Blankfein / Goldman Sachs Buffett / Berkshire Hathaway Thiam / Prudential Jobs / Apple Walsh / British Airways Murdoch / News Corporation Ackermann / Deutsche Bank Ghosn / Nissan/Renault Zetsche / Daimler Schmidt / Google Gref / Sberbank Toyoda / Toyota Dimon / JP Morgan Zuckerberg / Facebook Marchionne / Fiat Miller / Gazprom Winterkorn / Volkswagen Geoghegan / HSBC Hester / RBS

03/2010

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LEADERS

Quality of CEO coverage | Percentage of favourable, neutral and unfavourable coverage favourable

neutral

unfavourable

Benmosche Zuckerberg Pandit Whitacre Zetsche Ackermann Albanese Kloppers Walsh Ghosn Dimon Schmidt Ambani Toyoda Thiam Murdoch Jobs Blankfein Buffett Hayward

10%

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first) as the Sage of Ohama’s words of wisdom on all things financial kept him in the spotlight. In Asia Pacific, Buffett was the most quoted CEO – while Hayward ranked only fifth. Lloyd Blankfein of Goldman Sachs moved up one place to third in the global listing as the media reported his efforts to defend Goldman’s reputation at Senate hearings on fraud Themes most beneficial for CEOs | Favourability of topics % favourable

% neutral

% unfavourable

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03/2010

COMMUNICATION DIRECTOR

Environment

Society

Labour

Governance

Commercial

Products & Services

Legal

Management

0% Finance

60%

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charges. Steve Jobs of Apple fell one place to fourth position, while Rupert Murdoch, the veteran media mogul, remained in ﬁfth. The highest new entrant to the ranking at sixth place is Tidjane Thiam, CEO of Prudential, the UK insurance heavyweight, whose attempt to expand in Asia through the purchase of AIG’s Asian operation AIA failed. Other new entrants were Willie Walsh, BA’s embattled CEO at 11 (up from 22), Marius Kloppers of BHP Billiton at 13, Tom Albanese of Rio Tinto at 14, Dieter Zetsche of Daimler at 16, Ed Whitacre of General Motors at 17 and Mark Zuckerberg, the youthful CEO of Facebook, at 19.

LEADERSHIP SEES HIGHER SHARE Though ﬁnance once again accounted for the largest share of coverage, at 43 per cent, this was lower than its 52 per cent slice last survey. Management and leadership reporting took a higher share of 33 per cent (up from 18 per cent). Legal/regulatory reporting was three per cent higher, at eight per cent, though products, services and solutions accounted for a smaller proportion than last time, at seven per cent. Labour, governance, society and environment and sustainability remained marginal issues, accounting for small shares of overall coverage, perhaps surprising in view of the publicity given to the environmental disaster at BP.

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LEADERS

The best and worst presented CEOs | Top performers vs bottom performers: differences in topic Products, services

100%

Management Legal

80%

Labour Society

% of volume

Governance

60%

Finance Commercial Environment

40%

20%

0% Thiam

Murdoch

Hayward

Buffett

Best performers on favourability

LATAM NAM

Environment (0%) Governance (1%)

100%

Legal (8%)

Labour (1%) Society (1%)

Products/Service (7%)

80%

back” has reportedly become a catchphrase among US protesters (FT, June 12/13). His widely reported comments that the Gulf of Mexico is a “very big ocean” and that the environmental impact would be likely to be “very, very modest” also enraged US public opinion. In an article rated unfavourably for environment and sustainability issues, The Economist commented: “BP’s chief executive, Tony Hayward, has been the face (and voice) of a company America has come Themes most associated with CEOs | Share of coverage of issues monitored in media

Top CEOs | Geographic spread of coverage APAC

Toyoda

Worst performers on favourability

TONY HAYWARD OF BP Tony Hayward has been the public face of BP as it has responded to the environmental catastrophe caused by their leaking wellhead in the Gulf of Mexico. That the fallout has also been a public relations and communications disaster has been widely acknowledged. Tony Hayward’s gaffes have been well reported, and may continue to haunt him, in the same way that Lloyd Blankfein has not been allowed to forget his quip that he is “doing God’s work”. Hayward’s famous off-the-cuff “I want my life

EMEA

Blankfein

60% Finance (43%)

40%

Management (33%)

20% 0%

Thiam

03/2010

Murdoch Buffett Hayward Blankfein

COMMUNICATION DIRECTOR

Toyoda

Commercial (6%)

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to hate” (Economist, June 19-25). When Hayward took over from Lord Browne, who was more associated with ﬁnance, he committed to safety issues; “But chief executives cannot Hayward | Feeling remorseful Dollars

Financial Times, May 4 Washington to keep “boot on the throat of BP over oil spill!”.

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renew cultures without years of protracted and increasingly disseminated eﬀort to that end. Mr Hayward had not fully succeeded” (Economist, June 19-25). Among other blunders, Tony Hayward admitted that BP did not have ‘“the tools you would want in your toolkit”’ to deal with the disaster. “So now we know” said the Financial Times, “the PhD geologist boss did not have enough specialist engineers to turn to” (June 8). The Financial Times memorably likened Hayward to “Coleridge’s Ancient Mariner, an oiled pelican slung around his neck, captaining a ship that forges through toxic seas manned by a crew of the damned” (FT Notebook, June 11).

PR DISASTERS Continental publications, such as Frankfurter Allgemeine Zeitung (FAZ), the German newspaper, also followed the travails of the BP boss: “The 53-year-old Englishman was seen as one of the most successful British managers. Now he is a hunted man, always on the move, he ceaselessly gives interviews on American TV… As long as the oil is spilling he is needed, as a crisis manager and a scapegoat. Afterwards, someone at BP will have to take personal responsibility for the disaster… the first candidate for this is the current CEO, the face of this environmental catastrophe” (“The Nightmare From The Deep Sea”, FAZ, May 29). A Financial Times article of June 12/13 offers a detailed analysis of BP’s communications errors in the US that had helped bring about the company’s “catastrophic decline”. Right from the start of Washington taking an interest in the accident, it said, “BP got off on the wrong foot”. It quoted Frank Maisano, a communications consultant for

energy companies as saying “there are a million things” BP could have done differently from a PR standpoint. BP and the other companies involved, such as Transocean and Halliburton, sent senior executives to Washington faster than required by many lawmakers, who were concerned that BP should focus on fixing the leak. Once there, the companies pointed the finger at each other, angering politicians. The catalogue of mishaps continued as BP proved “slow to recognise the demand in the US for maximum disclosure”. It was said to have been guilty of “sins of omission” in what its executives told lawmakers at private briefings. Another criticism, continued the FT, was that BP had too few Americans leading its communications strategy: Tony Hayward and Andrew Gowers, BP’s head of media who is a former editor of the FT, are British, so too is Alan Parker, chairman of Brunswick, BP’s communications adviser. Another mistake may have been falling back on “the old tactic of making its chief executive the face of the disaster”. One consultant who had been advising other companies involved in the spill was quoted as saying: “Everyone puts their CEO up front, but the most important thing is to assess the damage first and not Hayward | Coverage by region LATAM (1%)

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get out ahead of the story and put out misinformation.” But Tony Hayward was not the only senior ﬁgure at BP to face censure by the British press. “BP’s all but invisible chairman, Carl-Henric Svanberg, has not been on the front line supporting his chief executive as the company faces unprecedented pressure to explain its conduct and, in the words of President Obama, “plug the damn hole’” (“BP Chief In Battle For Survival”, Daily Telegraph, June 2). 03/2010

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Both Svanberg and Hayward appeared before Congress to face the ire of US politicians. Their performance, however, did not win the unfortunate duo much praise. “Mr Svanberg has shown courage. Last week he was criticised for hiding under his desk. This week he was ready to make a full public account of his company’s actions. Pity he fluffed it, just as BP chief executive Tony Hayward did in delivering his apology to Congress yesterday in the unrepentant monotone of a speaking clock” (FT, June 18). It was not just Hayward and Svanberg whose response to the oil spill provoked criticism. Facing criticism from Americans about his handling of the crisis, President Obama joined in the tongue-lashing of BP and Hayward. The harsh criticism threatened to ignite a transatlantic row. “Backlash grows to ‘anti-British rhetoric’ in US”, said the FT headline of June 11. A FT editorial warned the “crudely populist response” of the Obama administration to the spill “threatens to make what is already a bad situation a great deal worse” (June 12/13). President Obama, in an address to the nation on June 15, vowed to “make BP pay” for the damage. Interestingly, CARMA found that the unfavourable reporting of Tony Hayward has generally been confined to UK, European and Latin American publications. US business publications have maintained a fairly neutral tone towards him, in contrast to the pillorying he has received on American talk and news shows. The Wall Street Journal US (June 9) commented: “The President seemed to be taking the liberal advice to rage against the ocean and BP. Yesterday, in addition to his ‘kick-ass’ vulgarity, he told NBC’s Today show that while he hadn’t talked to Tony Hayward during the crisis, he would have fired Mr Hayward by now if the BP CEO worked for him. The President also hinted that BP should reduce its dividend.” The next day, the Wall Street Journal said: “With a presidential boot taking aim at his Prudential | Mixed perception Dollar

Financial Times May 6 “Pru was foolish to misread FSA’s attitude to Asia deal”

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rear end, BP Chief Executive Tony Hayward is being told to throw a punch of his own—straight to the guts of shareholders” (“BP Should Resist Slashing Dividend” June 10). From mid June, BP replaced Tony Hayward as its public face in America with Bob Dudley, its American managing director, who started to take charge of daily management of BP’s operations in the Gulf of Mexico. The Wall Street Journal suggested Dudley was “gaining attention as a possible successor to the beleaguered Mr. Hayward” (June 21). There are clearly many lessons to be learned from BP’s handling of the Gulf of Mexico oil spill. Any environmental catastrophe and 11 tragic deaths is likely to generate poor publicity. Fixing the problem quickly is the most important action that a company can take. However, a more carefully considered public relations response from BP executives might have helped to staunch the full torrent of bad news. Having an American manager in place from the start, supported by a locally led public relations team, might have enabled BP to respond more adeptly to American media and politicians. For Tony Hayward himself, an important lesson must be to avoid insensitive and damaging “oﬀ-the-cuﬀ” remarks. Alex Woolfall, head of issues and crisis management at Bell Pottinger, the public relations agency in London, advises executives to “script their messages and practise their delivery” (“It Pays To Expect The Unexpected” FT, June 30). Heeding that advice is particularly important for CEOs who are speaking to the media in the US, or indeed anywhere outside their home territory.

TIDJANE THIAM OF THE PRUDENTIAL Tidjane Thiam,

CEO of Prudential, has an impressive CV. He describes himself as a “black African, francophone and six foot four” (“Tidjan Thiam: The Man From The ‘Pru’”, www.news.bbc.co.uk,

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June 2). The FT describes him as “the French-educated, Ivory Coast-born Prudential chief” (March 1). The UK’s Daily Telegraph said: “His path to the top is, in its way, as fascinating as that of his peer Barack Obama, with whom parallels have, inevitably, been drawn. An exotic heritage, stellar academic ability, and ambition have combined to create a leader in whom the expectations of many reside, in the business community, and in Africa” (“Tidjane Thiam: The Man From The Pru’s Beginnings In Ivory Coast”). Thiam came to Prudential from Aviva as finance director in 2008, and was appointed CEO in late 2009, becoming the first black FTSE 100 CEO. His bold attempt to buy AIA, the Asian business the state-controlled US insurance giant AIG, and its eventual failure, is the saga that has propelled Thiam into sixth place in CARMA’s global ranking of leading CEOs. Despite the debacle and its threat to Thiam’s position at Prudential, his coverage has been neutral, with one per cent of reporting proving favourable. On March 1, just five months after Thiam became CEO, Prudential confirmed it had reached agreement with AIG to buy its Asian business, AIA, for 35.5 billion dollars. A year earlier, Prudential had walked away from buying AIA. The Wall Street Journal US called the deal “a huge gamble for the Pru’s ambitious new chief, Tidjane Thiam”. It would more than double Prudential’s size and require a 20 billion dollar rights issue: “But if investors can weather some short-term share weakness, the long-term investment case looks convincing” (“The Pru’s Bold, Fresh Asian Flavour”, Wall Street Journal US, March 2).

CRITICISM The story was taken up by India’s Economic Times, which drew comparisons with Thiam’s earlier career: “Prudential chief executive officer Tidjane Thiam knows about taking risks. He abandoned a career at McKinsey & Co in 1994 to become an advisor to the Ivory Coast government that was deposed in a military coup five years later. At Aviva, he helped engineer a bid in 2005 for Prudential that failed” (“For Prudential Boss, No Risk Seems To Be Too Big”, Economic Times, March 3). After persuading AIG and Washington to support the deal, and touring Asia to present its case to staff and regulators, Thiam turned his attention to Prudential’s investors: “Tidjane Thiam will attempt to charm Prudential’s top 30 investors on Monday as the chief executive moves to quell shareholder disquiet” (FT, March 6). Another FT headline read: “Prudential now has hard task of wooing core investors” (March 9). But, after some reported success (“Wary Pru Investors Warm To Asia Plan”, FT, March 13), Thiam’s charm offensive suffered a setback as investors reacted angrily to news he had accepted a directorship at Société Generale. Thiam changed his mind

and turned it down. The Daily Telegraph calls this the “first PR disaster” for Thiam (“Where Did It All Go Wrong For The Man At The Pru?” June 2). In his second PR disaster, in early May, FSA misgivings about Prudential’s capital position forced the insurer to delay publishing a prospectus for its 21 billion dollar rights issue, the biggest in UK history (“Pru Was Foolish To Misread FSA’s Attitude To Asia Deal” said the FT headline of May 6). This caused embarrassment to Harvey McGrath, Prudential’s chairman, and Thiam, and threw the AIA deal into “deep uncertainty” (FT, May 8). Though the prospectus was eventually published on May18, an investor revolt over the AIA price tag compelled Thiam to present a lower offer of 30.4 billion pounds sterling to AIG in late May. Robert Benmosche, CEO of AIG, though in favour, did not win the support of AIG for the new price. The deal collapsed, landing Prudential with costs of 450 million pounds sterling. The CEO and his chairman set about a damage limitation exercise with Prudential’s investors. A large proportion of those investors, said the FT on June 5/6, were “reluctant to bring on further uncertainty at the Pru with any knee-jerk management changes, but confidence in the board, and particularly Mr Thiam, has been shaken”. In Thiam’s favour was McGrath’s assurance that “the board were with him every step of the way”. However, an FT report of the Pru’s shareholder meeting insisted that it was “Mr Thiam’s vision that drove the original offer, at the higher price, and that bid blew up” (FT, June 8). At the meeting, a “contrite-sounding” Thiam expressed his regrets. Other commentators blamed the board. “The chairman, Harvey McGrath, has indeed stood right beside the chief executive, Tidjane Thiam, throughout the doomed effort to buy AIA…The Pru’s board is full of luminaries. Yet they allowed an untried executive team to offer too high a price for a business the Pru could not afford, and the deal collapsed” (New York Times, June 4). Thiam had the full support of his chairman and the board, but was unsuccessful in convincing shareholders that AIA merited its original price tag. Nevertheless, in the aftermath of the AIA adventure, suggestions that Thiam might be forced to leave Prudential have proved premature. Before the AIA affair he was popular with Prudential’s investors and he remains widely regarded as a talented and engaging CEO. One thing seems clear: whether he remains at Prudential or takes his talents elsewhere, it is likely that the corporate world will be seeing, and hearing, much more of Tidjane Thiam.

LLOYD BLANKFEIN OF GOLDMAN SACHS Lloyd

Blankfein of Goldman Sachs once again found himself defending his ﬁrm’s reputation against further allegations of wrongdoing over the period covered by CARMA’s survey. 03/2010

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After BP’s Hayward, he had the highest proportion of negative coverage over the period with four per cent, although one per cent of his coverage was favourable. On April 16, the US Securities and Exchange Commission (SEC) charged Goldman with securities fraud that caused losses to investors of more than 1 billion US dollars. The civil action alleged that Goldman and one of its vice-presidents, Fabrice Tourre, defrauded investors by misleading them about potential conflicts of interest in a collateralised debt obligation, a security backed by subprime mortgages, sold by the bank in 2007. Goldman shares plunged after the news. The FT commented: “The questions now being asked on Wall Street are whether Lloyd Blankfein, Goldman’s chief executive, can survive the latest assault on the firm’s integrity, and whether clients will choose to walk away.” The FT’s Lex column commented: “The story is awful for Goldman, but it may have a better chance of defending itself in a court of law than in the court of public opinion, where it has failed in its attempts to counter infantile insults about vampire squids” (Rolling Stone magazine had notoriously described Goldman as “a great vampire squid wrapped around the face of humanity”). Within days of the SEC bringing its case, Goldman announced big profits: “Amid storm, Goldman profit surges”, said the Wall Street Journal Europe headline (April 21). Blankfein was closely associated with the bank’s strategy in media reports. The FT said “The lawsuit raises crucial questions over Goldman’s oft-repeated commitment to its clients and the trading ethos that has been central to its success since Mr Blankfein took the helm in 2006”. The paper said the SEC’s case “emboldens critics who want Goldman to be more transparent about its financial wizardry and conflict management techniques” (FT, April 24). The Wall Street Journal Europe commented: “The mess is especially awkward for Goldman’s powerful chairman and chief execuGoldman Sachs | Great loss Euro

Financial Times, April 17 Goldman charged with fraud.

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tive, Lloyd C. Blankfein, who pushed hard during the past decade to accelerate the company’s transformation from a corporate-merger adviser to a trading house that is increasingly focused on using its own capital to generate business” (April 19). On Blankfein’s performance before the Senate, the FT headline said “Goldman loses – but not by a knockout” (April 29) His long examination “blew some significant holes in the bank’s once-formidable reputation”. The Wall Street Journal headline said: “Goldman Is Bruised, Defiant In Senate” (April 28). European publications too followed the story. Vedomosti of Russia reported that according to witnesses Blankfein was convinced that the Senate hearing was a politically motivated attempt to destroy the bank (Vedomosti, April 23). Les Echos reported that at the shareholders general meeting Blankfein said Goldman had to engage in a self-examination because of a “disconnection between the way we consider ourselves and how the public sees us” (Les Echos, May 10). On July 16, Goldman agreed to pay a 550 million US dollar fine, the largest penalty ever imposed on a Wall Street Bank. The penalty came close on the heels of the Senate’s final approval of stricter financial regulation on July 15.

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DIETER ZETSCHE OF DAIMLER Media reporting of a new carmaking alliance between Renault and Daimler drove Dieter Zetsche of Daimler up into sixteenth position in CARMA’s ranking. Carlos Ghosn, chief executive of Renault and Nissan, appears to have a higher media proﬁle than Zetsche and took 12th place (up from 19th) in CARMA’s latest survey. However, the deal between Renault and

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Daimler reminded the media of Zetsche’s credentials as a well respected carmaker chief. A Time profile of April 2006, three months after Zetsche took the steering wheel at Daimler, said he had “earned a reputation as the auto industry’s top mechanic.” He is also known as the man behind the break-up of the troubled merger of Daimler and Chrysler. After returning Chrysler to profitability, he demerged the two companies in 2007. On the Renault and Daimler partnership, Zetsche said that the two groups had found the “right cultural fit” (FT, April 8). The new deal involves the swap of three per cent equity stakes and a pledge to work together on engines, commercial vehicles, and small cars (“Drive to succeed may mean lane sharing” FT, May 6). Zetsche’s views on the weakness of the euro also brought him media attention. “A vocal minority – including Daimler’s Dieter Zetsche – fear that a weak currency means a weak economy, so they would rather have a stronger currency even if it can make life more difficult for individual companies. That stands in contrast with the American approach, more imbued with optimism” (“Weakening Euro Fills Some Glasses But Empties Others”, FT, May 7). Zetsche also spearheaded a joint venture agreement with a Chinese carmaker, BYD Chairman Wang Chuanfu, which is part-owned by Warren Buffett, to produce electric cars. “Mercedes Delivers Bullish Forecast On China Strength”, declared the Wall Street Journal US headline (May 29). The deal made news in Chinese newspaper, China Daily, which quoted an e-mail statement from Zetsche: “Our new joint venture is well positioned to make the most of the vast potential of electric mobility in China” (“Daimler, BYD Form Battery Powered Car JV” China Daily, May 28).

SO WHAT DO WE LEARN? Tony Hayward has taken the brunt of public anger for BP’s environmental disaster in the

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Financial Times April 8 Ghosn and Zetsche forge new carmaking alliance

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Gulf of Mexico. His mauling by the US public was made all the more brutal by his incautious comments. However, Hayward was inadequately supported by his chairman, Carl-Henric Svanberg – until criticism forced Svanberg out of hiding. Nor was he properly advised or assisted by his communications team, who were British-led, and appeared to have little understanding of how to respond in public relations terms to the oil spill or deal with lawmakers. Tidjane Thiam, the engaging and talented CEO of the Pru, has learnt that it is not enough to have the backing of your chairman and board for an ambitious acquisition. Ensuring that your shareholders support the rationale and the bid price for the deal are crucial for success; maybe a different sequence of stakeholder management actions would have brought different results. Lloyd Blankfein did not shrink from the task of vigorously defending the Wall Street firm against the fraud charges brought by the SEC. But he is closely associated with Goldman’s trading strategies and his reputation, as well as the bank’s, was on the line. To repair the damage, Blankfein needs to persuade the media that its self-examination will lead to the changes in the bank’s culture. More transparency about the firm’s complex financial products and practices might help assuage mistrust. Dieter Zetsche of Daimler, though a much respected carmaker CEO, attracts less press coverage than Carlos Ghosn of Renault, at least outside Germany. Reporting has focused on the alliance between Daimler and Renault and Daimler’s joint venture in China.His appearance in the top twenty most reported CEOs shows that actions can sometimes speak for themselves. 03/2010

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STRATEGIC THINKER The corporate and academic stand on communication

GLOBAL UNDERSTANDING In the West, the conception of globalisation is shaped by pre-existing frameworks that limit the ability to communicate the complex reality of global business. by Iris Rittenhofer

ecently, I attended a Danish sales manager’s lecture on his experiences with international clients. The talk was accompanied by a slideshow. A colorful slide caught my attention. Under the headline “A Globalised Company”, it visualised a world map with Europe, and the logo of a well-known company, at its centre. From there, connectors were organised, star-like, around the company logo , which was clustered in Northern Europe. The star reached out to Southern and Eastern European countries, as well as to emerging economies. Special emphasis was given to India and China. Somehow this perception of globalisation got me thinking. I started to pay more attention to the communication of the ‘global’ around me. Headlines such as “The Chinese Copy Danish Cookies” or “Cheap T-Shirts From China” leapt towards my eyes. When my bank’s stakeholder magazine dropped into my mailbox one morning, I realised a pattern in European public and corporate ways of communicating global relations.

“GLOBAL” – A COMMUNICATIVE CHALLENGE A closer look at today’s European corporate language surprisingly reveals that corporate communicators seem to respond to cultural meaning and interpretation frameworks established before the post-industrialised and postnational globalising world. These cultural patterns do not make facts understandable. These cultural patterns are facts. These frameworks characterise and limit perceptions of contemporary societal and economic transformations. The challenge for communicators in the “Old World” is to carve out related challenges and new formations. Communicators need to understand that by applying the word “global” or “globalisation”, they do not simply denote a physical or material world. Rather, the communication of those ‘g’ words is culturally informed by traditional patterns of thinking and perception applied to recent trans03/2010

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formations, such as borderless social, economic and market relations. Global social movements and labour migration have increasingly diverse and complex stakeholder demographics. In addition, transportation and communication technologies oﬀer the opportunity for borderless identity creation. Consequently, markets, stakeholders and their identities are characterised by

Communicators need to understand that by applying the word ‘global’ or ‘globalisation’, they do not simply denote a physical or material world. complexity and connectivity. They are no longer contained in state territory, or deﬁned by a state culture.

LIBERALISATION AND INTERNATIONALISATION IN DISGUISE Due to liberalisation driven by international organisations such as the WTO, interaction between economies is increasing. Today, we not only ﬁnd European products such as German cars in India or Swiss chocolate in Shanghai, but we also ﬁnd many examples of the opposite, for example Asian products in Europe, including Indian windmill technology in Denmark and Chinese cars in Germany. However, increasing

STRATEGIC THINKER

liberalisation and internationalisation are not globalisation. Rather, their relation to globalisation may be understood as that of drivers.

MIND THE ORDER! Fairly often, it is increasing European interaction, especially with Asian countries, that we found to be covered by the language of globalisation. There is an order in the communication of these developments. This order concerns the direction given to market developments and is by no means accidental: Orientalism proves to be the ﬂipside of global communications. Orientalism is identiﬁed by Edward Said as the ineradicable perception of a distinction between Western superiority and strength, and Oriental inferiority and weakness. This pattern is repeated in communications of the production

and sale of Asian products already well known in the West – be it wine, cookies, t-shirts, windmills or cars – as globalisation. Eastern economies are perceived as resemblances of the West. Behind that structure is a pattern well-known in cultural business studies – a “Europe first, then elsewhere” structure. It creates the illusion that Europe is always first. If you are a Westerner, this illusion, of course, is kind of reassuring, is it not? That the spearhead of globalisation is firmly located in the West? That the West and its industries are the sole drivers of globalisation? And that Europe will continue to stay on top of developments?

CONVENIENT COMMUNICATION Of course we hardly bother to understand new transformations from perspectives other than our own, as this might challenge the established cultural images in convenient communication. It is not enough to communicate the fact that 11 of the G20 countries are so-called “emerging” economies. To point out that 50 per cent of the world’s GDP is “now” produced by “emerging” economies does not challenge this order and the meaning it creates. It is the perspectives from which we communicate that need to be di03/2010

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STRATEGIC THINKER

versiﬁed. For how can it be explained that the so-called rising economies apparently continue to be just that: forever emerging? By exclusively focusing on Asian products that have entered European markets in terms of products already familiar in the West, our communication ﬁrmly locks Eastern countries away in a mental waiting room created by our own imaginations. Again, such communication will reassure many of us: without European products, there is no Asian competition. The original is, by the time of its arrival in Asia, already a well-known product in the West. Whether we emphasise the copying of originally Western products, the East’s contribution to world GDP, or that emerging countries become part of an extended G8, communicators tend to make emerging economies resemble the West. Moreover, Asian countries such as India or China continue to be rising economies – thus our perception reassures us that there is no risk that these countries already have, or eventually may, take the lead. It might be wise for communicators to reconsider this general, one-sided emphasis in order to capture existing complexities.

“WEST IS BEST” ATTITUDES G-word communica-

tion often denotes relations between home markets and geographically distant and foreign markets, as if globalising processes are territorially contained, borderless and multirelational processes are reduced to a territorial thinking strongly connected to the idea of nationhood. The stakeholder magazine I found in my mailbox one morning reflects such territorial thinking by offering a convenient recipe for how to survive globalisation. In order to meet the future challenges of globalisation, it is recommended that Denmark develop truly original products which China would find hard to copy. Examples of past successes by Danish companies are offered, including: a mobile phone with an integrated compass, enabling Muslims to always find the East; “prayer jeans” with green thread, the holy colour of Islam; and selling an old car for an additional charge because it once had belonged to a Pope. Communication like this uses a language informed by a descriptive, telling, and consequential understanding of markets as contained in distinct, homogeneous and sovereign cultures. Companies are perceived as representatives of distinct nation states. Not only is the perception of a Western country and its companies as the sole driver of globalisation kept alive, but, in addition, the source of originality is placed firmly in the West. Nationhood is put forward as natural capital and as added value to the Chinese or the muslim (read: ‘global’) market. This kind of 03/2010

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EXECUTIVE SUMMARY Strategic communication of globalisation is sustainable if it ... is acknowledged as a cultural practice. abandons reductive spatial thinking. is unburdened by Western preconceptions is informed by complex and emergent understanding of culture. integrates the tools of complex cultural analysis into the communication development processes. cooperates with cultural analysts in multi-disciplinary teams.

communication informs a cognitive limitation: being from the West is imagined as a competitive advantage in foreign markets. Since these markets are geographically distant, they are perceived as culturally distant as well. As the examples of China and India show, spatial relations connecting separate areas are translated into global market relations. Globalisation is reduced to a rise in the number of corporate relations to physically or culturally distant and economically diﬀerent places.

NEW OPPORTUNITIES AND CHALLENGE Globalisation com-

munications are often burdened by the European idea that everything has to be seen as a condition, as a historically developed unity. Respectively, corporate relations emerge as something that became global over time – by originating in Europe and then spreading to the outside. Communicators translate globalisation into spatial and chronologically developing relations between home

STRATEGIC THINKER

and distant foreign markets. Consequently, “global” is originating in the home market, but only happening “outside” the home market. However, this linear and unidirectional communication of international trade relations does not capture complex and multidirectional globalising processes, nor the opportunities and challenges they create in transform-

The challenge is to understand the strategic communication of globalisation as intercultural communication. ing markets. Moreover, communications of the global are exclusive and reveal blind spots: there may be several drivers of globalisation, leading globalisation forces might not be located exclusively in the West, the way foreign markets are organised might not resemble the organisation of the home market, and markets might emerge that are no longer contained in state cultures. Communications of globalisation need to break away from Orientalism.

Photo: Aarhus University

GLOBALISATION REQUIRES REVISED STRATEGIES The new

phenomena we try to capture and understand as globalisation are actually independent of national borders. Global relations are supranational relations transcending culture, economy and geography. Not only may these phenomena not be identiﬁed as characterising certain geographical areas, these phenomena operate largely independent of borders and territorial distance. Cultural frameworks help identify Europe and its corporations as drivers of globalisation and the West as a global added value. These patterns result in the communication of globalisation bur-

dened by European thought. As the recent ﬁnancial crisis has illustrated, borderless globalising processes aﬀect state territories, but do not derive from them.

COMMUNICATORS CANNOT AFFORD BLIND SPOTS New phenomena cannot be understood in terms

of shorthand descriptions which are both reductive and prescriptive. Companies cannot act on complexity, transformations end lack of predictability in a globalising world by monitoring the environment from the outset in seemingly self-evident cultural frameworks. These frameworks belong to the world of ﬁrst modernity, industrialisation and powerful nation states. They do not belong to the increasingly complex and multi-polar world of the 21st century. The challenge is to understand the strategic communication of globalisation as intercultural communication: practitioners not only need to recognise cultural patterns in their perceptions of globalisation, they also need to acknowledge the impact of culturally informed sensemaking processes on corporate communication. The understanding of globalisation, globality, territorialism, nationhood and Orientalism are cultural patterns that mutually reinforce each other in the communication of globalisation as a global economy of resemblances. Cultural frameworks are consequential in that they inform processes of meaning construction, direct understandings of markets and of individual and collective actions.

COMPLEX COMMUNICATION CREATES OPPORTUNITIES It does

matter how we communicate globalisation. Strategic communication of the global regulates knowledge on globalisation and is a site of economic competition and struggle for market shares. If communicated in ways that are non-reductive and nuanced, globalisation may open up diverse ways of value creation without blinding us to the challenges. 03/2010

Prof. Iris Rittenhofer Aarhus University Iris Rittenhofer has been an associate professor at the Aarhus School of Business since March 2206, having previously held roles at Universities in Aarhus, Aalborg and Bielefeld. She holds a Phd and an MA, and has served as a board member for the Danish Women’s Museum. Earlier in her career, she worked as an instructor for Moesborg Communication, and as a development consultant at DISCUS.

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DIFFERENT PERSPECTIVES ON PUBLIC RELATIONS The term ‘public relations’ can conjure up a wide variety of deﬁnitions and both negative and positive connotations, as the Polish example illustrates. by Jerzy Oledzki

ublic relations in any country is perceived differently by economists, politicians, journalists, social activists, charities and social movement activists. Generally, in contemporary Poland, there are several meanings of the term “public relations”, which also reflects the richness of the forms in which it is used and abused in various circumstances and contexts. They usually involve marketing contexts, as well as political and media, or scientific and didactic contexts. Depending on the context, one can discern five variants or options of how the terms “public relations” is understood:

(1) Normative variant: PR denotes a deliberate management of public image in the pursuit of organisational interests, which involves all communication activities (both internal and external) of institutions, aimed at generating positive relations with the public; (2) Academic variant: PR is also the name of a ﬁeld of knowledge concerned with professional communication skills, style, the art of developing the image and brand of institutions, social organisations, building the reputation of institutions and reinforcing relations with the public; (3) Journalistic variant: PR is a name of a promotional and propaganda method, and style of disseminating communications and information, as well as organising events to fuel the interest of the media and the general public; (4) Political variant: PR is a synonym of negative assessment of competitors’ communication activities (most often political); (5) Market and business variant: PR is a conventional term denoting all forms of activity carried out by PR agencies and PR departments, as well as private persons who take orders 02/2010

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for all integrated marketing communication services (involving active participation in product sales). This basket of comprehensive marketing services takes the form of an omnibus PR – a peculiar mutation of marketing public relations. This creation, in business practice explained by mar-

As a result of these faded borders, the responsibility for results becomes blurred and there is a real risk of ignorance of the professional ethics principles. ket demand, has little to do with the normative concept and philosophical bases of public relations, as it clearly goes beyond the borders of public interpersonal communication.

THE MEANING OF PR The normative variant is the most comprehensive in its presentation of the objective and activities taken by professionally prepared persons referred to as public relations consultants. The academic variant is used by universities where the scope of public communication by institutions and organisations is subjected to research analysis. Journalistic and

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political variants of PR interpretation have a caricatural nature. They are an expression of the communication activities of concrete persons and political institutions, rather than the name of the professional development and participation of a PR consultant in social dialogue. In this variant-based understanding each person involved in propaganda or advertising is perceived as a PRspecialist. The fifth meaning, “omnibus PR”, is in fact a declarative name of integrated marketing communication in a broad sense, which utilises all possible promotion (with PR and advertisement at the top) tools and techniques. This market and business variant, which is also popular outside Poland, corresponds to the commercial perspective of PR agencies and all businesses who, above all, see PR as a promotional tool, serving only their business. From the perspective of marketing communication, there are no differences in function between PR, advertisement and other tools, as they are all supposed to be complementary and coherent in order to meet the marketing accumulation and synergy effect. As a result of these faded borders, the responsibility for results becomes blurred and there is a real risk of ignorance of the professional ethics principles. Undoubtedly the first two PR variants are the most coherent, universal and comprehensive in public communication. It seems, that they also reflect the current understanding of the term “public relations” as popularised by all renowned national and international organisations. They are the closest to the meaning of normative PR and also describe the characteristic object of scientific research and the assessment of com-

29 munication activities of an institution (carried out via a communication audit). At the same time they highlight a very important public relations feature which diﬀerentiates them from traditional marketing activities – a noncommercial function of internal PR in any kind of organisation or institution. 02/2010

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CONDITIONS I would like to analyse PR as another stage in the evolution of public communications. In my opinion, real public relations can exist only in those countries which have a “loud” public opinion and freedom of public debate, because public relations requires certain conditions of development to prevent it from becoming sheer propaganda and advertisement. The conditions involve: (1) freedom of speech, (2) plurality of the media and access to various means of information and opinions, (3) a free market, and (4) free information ﬂow (the internet). They do not have to be met by marketing and integrated marketing communication which, as a result, can exist and develop in any society. It may well be that this favourable atmosphere is conducive to the expansion of the above mentioned “omnibus PR” in any state, regardless of its political and social structures; democratic, singleparty or totalitarian system. Indeed, the ﬁfth consecutive variant of the term PR (the omnibus PR) is able to absorb the negative features of the third and fourth option, as their common denominator involves using the same promotional and propaganda techniques.

PR IN POLAND Regardless of my wishful thinking, the majority of Polish PR practitioners is of the opinion that what is most important about public relations is public relations itself – good contacts and relations with journalists. The supporters of this least-complicated understanding of PR focus on simple forms of promotional and anti-crisis communication. They seek plaudits from their environments and the favourable opinion of their customers, even if short-lived – as long as it is loud and provides the desired effects. The most important thing is to make sure that there is no bad press and that no one speaks ill of the customer or myself – this is how one could formulate the basic objective in this activity, which that is more reminiscent of propaganda craft than PR. Based on observation of the professional PR milieu, one can draw a conclusion that this tendency has numerous practicing followers. Many of them don’t seem to be bothered by strategic communication goals and long-term effects. They limit themselves to superficial activities – promotional ritual is more profitable than the factual content of communications and meeting the mission of public relations. This shallow character of activities does not have to result from lack of theoretical knowledge and ignorance of the principles of the professional ethos, but it is a real reflection of the current demand in the market of services. Many customers in Poland so far do not expect anything more from PR specialists. 02/2010

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EXECUTIVE SUMMARY The term public relations lends itself to a number of different deﬁnitions. ‘Real‘ public relations can only exist in states which encourage debate. PR practitioners in Poland are more likely to take a short-term view than many of their contemporaries. Despite several of the negative perceptions about the effect that PR can have on society, there are a greater number of positives arguments to justify the need for its development.

One may also conclude that it is necessary to make a clear distinction between PR communications (where journalists and other communicators should be collaborators in professional relations) and pure marketing communications (where business partners are media house employees, that is representatives of professions other than journalists and fellow communicators). There are justiﬁable doubts raised when a PR specialist starts cooperating with a media house to buy or sell advertising materials, participates in sales

PR requires certain conditions of development to prevent it from becoming sheer propaganda and advertisement. promotion and uses all other marketing communication tools: this is marketing activity and should not be referred to as public relations. Mixing or combining these roles leads to a degeneration of PR and it also generates a crisis, as it complicates the observance of the clear ethical principles of the profession and, as

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a result, erodes the reputation of all public relations consultants and shapes a negative image of PR. There is a need, not only in Poland, to initiate a public debate about the idea of PR’s social responsibility, which by its fundamental nature has a character of a public (that is open and transparent) communication. One can therefore conclude that the principle of social responsibility is one of the rules reflecting the ethos of this profession and has a significant impact on the effectiveness of PR activities. In daily professional practice, this means decency and the treatment of all communication process participants as equal partners. Globally, public relations is still in the course of becoming a profession, and it is subjected to more close social attention. The media discusses the competencies and ethics of practitioners. In the common sense, a PR specialist is treated as an advocate of an organisation – he is supposed to present the arguments of his customer, but not lie, as PR cannot serve the purpose of hiding mistakes. Its basic function involves the ethical and effective presentation of a customer’s interests in the public forum. This is the basic principle of democracy: every person and institution has the right to freedom of speech and can use the knowledge and aid of specialist (as an advocate) for this purpose. There are also various opinions about the impact of PR on society. Let us start by formulating the basic accusations:

• PR litters the communication channel with loads of pseudo-events and untrue information, which complicate the picture of reality rather than explain it;

• PR litters and poisons social communication with cynicism and a lack of credibility – a telling example provided here involves spin and “black propaganda” (or the so called “black PR”). However, there are more positive arguments outlining the need for public relations:

• social control and access to information makes organisations, businesses and institutions transparent, and forces them to adopt higher moral standards; • making it possible to articulate different points of view; • accelerating the democratisation process of communication by offering professional services and communication skills to all interested persons and institutions; • inﬂuencing further development of new tools and means of interpersonal communication, as PR needs are a breeding ground for new ideas concerning communication tools.

SOCIAL VALUES Public relations still faces problems with the recognition of its full professional identity. It is thought to lack maturity and effective regulation, and is criticised above all for its control of access to the profession, its devotion to public service and advancing its own research projects. This environment still needs people who have proper functional, moral and expert qualifications. A positive argument would be to compare this profession with the journalistic profession, as both of them have an important information role to fulfil, which extends the area of freedom and the liberty of speech, and unifies and provides a sense of community. It may well be that I see to many Prof. Jerzy Oledzki social values in public relaUniversity of Warsaw tions, which are not present Jerzy Oledzki is a professor of there in every day business communication at the Institute of reality, but for the sake of Journalism, University of Warsaw the values themselves one and the Chairman of the Public Relations and Media Marketing should talk about this, as Division of Institute. Oledzki is dialogue constitutes a suthe author of several books on perior value in any public professionalism of journalists communications. The founand public relations consultants. He also is the recipient of a spedation of ethical functioncial honourable prize for highest ing in PR involves respect quality in PR teaching awarded for others. And it is worth by the Polish professional organisation of public relations. repeating that. 02/2010

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How to improve personnel management and your career

THE BEST OF TIMES, THE WORST OF TIMES Although you may be on the road to recovery, the journey can appear to have no destination in sight. The continued use of practices adopted during the toughest times can help you along your way. by Leila Bulling Towne

R 32

ecall a time you were on the motorway, driving from destination A to destination B. You know both places well, and often travel between them. The road is familiar, and since your purpose is merely travelling from one familiar place to another, the scenery has never been memorable. At one point during your journey, you look consciously at the passing landscape and seem to wake up, and noting where you are, remark to yourself, “Wow, I’ve traveled so far. I don’t even recall passing the Aldi.” Fearful that you have been asleep at the wheel with your eyes open, you reposition yourself in your seat, physically and mentally shaking yourself out of auto pilot. You’re almost there. Many of the executives I advise on a daily basis operate in a similar manner. They are the ‘auto pilots’ of medium to large organisations, driving thousands of employees towards what they feel are identifiable and comforting destinations. They are using vehicles they’ve driven before, using the best practices they employed during traffic-free times on newly-paved roads. Yet the landscape for these executives in the last few years has been anything but familiar or routine. Instead, it’s been treacherous and stability doesn’t appear to be around the corner. Organisations continue to lose money and customers, global unemployment figures remain high or climbing, and ‘bailout’ remains part of our vocabulary in 2010. Although the worst may be behind us, the present is still ambiguous. For many of my clients, the status quo – just keeping their heads above water – feels secure, and they hesitate to change their leadership strategies. Individuals and companies who will thrive in the future won’t do so by accident. Purposeful thinking, speaking, 03/2010

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and acting are required now, and there are four speciﬁc strategies (the ‘new’ best practices) for leadership, related to communication, that will help executives and their organisations to move forward.

1. LESSEN THE POWER OF THE PAST . . . BY TALKING ABOUT IT For

executives, the pain of cost cutting achieved through redundancies, the disappearance of customers, and the devaluation of their personal property and nest eggs can be likened to a closed, healed wound whose long, bright scar remains a vivid recollection of the agony endured. The power of the past few years – the memories of increasingly diﬃcult and unpredictable times in the oﬃce and at home – makes it problematic for leaders to approach recovery in a practical and systematic manner. They feel, as Americans colloquially say, ‘burned’. Hence, many executives plan to avoid any reference to previous redundancies, plant closures, or similar cost cutting measures in any and all employee communications. While many executives logically view the future as rich in opportunity for their organisations, and they actively state they want to

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forget the past, they allow history to cause them to move slowly, awkwardly, and far too cautiously. The oft-quoted words of Spanish-American philosopher George Santayana cloud their judgement: “Those who cannot remember the past are condemned to repeat it”. I am counseling executives to thoughtfully acknowledge the pain of the past few years in their communications with employees. If your executive team says nothing about the hard times when speaking of the anticipated good times, employees begin to wonder if they have an ulterior motive. Saying nothing leads to a great deal of talking by employees. When they don’t have the data they need or want, they infer it; they jump to conclusions. While you cannot control the amount of that discussion, you can inﬂuence the topics they thrash out.

2. BE INFORMATION TRANSPARENT In the wake of the Great Recession, the call for transparency from corporations, governments, and individuals rings the globe. Conservative and liberal newspapers, educational institution journals, and weekly news magazines of every political persuasion make eerily similar calls for more information, more often, and to more people. Many people managers, regardless of experience or title, tend to default towards sharing less information than they can. It is easier to say less, write less, and push out less information than it is to consider what to disclose and how to disclose it. In addition, many managers view their

The landscape for these executives in the last few years has been anything but familiar or routine. 33 employees as incapable of grasping the delicate, powerful nature of information. Thus, they operate like feudal lords: staunchly defending a castle of data, walls fortiﬁed to avoid any breach. It is an uncomfortable yet eﬀective analogy. As a result, the actions of people in authority and those of the organisation become opaque, and employees feel as if 03/2010

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they are told only what they ‘need’ to know – for today, this week, or until the scope of the project changes. This deflates the value of subject matter experts. They have already experienced a loss of workplace security as their office mates were made redundant. With information so tightly controlled, they struggle to operate effectively on a consistent basis. Innovation drops dead. To counter this, leaders must begin sharing more information than they want to. Knowledge is power, and as leaders grant knowledge, they bestow power. Disclose how decisions are made: for new product developments, for factory closures, and for promotions and salary increases. Provide employees with insight into the financial health of the organisation. Tell employees what they cannot share, and why. This best practice causes the most visceral amount of discomfort for executives: their anxiety is expressed in heaved sighs and rolled eyes; they tell me, yes, they want to be transparent, they wish to disclose as much as possible, but how can it be done sincerely and in a manner that avoids the loss of confidential data? Start small to build trust: your own trust in others and that of your employees towards you. Begin each day by listing three facts helpful to employees – data that would assist them in kicking goals into the net. Return from meetings and update your team right away. This behaviour shows your trust in your team. You demonstrate to your employees that their projects merit a higher level of information – and trust. The role of the communications executive is to encourage executives to view information as a daily fuel for the organisation. The more talking our leaders do, the more successfully employees of all levels operate. The more data shared, the more opportunities present themselves, and the more solutions are discovered. You will be guiding executives through a pool of anxiety, as you persuade them and their department heads to share what they have, in the past, kept to themselves.

3. PUT MONEY BACK ON THE TABLE As recovery from

the recession trickles down to more and more organisations in tangible forms, such as increases in quarterly profits and hiring, and executives begin to speak of ‘things getting better’, employees wonder when they will experience the recovery individually. When will they see it in their bank accounts? They’ll speculate to themselves at first, and soon enough to each other and then out loud to their managers, asking “are we getting salary increases? What about the cut in salary we had last year? Will we get that back?” Lessening the power of the past, especially when reviewing the balance sheets of previous years, is a difficult speed bump 03/2010

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EXECUTIVE SUMMARY Adapting methods used during the recession in order to maximise future performance. The last few years have prompted a necessary shift in practice, as methods used during a period of economic buoyancy no longer produce the desired results. Leaders must be prepared ignore their discomfort at talking about the past, and engage in honest, transparent dialogue with their employees. It is important to correct past wagecuts quickly, and especially in the case of the top-performing employees.

to avoid for any organisation. It is agonising to consider putting money back on the table, as the fear of having to take it away again is so great. An initial step to implementing this best practice is asking key questions of yourself and your executives as you review department and organisation-wide budgets and quarterly numbers. What are the projected wage increases for your industry – in each city and country in which you operate? Which departments are currently paid under

It is agonising to consider putting money back on the table, as the fear of having to take it away again is so great. the ﬁftieth percentile? How key are those professions to the organisation’s continued recovery? What are your competitors doing? If wage increases are impossible, can you begin to contribute to employee pensions? Can you aﬀord to increase the vacation of long-tenured employees?

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Preparing your executives for salary-related questions is fundamental. Ideally, you should advise them to volunteer news about wages instead of waiting for the enquiry to be raised. Every communications director has too many uncomfortable stories of what the executive said when an employee from a town hall audience threw out the question that no one thought anyone would dare ask. If you are unable to consider salary increases at the end of your current performance period, you must still say more than “No” or “Not right now”. Be transparent and tell employees why not. If it is impossible to share speciﬁcs, then say so: “Right now, I can’t provide an estimate of when we’ll be able to bring salaries up to the levels they were previously. I don’t anticipate we will be able to do so in the next three months, at least.” Painful? Of course, yet compared to the agony created by incomplete information, it will only be a scratch.

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4. RETAIN TOP PERFORMERS AS IF YOUR LIVELIHOOD DEPENDED ON THEM (BECAUSE IT DOES) When I sit down with new

clients, my greatest fear is that I will learn that they have done little to no thinking about their top or ‘best’ employees. Sometimes, I discover executives are unaware of who those employees may be, or what subject expertise is crucial to the organisation’s recovery. While outstanding employees tend to succeed in ﬁnding new positions in any economic climate, many of them chose not to move around over the last few years. They employed a “sit it out” strategy: let’s see how bad this gets, what my manager does, what changes happen around here, and what opportunities might come my way. You should be terriﬁed by the idea of your top

employees leaving. The image of your principal engineer walking out of your office and down the street to another company should be keeping you up at night. To tackle retention in a speedy yet thoughtful manner, make three lists: must-retain employees, middle of the road employees, and mediocre employees. Your top performers are the employees who have built the best products, established the best client relationships, and are the best managers. Put the vast amount of your time and resources there, even though it is tempting to tackle the bottom 10 to 20 per cent – or mediocre employees – first. Once executives have identified the ‘must not lose’ performers, we use ‘The 4 Ps’ assessment to create individual retention programmes. We enquire around People, Practices, Projects, and Pushers. People: “With whom do you want to engage more?” Practices: “What do you want to learn how to do?” Projects: “Identify the projects you wish to work on or lead.” Pushers: “What or who could push you away from this organisation?” The recession forced many of us to alter our behaviours. We reduced spending; we operated more efficiently. And what we discovered is that not only can we do more with less, but we can make money with less. If you were turning off lights or printing less copies earlier this year because you wanted to save money, why would you continue to do it now since the worst seems to be behind us? I feel it‘s because we have experienced the benefits of altering our behaviours, making changes that seemed awkward at first. Now, doing more with less or using resources in a more conscious manner is part of Leila Bulling Towne our routine. While I call these Executive Coach the “new” best practices, they Leila Bulling Towne is an exeshould feel well known to you, cutive coach who specialises almost blindingly obvious. in helping leaders decide what Why? Because many sucto say and how to say it. She coaches leaders to speak with cessful leaders employed them authority and authenticity, wheduring the recession and are ther they are communicating to continuing to do so now. employees, the board, or custoThey feel right; they engage mers. Bulling Towne graduated from the University of California employees, providing them at Berkeley with an AB in Engwith information on what to lish and German. She received do and how. Hence, practices her MA in English from The for hard times are now pracClaremont Graduate School at tices for the best of times.“ The Claremont Colleges. 03/2010

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THE POWER OF LEADERSHIP 36

Key ﬁndings from the European Communication Monitor 2010 prove that an inclusive leadership style correlates positively with inﬂuence and job satisfaction by Ángeles Moreno, Dejan Vercic and Ansgar Zerfass 03/2010

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gitimacy. Empirical evidence on the development of the profession and drivers for success has been identiﬁed by the fourth edition of the European Communication Monitor (ECM) survey. With 1,955 participants from 46 countries, the ECM 2010 is probably the largest transnational survey of public relations ever conducted worldwide. The majority of respondents (72 per cent)

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While some industries such as the automotive sector were able to regain trust, others found themselves in the middle of a new quest for legitimacy.

he relevance of communication for organisational success has become more visible than ever throughout the turbulent ups and downs of the European economy in early 2010. While some industries such as the automotive sector were able to regain trust, others found themselves in the middle of a new quest for le-

report that their function has gained importance during the recent recession, although only 22 per cent of them report that they were able to gain resources as compared to other departments and functions. 37.2 per cent of respondents say that their resources suffered more, and 40.8 per cent that they were able to stay on an equal footing with other departments and functions. Most interestingly, communication professionals with a strong focus on supporting organisational goals by facilitating business processes (that is by influencing consumer preferences and motivating employees) have reported a significantly better development of resources during the recession than those who favour the indirect way of building images, brands and internal cultures. This correlation points to limitations in some of the established and mainstream paradigms in corporate communications which capitalise mainly on image and reputation (that is Van Riel & Fombrun, 2007) rather than focussing on the support of business processes to achieve the organisation’s defined goals in a broader sense (that is Van Ruler & Verčič, 2005; Zerfass, 2008).

BACKGROUND OF THE SURVEY The European Communication Monitor is an annual research project conducted since 2007 by a group of professors from 11 renowned universities across Europe within the framework of the European Public Relations Education and Research Association (EUPRERA), in partnership with Communication Director magazine and the European Association of Communication Directors (EACD), and sponsored by monitoring specialist Infopaq and the international agency Grayling. In May 2010, over 30,000 practitioners were invited to complete an online questionnaire. The questionnaire had been tested previously by 53 practitioners across Europe. Every 03/2010

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European region is represented across the 46 countries: Northern Europe (28.8 per cent), Western Europe (34.7 per cent), Southern Europe (25.2 per cent) and Eastern Europe (11.3 per cent). Topics included communication strategy and planning, indicators of excellence and power, contribution to organisational objectives, development of the discipline and communication instruments, strategic issues, critical aspects of social media, leadership styles, salaries and job satisfaction, as well as the development of communication management in different types of organisations, countries and regions. The report is available either as a chart version on the web (www.communicationmonitor.eu) or as a book (Zerfass et al., 2010).

the recession also positively inﬂuence job satisfaction. Despite this evidence, practitioners in Eastern Europe (the worst paid) are the most satisﬁed with their working conditions, with Southern Europeans the least. Respondents in the latter region lag behind in all

Despite this evidence, practitioners in Eastern Europe are the most satisﬁed with their working conditions.

COMMUNICATORS ARE SATISFIED WITH THEIR JOBS In general, communication professionals in Eu-

dimensions: they complain about inadequate salaries and lower job security. Cultural and socio-economic diﬀerences and a diverging maturity of the profession across Europe may explain these diﬀerences. Practitioners in Western and Northern Europe, and males all over Europe, are better paid.

rope are satisﬁed with their job, although there are differences across the regions. Working with interesting tasks, acknowledgement of the work by superiors and clients and the status of the job are the main contributors to satisfaction. 69.2 per cent of the respondents claim to be happy with their job overall, but only four out of ten professionals are satisﬁed with their career opportunities, work-life balance and salary. Being female and working in higher positions increases the chance of satisfaction. Higher salaries and higher resources during Table 1 Development of the importance and resources of communication departments during the economic downturn Communication has become less important No change Communication has become more important 30.2%

23.7% 18.0%

8.7%

8.1% 5.3%

1.1%

2.9%

Budget development better than average

1.8% Budget development equal to the average

Budget development worse than average

n = 1,533 PR professionals in communication departments (Zerfass et al. 2010, p. 58)

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LEADERSHIP STYLE The ECM 2010 survey supports previous research (Werder & Holtzhausen, 2009) that communication professionals enact different leadership styles. They may draw on their authority (transactional style), develop a vision and appeal to followers’ ideals and values (transformational style) or identify challenges and involve followers in shared decision-making and stimulate them to participate in the process (inclusive style). Both organisational structures and cultures have a significant impact on the dominant leadership style. Transactional style dominates in governmental organisations (29.5 per cent), transformational style in private companies (38.1 per cent). Inclusive style can be found most often in joint stock companies (45.3 per cent) and non-profit organisations (46.9 per cent). Statisti-

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THREE TOP CRITERIA FOR EXCELLENCE European profes-

Table 1I Job satisfaction among communication professionals in Europe 82.3% 71.7%

69.2% 61.3% 43.5%

41.8%

40.1%

ere

sti

ng My t an ask dm sa pe an re rio ifo cli rs a ld en n d( ts va i lue nter my nal) Th wo ej rk ob ha sa hig hs My tat us job is s ec ur ea nd sta ble Th es ala ry is a My de qu wo ate rk -lif eb ala Ih nc ave ei sa gre ll r at igh ca t ree r a Ov pp er or all tun ,I itie am s sat isﬁ ed wi th my job

48.6%

int

cal analysis unveils that leadership style correlates with job satisfaction and power of communication professionals. Inclusive leaders are significantly more satisfied with their job and they perceive themselves as having more influence in the organisation. They are taken more seriously by senior management and they are more likely to be invited to senior-level meetings dealing with organisational strategic planning than those respondents who prefer one of the other paradigms of leadership. Consequently, an inclusive approach to leadership may be taken as an example of good practice for communication directors in Europe.

n = 1,955 PR professionals from 46 countries (Zerfass et al., 2010, p. 21)

sionals perceive three criteria to be the most important for the excellent performance of a communication departments: the ability to develop and maintain good relationships with stakeholders, the capacity to mobilise people, and to be formally involved in top management deci-

sion-making. No significant differences of criteria arise from position, education or nationality, with only years of experience influencing the importance conceded to the hierarchical position of the head of communication. Criteria are quite homogeneous across Europe and its practitioners. However, less experienced practitioners seem to underestimate the relevance of formal structures

Table III Implementation of basic prerequisites for social media communication

Social media guidelines for

29.3%

31.3%

39.4%

communicating in blogs,Twitter etc Tools for monitoring stakeholder

27.9%

26.3%

26.8%

29.5%

45.7%

communication on the social web Description of social media services

43.7%

offered by the department/agency Training programmes for social media Key performance indicators for

20.5%

18.0%

27.5%

52.0%

27.2%

54.8%

measuring social web activities Already implemented

Planned for 2010

Not planned yet

n = 1,955 PR professionals in 46 European countries (Zerfass et al., 2010, p. 79)

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and power, especially when they have only worked in the field for less than five years. Quite strikingly, four out of ten professionals state that excellent communication departments should be independent from the overall decision processes within the organisation. Normative ideas of public relations as neutral mediators or even as advocates of external (public) interest within the organisation seem to prevail. These concepts fall behind the theoretical insight that any planned communication within the context of organisations is a part of the overall game and should position itself in exactly this way, linking its goals to overall corporate goals of profitability and legitimacy (Zerfass, 2008), and making its own role transparent to every stakeholder. When asked about measures to enhance the performance and competitiveness of the communication function over the next three years, the respondents prefer training

Investing in research projects and in academic research in communication management and public relations are valued much less. communication and business skills as well as networking and supporting high-potential individuals within the team. Supporting high-potentials is considered significantly more important in Eastern than in Western Europe. Respondents all over Europe seem to define professionalisation of communication management particularly in terms of the improvement of personal and interpersonal skills of individual communication employees. Investing in research projects and in academic research in communication management and public relations are valued much less. This result seems to reflect a profession that defines itself more in terms of interpersonal Table 1V Perceived factors of excellence for communications departments

Good relationship with key stakeholders

85.8%

Capability to mobilise people

82.1%

Formal involvement in the strategic management process

81.8%

Knowledge of communication rules

75.8%

Processes for planning and evaluating communication

69.7%

Informal networks within the organisation

65.9%

Capability to use content production tools

63.7%

Hierarchical position of the senior communication professional

54.1%

Independence from organisational decision-making

41.4%

n = 1,955 PR professionals in 46 European countries (Zerfass et al., 2010, p. 38)

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EXECUTIVE SUMMARY Communication depar tments lost comparatively less resources during the recession when communication became more important for their organisation and they had a clear vision of how communication supports organisational goals. A majority of communication professionals think their job is interesting, valued by superiors and has a high status. However, most of them are less happy with their career opportunities, worklife balance or salaries. The inclusive style of leadership corellates positively with job satisfaction and influence; communicators should consider this paradigm as a good model, but realise that different types of organisations may need other methods. Good relationships with key stakeholders, the ability to mobilise people and formal involvement in the management process are perceived as the most important factors in defining an excellent communication department. While social media receive increased attention, only a minority of organisations has started to establish a governance structure for this field.

communication and relationship management rather than a profession that views itself from a macro perspective of culture, systems and society where other knowledge and skills are necessary.

STRATEGIC PRIORITIES AND CHANNELS Half of the respond-

ents state either that coping with the digital evolution and the social web and/or linking business strategy and communication are most relevant for themselves within the near future. The digital topic has overtaken the business link issue, which had been ranked number one for the

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Van Riel, C.B.M., Fombrun, C. (2007). Essentials of corporate communication. London/New York. Van Ruler, B., & Vercic, D.(2005). Reﬂective communication management. In Communication Yearbook 29 (pp. 239273). New Brunswick, NJ. Werder, K.P., & Holtzhausen, D. (2009). An Analysis of the Inﬂuence of Public Relations Department Leadership Style on Public Relations Strategy Use and Effectiveness. Journal of Public Relations Research, Vol. 21 (4), 404-427. Zerfass, A. (2008). Corporate Communication Revisited: Integrating Business Strategy and Strategic Communication. In A. Zerfass, B. van Ruler & K. Sriramesh (Eds.), Public Relations Research. European and International Perspectives and Innovations (pp. 65-96). Wiesbaden. Zerfass, A., Tench, R., Verhoeven, P., Vercic, D., & Moreno, A. (2010). European Communication Monitor 2010. Status Quo and Challenges for Public Relations in Europe. Results of an Empirical Survey in 46 Countries. Brussels.

past three years. Paralleling this strategic dimension, online communication (websites, e-mail, intranet), media relations on the web and social media applications (blogs, podcasts, communities etc.) have made a great leap forward during the last twelve months on the instrumental level. Predictions for the future are

Communication professionals regularly overestimate the growth of new communication channels. even more enthusiastic. However, a longitudinal analysis of predictions from previous surveys shows that communication professionals regularly overestimate the growth of new communication channels. Online communication was expected

to gain in relevance by 25.9 per cent from 2007 to 2010, but the difference between the findings in both surveys was only 14.4 per cent. The importance of social media grew by 15.2 per cent, instead of the 41.4 per cent expected four years ago. Nevertheless, the overall shift is significant and must be dealt with. In spite of the enthusiasm for social media communications, less than one third of organisations have already implemented necessary prerequisites like social media guidelines, monitoring routines or even key performance indicators to define and evaluate measures of success. This differs significantly within the various European regions. Although a majority of communication professionals claim they have strategic control of digital and social media, resources are often assigned to the marketing function. Less than half of the respondents working in joint stock or private companies have budgetary control over social media. Communication professionals still have to stake their claims. By doing so, they might be able to take pole position in the run for those positions that are responsible for the overall social media strategy and social media governance in organisations. Combining communication expertise, a clear vision of goals linked to organisational strategies and an advanced, inclusive leadership style will be a good prerequisite for this. 03/2010

Prof. Ángeles Moreno University Rey Juan Carlos Ángeles Moreno is a professor of PR and strategic communication and director of two postgraduate programmes of comms management at the University Rey Juan Carlos, Madrid.

Prof. Dejan Vercic University of Ljubljana Dejan Vercic is a professor of PR at the University of Ljubljana and organiser of BledCom, the annual international public relations research symposium at Lake Bled.

Prof. Ansgar Zerfass University of Leipzig Ansgar Zerfass is a professor of communication management at the University of Leipzig and lead researcher of the European Communication Monitor survey series. He is also executive director of EUPRERA.

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Photos: University Rey Juan Carlos; University of Ljubljana; University of Leipzig

REFERENCES

BORDER CROSSER Experiencing the unknown – PR professionals working abroad

PIERRE GOAD Global Head of Corporate Communication, Zurich Financial Services Interview: Marc-Oliver Voigt

You hold both British and Canadian citizenships – how did you end up with dual citizenship? It is even more complicated than that – I was born and raised in Canada, before moving to Hong Kong, where I received an identity card for permanent residency, which is the closest to citizenship you can get without being Chinese. Then I moved to London where I lived for seven years. After ﬁve years you qualify for permanent residency and, after six years, for citizenship. So, eﬀectively, I added both Hong Kong and British citizenships to my own. Additionally, my wife is originally from the Philippines, therefore our children have the right to live and work in four countries.

that is something which is very familiar for many of the readers who have joined new employers.

So you really are a border-crossing family? Absolutely, yes. My two eldest children go to university in Vancouver, our vacation house is in the Philippines and we are in the process of moving from London to Zurich. All of our children were on airplanes within 30 days of being born. Living in more than one place appears to be quite normal for us.

The story of the banking industry will be the same in next two years as it was in the past two years.

What would you say is typically British, what is typically Canadian and – after what you have just told me – typically Asian about you? That is an excellent question, but I think, in a way, I am poorly placed to answer it, as I have taken in all of those diﬀerent inﬂuences. So what seems normal and routine to me, may be seen as highly unusual by someone else.

You became global head of corporate communications at Zurich Financial Services in May. What were the first things you accomplished in the first two months? Zurich is a very large and complex organisation. In the first two months, I think I have gained a much better understanding of how the organisation really works, and where the stresses and challenges are, as well as who feels involved and who does not really feel connected. I think 03/2010

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You worked for many years at HSBC Global Banking and Markets in London. The ﬁerce criticism targeted towards the banking industry in the past two years must have been difﬁcult to experience. Does your new role at Zurich Financial Services promise to be a welcome change of pace?

It felt like time for a move after those years in London. Of course, the last two years were a stressful period – HSBC was a very good bank but still a bank and therefore belonged to the category of ‘evil, awful and terrible banks’. It is, in some sense, a relief to move on to something where the stories are diﬀerent and the themes are broader. The story of the banking industry will be the same in next two years as it was in the past two years. Banking has just one story, and after a while that gets a bit dull.

What communications challenges do a global insurance company and a global bank have in common?

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My own understanding and thoughts on what the purpose of communications is within large organisations has evolved. I now fully recognise how important the internal audience is. It is much less about dealing with the media than it was 10 years ago. Your number one audience is your own employees – they are incredibly valuable, especially in a services company. Product features are not how you win: it is a combination of service, customer experience, and retaining knowledge and developing talent within the ﬁrm. All of this is entirely dependent on people. If you have a very high turnover or a hard time recruiting the best people, you will struggle. This is a business strat-

egy issue: attracting and retaining the best workforce in a services company is critical. It is even harder when you are dealing with a labour market which is evolving rapidly, particularly in emerging markets. It certainly was the case that a large multinational company operating in a less-developed market 20 years ago could have had its pick of university graduates. Everybody wanted to work for the big modern company, but now, local companies can, and do, compete very aggressively with multinational companies. Sometimes local companies will have a better image, or they can make quite a strong argument that they offer better career opportunities. Finding the right people across a network of 60 countries is much more challenging than it used to be. For all of those reasons, I think that the internal audience is number one. Successful companies have clearly done something with their staff to make a difference, and communications is absolutely central to making that happen, which is another dramatic change. Communications is no longer the company’s newsletter or press office 03/2010

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– which may have been the case 10 or 20 years ago. I believe that today, communications is right at the core of a modern corporation.

How can you create and orchestrate Zurich’s communications towards its very diverse workforce of 60,000 employees worldwide in a manner which makes it suitable for the different cultural groups among your employees? My own view is people have become, to some extent, obsessed with the technology of what is called social networking. They ignore what is truly interesting about it and that is simply that people will identify with and join communities. People spend many hours per day inside their company with their colleagues, so you can be Swiss or American or

The trick is that you must be very careful and you must guard against expressinf corporate culture in terms of a national culture – and that is hard. Emirati, and that is your national community, but at the same time you can be part of the Zurich community. There need not be a contradiction. You can create a Zurich community of 60,000 people, distributed across the world, that has a very strong culture which people identify with, where people have shared experiences, values and vision, and none of that has to contradict their own national characteristics, language or preferences. I think successful modern companies have ﬁgured that out. The trick is that you must be very careful and you must guard against expressing corporate culture in terms of a national culture – and that is hard.

You mentioned social media – does the plethora of new media facilitate communications across borders or make it more difficult? At present, I think it is making it more difficult, but that is because we are not yet at the shake-out phase, where people decide democratically what to use and what not to use. The audience will decide which the best channel is, or the better channels, and then people can focus their attention on those challenges. It is confusing – it’s a challenge worth spending a lot of time thinking about and experimenting with. Is social media suitable for the insurance business, an industry which is perceived as being rather conservative? We do not know yet because in financial services in general you have to be very careful with your reputation. You do not want to buy insurance from a company that is ‘radical’. 03/2010

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There have been some experiments with Twitter and internal blogs – some successful, some not so successful. We have also had a couple of very successful uses of external blogs about speciﬁc topics. Yes, the internet has been around for a long time, but this social media explosion is very recent. It is only in the last few years that the usage ﬁgures have increased dramatically. I do not think we know how to use it yet, or how people ultimately will use it in the future, but we do need to take it seriously.

Your customers are getting younger... It has certainly been pointed out to me, having children, that they are doing things differently, so there is a generational shift. My first career was in newspapers, but my children do not read them. There is a transition. Does that make them worse people? It saddens me as I grew up loving and reading newspapers, as well as working for one. They are actually consuming a lot of information, but from different sources. I think five years from now, there will be a differentiation between trusted and untrusted sources – something will emerge that is trusted and verified, and it will have those features that used to be associated with a newspaper. With social media, it is impossible to know what can be trusted to such a level right now. Is it possible to identify differences in the way the Asian media report on matters in comparison to the European media? I have thought about this a lot. I find as a communicator, not just as a reader, some of the most striking national differences are in newspapers and media. I travel around the world and meet people, and they quite often seem to have quite simi-

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lar interests and concerns, and then you look at the media available in their countries, and it is quite different. I do not know why that is – why journalists end up in such a small world that, almost under some Darwinian system, they evolve into the equivalent of the platypus, which is an animal you would not find anywhere else. You would not find English newspapers anywhere else; they are so specific to the UK. A UK tabloid is different from a German one. It has always struck me that national media seem to almost exaggerate national differences. They seem more different than their audiences do.

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Are companies viewed differently by the public in Asia than in Europe? You will not see the same suspicion towards successful companies in Asia as you would in Europe or the US. They do not start from a position of “if you’re making money, you must be doing something wrong”. In the UK, it would be very diﬃcult to start a conversation with a discussion about your success, whereas, in Asia, the opposite is true. People are curious about this rapid economic change that is such a part of their lives. There is a much greater willingness to believe that companies can do good things. That is due to the rapid changes in living standards over the last 20 years. People in the US or Europe do not understand what a miracle this has been – it does not sound like much to go from earning a dollar per day to 10, but that can be a dramatic change in somebody’s personal circumstances. All the places and media you worked in, and for, seem interesting enough, so what inspired you to change gears in the new millennium and start a career in communications?

I think I had reached a stage in my journalism career where I had had the most interesting jobs I ever would have. I was really faced with taking a very long-term view. I could have remained in journalism at the Wall Street Journal, which ultimately would have meant moving back to the US and trying to move up in management. I think I had reached a point where I had had a very good run, and been very lucky and enjoyed myself tremendously, but I just was not sure what the next job in journalism might be that I really wanted. So I started to look around. I had always been a business reporter, so I was clearly interested in business, and the entry point in the business world for someone coming out of the media is often communications.

Will a good journalist always make a good corporate communicator? No – sometimes they are awful! I think that a lot of journalists mistakenly believe that they know how to be a good communicator. Some of the skills are transferable and some of the knowledge is useful – certainly familiarity with the media is useful – but being a media spokesperson is a much smaller part of the job than it was 20 years ago. You have to have a much wider range of skills, and you must Pierre Goad have the kind of personality to be able to convince people Global Head of Corporate Communication Zurich internally to move in a certain Financial Services direction as well as create a consensus. Journalists, dePierre Goad has been Zurich pending on the environment Financial Services’ global head of corporate communications they come from, can find the since May 1, 2010. Reporting transition very difficult. Last question: Your working languages are English and French, will you now, being based in Zurich, start picking up Swiss German? I will. I am unafraid of the challenge! Many people told me just how challenging it will be to learn two flavours of German simultaneously, but other people have done it, so it is not impossible. 03/2010

to Martin Senn, the Group CEO, Goad is be responsible for the communications function at Zurich’s Corporate Centre and across the Group. Goad joined Zurich from HSBC where he served as head of corporate development for the bank’s investment banking and asset management divisions with responsibility for all strategy and communications functions. He has extensive international experience, having held a series of communications and strategy roles at HSBC in Hong Kong and London.

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STORY TELLER Looking at the important questions of communication

03/2010

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ON TOP OF THE GAME How reputation keeps your organisation above the crowd

“Reputational risks and rewards” by Dafydd Phillips page 48 - 51

“Problems in common” by Mike L. Barnett page 52 - 55 “The blame game” by William L. Benoit, Finn Frandsen and Winni Johansen page 56 - 59

“Reputation gatekeeper” by Dirk De Muynck page 60 - 62

“Handling social media with care” by Chiara Valentini page 64 - 67

“Scoring in South Africa” by Vicki Trehaeven page 68 - 71

“Welcoming scrutiny” by Jan Runau page 72 - 75

“Team building exercise” by Alberto Andreu Pinillos page 76 - 78

“Basing your good name on good deeds” by C. B. Battcharya page 80 - 83

“Tried and true techniques” by Kamelia Velichkova

page 84 - 87

03/2010

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REPUTATIONAL RISKS AND REWARDS Good reputations can take years to nurture, but only hours to overturn. So who decides a corporation’s reputation, what are the most efﬁcient ways of conveying it, and what happens when crisis brings the threat of notoriety?

by Dafydd Phillips

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eputation is intangible, being the evaluation of ourselves by others. It is also the accumulation of years of experiences, decisions and mistakes. In the corporate world, a reputation could be described as a promise made to stakeholders, employees and to the wider society, a promise of current and future behaviour based on past performance. A good reputation inspires trust, which is good for an organisation’s long-term sustainability, but failure to deliver on promises made can build a bad reputation. At the heart of this process is communication – simply put, communication builds reputation. In his new book, Crisis of Character: Building Corporate Reputation In The Age Of Skepticism, global corporate reputation adviser Peter Firestein, writes that the idea of “the corporation as a fortress divorced form its social setting” has come to an end. The level of scrutiny and transparency demanded of organisations today means that the public has an unprecedented power to inﬂuence a corporation’s destiny, and managers must acknowledge this and be in step with people’s desire to see their own values reﬂected in the company’s work. Or as Firestein told Communication Director, “I think that a good corporate reputation requires an alignment of a corporation’s values with the society in which it purports to function.”

ON THE FRONT LINE But who is responsible for building reputation – or rather, who is responsible for creating the conditions in which a reputation is created? Just as reputation touches on so many diﬀerent issues that aﬀect an organisation – including crisis, employee relations, corporate social responsibility, investor relations – then equally 03/2010

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as many groups have input into supporting and conveying reputation. Most visible is the CEO. Firestein sees the CEO’s role as crucial: “It has to come from the CEO, and that’s not just the CEO’s personal conduct, it’s the ability of the CEO to instil throughout the organisation a set of values and a way of

The CEO as chief ‘brand builder’, if you will, is a double-edged sword. carrying out the values throughout everything the corporation does”. Here, the communications function plays a crucial role: “What the communication director can do for a CEO”, he notes, “is to stress how a company is perceived – you can’t communicate without knowing what your audience thinks.” But Professor Peggy Bronn, director of the Centre for Corporate Communication at the Norwegian School of Management, Oslo, sounds a note of warning against putting too much weight on the CEO as a reputation mascot: “The CEO as chief ‘brand builder’, if you will, is a double-edged sword. It is great for

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firms who have an inspiring leader who connects with a wide audience and represents their organisation in a good way. The downside is when the leader’s own profile overshadows the firm. We have had a few cases in Norway where, when we removed the impact of a highly profiled leader from their firm’s reputation value, the firm’s reputation was lower. In other words, the quality of products or ethical behaviour was not good

enough to place the ﬁrm in a higher ranking. In the end, who the leader is doesn’t matter if the ﬁrm can not deliver on the rest of the dimensions.” Employees are also on the front line of reputation, as any interaction between the public and the company is a reputational make-or-break. According to Rui Martins, communication director and head of institutional relations at health association Dianova Portugal, employees must be empowered to buy into the company strategy, and to show commitment as carriers of the company’s reputation. “Employees must be given a voice,” he says, “to be motivated and engaged in creating the success of the 03/2010

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entire corporation in facing the challenges and opportunities of this interdependent global world.”

TOYOTA RECALL The global reality of many of today’s

companies also brings another dimension to reputation. Cross-cultural communications clearly have a role to play in adapting aspects of brand and reputation to local cultural, social and economic considerations. Integrated communication is also important for building a strong reputation, as Sabine Einwiller, professor of corporate communication at the Department of Communication, Johannes Gutenberg University, Mainz explains. “In decentralised organisations, ensuring integrated communication is much more difficult” she says. “Especially when it comes to defining central values and messages, as well as the strategy and processes for reputation management, centralisation helps. However, there has to be enough flexibility to adapt reputation management to local sensitivities and needs. Also, in times of accelerated and more transparent communication through social media, it is essential to be able to communicate very quickly and not be hindered by cumbersome and lengthy coordination processes which often come with centralisation.” A case in point here is Toyota’s experience earlier this year, when the car manufacturer’s slow reaction to concerns over faulty breaks was attributed to cultural tone-deafness. Peggy Bronn thinks that, in the case of Toyota, “we saw American consumers and politicians expecting certain behaviour from Toyota management, and this behaviour was lacking. The Japanese leader had to be told how to behave for the US.” So Toyota’s communications function apparently failed in its task of letting top management know how others saw the company and its strategy.

NESTLÉ’S FACEBOOK PAGE It is not just locations but tools that call for a different approach. The growth of internet communication means that more people can talk about firms and products, and crises large and small take on new life, all of which can derail reputation. Earlier this year, Nestlé’s Facebook page attracted the wrong kind of attention when the page’s administrators reacted in a defensive tone to critical wall comments, shutting down sites and banning the appropriation of Nestlé logos. Sabine Einwiller describes this as a failure to communicate “in a tone of voice suitable for an environment like facebook…the communication platform for reputation management has to be adapted to the differences in media environments just as to the differences in local or regional environments”. On a more positive note, Rui Martins 03/2010

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credits social media with aiding a closer, more accurate measurement of what people are saying about your company: “Social media has simplified my task, by allowing me in real time and without financial costs to monitor and listen what prospects, influencers, opinion leaders, politicians and the media are saying about us and how they expect Dianova to fulfil its promise”.

CRISIS, RISK, AND REPUTATION These are just some of the

channels and strategies in which reputation can be fostered and communicated over the years. But alongside this long-term approach, the sudden impact of crisis can capsize the most carefully-nurtured

The sudden impact of crisis can capsize the most carefully-nurtured reputation. reputation, and this presents one of the more difficult roles for the communication director. Dan McGinn, CEO of TMG Strategies, believes that reputation risks are directly proportional to the success of the company. “When you’re the biggest, best, first and most”, he says, “you’re in the greatest danger of having a catastrophe on your hands. You’re so big, it breeds confidence, it breeds over-confidence. It’s hard to see the world the way the rest of the world does. It exposes you, it insulates you, and I think for those larger organisations in the world, way up above everybody else, they need to realise that they’re in peril because of their size and they have to fight against arrogance and against complacency, and it’s those lessons that I see played out over and over again.”

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Firms like BP suffer in a crisis because crises are seen to expose a fundamental flaw in the corporate culture. Sabine Einwiller describes crisis as “stress situations. They reveal a lot about the true personality of the entity who is hit by the crisis, be it a person or a firm”. Peggy Bronn believes that the current financial crisis “exposed a lot of bad practices and made people realise that some business sectors need increased regulation because you can’t trust what they are telling you.” When trust in business is violated, the effects on reputation, no matter how many years are behind that reputation, can be highly corrosive.

TRUE COLOURS SHINING THROUGH In counteracting this

damage, it is a relatively simple matter to establish the appearance of transparency, with websites, Twitter accounts and Facebook updates moving the information flow along quickly and professionally. But actions ultimately speak louder than words. As Einwiller cautions, “the real DNA shows through when it comes to accepting responsibility and meeting the needs of those affected. Here it shows whether a firm is largely profit-driven and governed by lawyers and accountants, or whether they have really and truly adopted a stakeholder approach to management and take the well-being of their stakeholders seriously.” In the case of BP, Dan McGinn believes that “they need to make an examination. I think they need to take this crisis and get the full value out of it for what’s happened, and re-examine their culture and their processes to see how something like this can happen, and why their response was not exactly right. They need to make a deep evaluation because yes, there’s

bad luck, yes, there are technical explanations here, but there’s something cultural that contributed here as well.”

A SLICK APPROACH In the wake of a crisis as all-con-

suming as the recent Deepwater Horizon debacle, can a ﬁrm ever restore its reputation? Will BP’s name now forever be asscoiated in the public imagination with disaster, in the same way as, say, Exxon Mobil? Sabine Einwiller believes that “the associations between BP and the oil spill are engraved not only in the public’s memory but also in the digital memory of electronic media. The only way to prevent even greater reputational damage is to try to also create favourable associations and thereby attenuate some of the negative associations”. The recent announcement of the imminent replacement of Tony Hayward with American colleague Bob Dudley, head of the clean-up operation, is a step in this direction. And Dan McGinn believes that, despite the likely legacy of the incident, BP can begin the process of reputation rehabilitation by carefully defending its case: “I think the argument they need to make is that, from an environmental and energy stand-

In the wake of a crisis as all-consuming as the recent BP debacle, can a firm ever restore its reputation? point, the world won’t be better off if BP disappears. This is one of the biggest institutions in the world, we need them to be run better, we need them to operate better, but for us to solve our environmental and energy problems we need a strong BP. They had the catastrophe, and they’ve repeatedly disappointed people with the way they’ve handled it. But I think that by having a new person in charge, they still have an opportunity to stabilise themselves and demonstrate their leadership here. Whether they will or won’t, time will tell, but they still have an opportunity to recover ground, to stabilise and to make this a long term fight on their part.” So we return to the long-term approach. As McGinn suggests, despite the difficulty faced by communicators in persuading a skeptical audience that the company is able to take accountability and move on, it is not impossible. And as Peggy Bronn notes, “a lot depends on the firm’s previous reputation capital, almost a bank account of built up reputation assets. If it is substantial, a firm can survive but it’s got to put back what it lost. For some firms this account is perilously close to empty. Toyota will come back in pretty shape, BP probably won’t disappear but they will never be the same.” 03/2010

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PROBLEMS IN COMMON The BP oil spill acts as a stark reminder that problems affecting one company can harm the reputation of an entire industry. by Michael L. Barnett 03/2010

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ould it happen here? The environmental disaster that followed the blow-out of the Deepwater Horizon rig in the Gulf of Mexico has shown that deep-water drilling is indeed a hazardous activity... Like the big banks, big oil needs to be restrained.” (The Independent, Viewspaper June 10, 2010). Unfortunately for Shell, and perhaps ironically for Exxon, BP never did move “Beyond Petroleum”. Because BP is an oil firm, its massive Gulf of Mexico oil spill has significant consequences for Shell, Exxon, and other oil firms. The tar ball spreading across the Gulf is also spreading across the oil industry, gumming up oil firms’ reputations and darkening their collective futures. Granted, since the demand for oil is relatively inelastic, protests against BP can mean new customers for Shell, Exxon, and others. But there remains the problem that BP’s inability to manage disaster in a deepwater well has unravelled trust in the technology and managerial competence of oil drilling in general. As a result, the costs and burdens of regulatory oversight in the oil industry will significantly increase and the ability to explore and drill in new locations will significantly decrease. It also seems likely that previously waning calls for alternative energy exploration will again gain momentum, perhaps finally providing enough of a push to move more countries beyond petroleum, and thus bringing about a major decline and even an end to the oil industry as we have known it. These types of situations, wherein events at one firm can damage the success and survival of entire indus-

tries, can be conceptualised as ‘commons problems.’ The notion of a commons – a resource that is collectively owned and jointly used – is typically applied in natural resource settings, such as with fisheries, grazing lands, and parks. Incidences of overfishing, overgrazing, littering, etc. by one or a few can damage or destroy the natural resources held in common by the many. In an analogous way, industries share a commons – their collective reputation – and this commons, too, can be damaged or destroyed by the actions of one or a few. Though the BP disaster is currently the most salient, examples abound across a broad swath of industries of how the actions of one firm tainted an entire industry. Older examples include Union Carbide’s deadly poison gas leak in Bhopal, India, in 1984, which led to tighter regulation of, and a multi-billion dollar charge to, US chemical firms through the Superfund Amendment and Reauthorisation Act; and the near meltdown of a single nuclear reactor at a single facility of one nuclear power company at Three Mile Island in 1979, which stalled nuclear power development in the US for at least three decades. More recently, the actions of perhaps more than a few bankers have sullied the reputation of the banking industry overall and perhaps made it a career of less desirability as well as a frequent target of legislative ire. Why do these sorts of reputation commons problems arise in industries, and what role does communication play in alleviating them?

EXPLAINING REPUTATION COMMONS PROBLEMS Reputation commons problems arise because cus-

tomers, activists, current and future employees, regulators, and other stakeholders are unable or unwilling to separate the baby from the bathwater. We live in a complex world, full of stimuli that beckon for our limited attention. We cannot pay attention to everything. And even if we do

The tar ball spreading across the Gulf is also spreading across the oil industry, gumming up oil ﬁrms’ reputations and darkening their collective futures. 53 pay close attention to some things, given disparate and self-serving information sources (is the Gulf oil disaster attributable to BP, or Transocean, or Halliburton, or someone else?), we may be unable to make clear sense of them. So we develop shortcuts to help us cope with this complex world. In particular, we develop heuristics that 03/2010

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distill broad categories into simplified mental models. If we are asked what we think of a particular bank, we may know little about the bank or have little ability or desire to take on the effort of learning about the unique characteristics of that bank, and so we generalise from recent and salient examples of bank behaviour: I’ve heard bad things about banks; this is a bank; therefore, it is likely to bad. In this way, a very salient event at one firm can affect all firms like it by altering the ‘theory in use’ that observers use to categorise an entire population of firms. Observers start to work from the assumption that banks are bad, and this default condition holds unless proven otherwise – and it is hard to prove otherwise, given limited attention. Consider, for example, the way a terrorist act can flip an entire society’s theory in use. After September 11, 2001, any airplane crash, train wreck, or even drunkenly rowdy airplane passenger became initially categorised as suspected acts of terrorism, and had to be proven otherwise.

MANAGING REPUTATION COMMONS PROBLEMS

The implication of a reputation commons is that you cannot manage your firm’s reputation in isolation, because you cannot escape the fact that you are part of your industry. Even if, say, Shell were to have a pristine safety record, the regulations put in place in the aftermath of BP’s oil spill will increase costs and decrease discretion for Shell, and lead to a more difficult operating environment. Current and potential employees, partners, insurers, investors, and others will be more hesitant to be affiliated with oil firms in general. Economic incentives push commons toward destruction because each member of a commons, in seeking to maximise self-interest, tends to overexploit the commons. Fishermen have a strong economic incentive to overfish shared fisheries; after all, if they don’t take all the fish they can, another probably will, and so they might as well gain the benefit themselves. Likewise, ranchers sharing an open pasture have incentive to add another grazing cow, community members sharing a water well have incentive to draw another bucket of water, and so on. Even though the eventual destruction of the commons will make all worse off, the dominant incentive for individuals to overexploit it is difficult to keep in check, and so “the tragedy of the commons” prevails. We see this sort of logic play out in relation to an industry’s reputation as well. Though the industry overall benefits from a good reputation, individual firms have a strong economic incentive to avoid investing in the costly activities necessary to maintain it. As firms give into the 03/2010

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EXECUTIVE SUMMARY Reputation commons problems The reputation of the oil industry is a common resource, with stakeholders bracketing all of the ﬁrms together. The “tragedy of the commons” is that actors will try to over-exploit common property for individual advantage. Firms must work hard to build a mental fence around their company, and hope that the others do too, to protect them from disasters within the industry.

temptation to take shortcuts, such as with oil rig safety and disaster planning, in order to reap immediate financial rewards, the overall industry reputation becomes more and more at risk. The solution for many natural resource commons problems has been to privatise the commons. For example, to end overgrazing, plots of land may be allocated to individual ranchers, who then fence off their privatised lands. Since the costs of exploitation are borne directly by the individual owner, the economic incentive to overgraze one’s own land is removed. In an analogous fashion, the solution for an industry faced with a reputation commons problem is to erect what we have termed “mental fences” that parcel reputation into individual plots. Consider the risk a firm faces by being in an industry with a few dozen firms, each with a five percent chance of suffering a major crisis in the next year. If the actions of other firms reflect on all firms in the industry, then it becomes virtually certain that at some point, the focal firm will suffer collateral damage. But if the firm can untangle itself from the

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reputation commons and stake out its own, distinct reputation plot, it can ameliorate this vulnerability to the act of others. Mental fences are built through information disclosure. Reputation commons result from stakeholders’ tendency to lump ﬁrms together, presuming that one bank, say, is much like any other. Transparency, outreach, community involvement – in short, opening one’s doors and letting the public walk in – helps to distinguish ﬁrms, making them

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Reputation commons result from stakeholders’ tendency to lump firms together. more than generic players in an industry. Even in dangerous industries, where ﬁrms may fear disclosure or believe that the public just will not understand, it is better to air your dirty laundry – so long as you can make it clear that you are getting better and better at laundering. Eventually, an error is inevitable, and it is better to have stakeholders prepared for the worst but believing you will handle it the best, than having them experience the worst and having no idea how you will handle it. This stands in contrast to the common tendency to hunker down. Don’t be a closed box. Most stakeholders, given other demands on their attention, will not take the trouble to look inside a closed box. But once their attention is drawn toward it as a result of an inevitable disaster, they will presume the worst about the unknown contents. It is better to establish transparent relationships in advance, when stakeholders are amenable to listen-

ing, and then to keep that relationship alive. It can work after the fact (after the cow is out of the barn, such as with the chemical industry after the Bhopal disaster) but it is much harder under these adverse circumstances. It is best done before a crisis, though this is precisely when it is least likely to take priority. Interestingly, though, a mental fence built in isolation seems to be ineffective. If a firm does manage to distinguish itself from other similar firms in the eyes of stakeholders, effectively parsing out its own reputation plot, it still remains vulnerable to harm from the misdeeds of rivals if these rivals have not also built mental fences. Picture these mental fences as having gates that swing inward but not outward. The mental fence helps keep a firm’s errors as its own – effectively fencing them in – but the errors of other firms can breach the fence. To protect the firm, other firms must also forge mental fences to contain their inevitable errors. Thus, the key to successful resolution of reputation commons problems is to have all firms build fences. The chemical industry recognised this after the Bhopal disaster and created the Responsible Care industry self-regulatory programme, the primary code of which required all member firms to open their doors and closely interact with the community. By coming together, they stood apart better, making each firms’ problems more firm problems and less industry problems. Arguably, member firms also made performance improvements as part of the self-regulatory programme as well, and so Prof. Mike Barnett were less prone to accidents Said Business School, University of Oxford that might test the strength of the mental fences. Mike Barnett joined the Said

CONCLUSION Given the

massive damage inﬂicted on the Gulf region, it presently feels rather petty to focus on the welfare of industry in response to crisis. But perhaps industry’s recognition and better management of their shared fate may decrease the likelihood of future disasters. 03/2010

Business School at Oxford University as professor of strategy in Autumn 2009. He also serves as fellow in strategy at St. Anne’s College. Previously, he held the post of Exide professor of sustainable enterprise at the University of South Florida. He completed his PhD at the Stern School of Business at New York University. Before entering academia in 1997, Barnett served as a commissioned ofﬁcer in the United States Air Force.

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THE BLAME GAME When ﬁnancial ﬁrm AIG was criticised over reported payouts to executives, the CEO wrote a letter protesting his personal innocence and attempting to repair the institution’s image. by William L. Benoit, Finn Frandsen and Winni Johansen

he US banking and insurance industries suffered huge losses in 2008. In September, the federal government took control of Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation), both important mortgage providers. Lehman Brothers investment bank filed for bankruptcy, and problems arose with other banks (including Washington Mutual and Wachovia; Federal Reserve Bank of St. Louis, 2010). One particular sore point in the financial mess was AIG (American International Group): by March 2009, over 170 billion US dollars in federal money had been poured into this institution, and criticism surged over reports that AIG planned to pay out “about 165 million US dollars in bonuses . . . to executives in the same business unit that brought the company to the brink of collapse” (Anders and Baker, 2009).

Liddy clearly distanced himself from the AIG bonus programme using simple denial.

A “senior government official,” speaking off the record, declared that “it is unacceptable for Wall Street firms receiving government assistance to hand out million-dollar bonuses, while hard-working Americans bear the burden of this economic crisis” (Anders and Baker, 2009). AIG had a serious image problem. This essay investigates the image-repair efforts of Edward M. Liddy, Chairman and CEO of AIG (Liddy assumed this position after the government required the resignation of the then-CEO as a condition for receiving bailout money). On March 14, 2009, Liddy sent a letter to Timothy F. Geithner, Secretary of the Treasury. The letter was 03/2010

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also distributed on the internet. This analysis will employ the image repair strategies identiﬁed in Benoit (1995) to analyse this message. First, we describe the theory which informs this analysis. Then we use the image repair strategies to analyse Liddy’s letter. Finally, we evaluate this message and discuss the implications.

IMAGE REPAIR Many critics and theorists have worked to understand how persuasive messages can be employed to repair a tarnished image (see, for example, Coombs, 2007). It is important to realise that reputation or image can be quite important, that threats to reputation arise throughout human affairs, and that persuasive messages can help repair the damage to a reputation suffered from accusations or suspicions of wrong-doing. Image or reputation is important for individuals and corporations alike. Benoit identified a variety of potential image repair strategies grouped under five general strategies (1995, 1997). The first general category of image repair strategy is denial, with two variants. Simple denial asserts that the accused did not commit the offensive act or that the offensive act simply did not occur. Shifting blame goes a step further than simple denial, attributing responsibility for the wrongful deed to another. The sec-

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ond general category of image repair, evading responsibility, can assume four forms. Provocation asserts that the offensive act should be viewed as a reasonable reaction to another, prior wrongful act. Defeasibility declares that the accused should not be held responsible because of a lack of information or control over the offensive act. Thirdly, accident argues that the wrongful act was a mishap. Next, the accused can assert that he or she meant well, performing the act with good intentions. The third general category of image repair, reducing offensiveness, has six forms. Bolstering attempts to counterbalance the offensive act by stressing the positive qualities or deeds of the accused. Minimisation attempts to reduce perceptions of the severity of the consequences of the wrongful act. Differentiation functions by comparing the act in question to similar but less desirable acts so that, in comparison, the offensive act does not see as bad. Transcendence tries to justify

the oﬀensive act with appeals to higher values or other more important ends. Another option for the accused is to attack the accuser, so as to reduce the credibility of the source of accusations and/or create the impression that the victim

His denial of personal involvement is coupled with an effort to shift blame to previous management for these problems. deserved his or her fate. The final method for reducing offensiveness occurs when the accused offers compensation to the victim. The last two general strategies are corrective action, which promise to repair and/or prevent recurrence of the problem, and mortification, Burke’s (1970) term for an apology (the accused admits wrong-doing and asks for forgiveness). The appendix offers definitions and examples of these image repair strategies.

ANALYSIS Although AIG was criticised for poor business practices and accepting government handouts, the main accusation addressed here was the complaint that AIG gave bonuses (and incentives) to employees after (1) the company’s dismal performance and (2) accepting federal bailout money. Our analysis of this text reveals defenses of two separate targets: Liddy and AIG. Early in

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the letter Liddy (2009) clearly distanced himself from the AIG bonus programme, using simple denial:

declares that “honouring contractual commitments is at the heart of what we do in the insurance business. I cannot have our clients lose faith in our desire and ability to do just that.” Thus, Liddy argues that factors beyond AIG’s control (legally binding contracts) require the bonus payments to be made.

I did not participate in any AIG bonus or retention programme, have never attended a single AIG sales event or conference and, before September, did not have any relationship with AIG. I was asked to serve by your predecessor in connection with the acquisition by the government of almost 80 per cent of AIG’s outstanding shares. Notice that he does not deny that AIG had bonus and retention programmes, sales events or sales conferences; he only denies that he personally had been involved in these offensive acts. His denial of personal involvement is coupled with an effort to shift blame to previous management: “Prior management took significant retention steps at AIG Financial Products.” Later in the letter, he declares that “I would have designed these [bonuses] differently and at significantly lower levels,” further distancing himself from the company’s incentive programmes. The obvious intent here is for Liddy to exonerate himself from these allegations. The remaining discourse in this letter offers three other major strategies to help repair the company’s image. A frequent strategy employed in the letter is defeasibility, which argues that circumstances beyond the company’s control caused the offensive act: “AIG’s hands are tied. Outside counsel has advised us that these are legal, binding obligations of AIG, and that there are serious legal, as well as business, consequences for not paying” bonuses. He also

The obvious intent here is for Liddy to exonerate himself personally from these allegations. Liddy’s message also relies on transcendence, attempting to justify the company’s actions: “retaining key traders and risk managers is critical to our goal of repayment” of government bailout money. Similarly, he argues that “we cannot attract and retain the best and brightest talent... if employees believe that their compensation is subject continued and arbitrary adjustment by the US treasury.” The argument advanced here is that bonuses and other com-

Appendix 1 Image Repair Strategies

Strategy

Key Characteristic

Example

Denial Simple denial Shift the blame

did not perform act another performed act

Tylenol: did not poison capsule Tylenol: a “madman” poisoned capsules

Evasion of Responsibility Provocation Defeasibility Accident Good Intentions

responded to act of another lack of information or ability mishap meant well

ﬁrm moved because of new taxes executive not told meeting changed tree fell on tracks causing train wreck Sears wants to provide good auto repair service

Reducing Offensiveness of Event Bolstering Minimization Differentiation Transcendence Attack Accuser Compensation

stress good traits act not serious act less offensive than similar acts more important values reduce credibility of accuser reimburse victim

Exxon’s “swift and competent” clean-up of oil spill Exxon: few animals killed in oil spill Sears: unneeded repairs were preventative maintenance, not fraud helping humans justiﬁes testing animals Coke: Pepsi owns restaurants, competes directly with you for customers disabled movie-goers given free passes after denied admission to movie

Corrective Action Mortiﬁcation

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plan to solve/prevent recurrence of AT&T long-distance upgrades; promised to spend billions more to improblem prove service apologise AT&T apologised for service interruption

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pensation are vital to employee retention. The letter also made use of corrective action. Liddy asserts that “AIG intends to use its best eﬀorts ... to reduce contractual payments.” Other actions to reduce compensation are mentioned. For example, if AIG sells some parts of the business, it will “require the buyer to assume going-forward compensation payments.” Together, such eﬀorts are expected “to reduce expected 2009 retention payments by at least 30 per cent.” He also notes that “the 25 highest-paid active contract employees at AIG... have agreed to reduce their remaining 2009 salary to 1 US dollar.” These policies are intended to reduce excessive compensation.

EVALUATION This was a complex situation. Liddy had to be concerned with the stakeholders of AIG, the Secretary of the Treasury, the news media, and American citizens. As the letter was addressed to Geithner, it was an official image repair message; but as noted earlier, this image repair effort presents defenses of two targets: AIG and CEO Edward M. Liddy. Liddy’s defense of himself undermined his defense of the company he led. He denies his involvement in the offensive bonus and incentive programmes, but does so at the expense of the company. He denies that he is to blame for these problems but does not deny that AIG is blameworthy. In fact, Liddy explicitly shifts the blame to AIG (prior management) for the offensive acts. Liddy notes that his stake in this matter “is his reputation,” but AIG’s reputation is also at stake here–and repair of his personal reputation is at odds with repair of the company’s image. The argument that AIG should be exonerated because of contrac-

tual agreements (defeasibility) is flawed: who executed these contracts? AIG. Perhaps it cannot renegotiate these contracts at this point in time, but AIG certainly endorsed them when the contracts were made (and presumably the company drafted these agreements), so ultimately AIG was to blame. The attempt at transcendence (bonus and high compensation are justified to retain employees) may not be persuasive: given AIG’s huge financial problems, people might well wonder whether AIG in fact has the “best and brightest talent” who must be retained. Perhaps AIG should fire these employees rather than reward them. It is possible that these employees were effective; it is not clear that people would agree that their work justified the bonuses and compensation payments. Finally, proposals for corrective action may sound like too little, too late–especially given Liddy’s arguments that the company’s “hands are tied” and that they cannot reduce contractual obligations. In short, Liddy’s message seems better designed to exonerate himself than to repair the image of the company he headed. It is not clear that Liddy was accused of the misdeeds for which he strongly protested his innocence. The defense he offered of his company was weak, even ignoring his attempts to blame prior management. 03/2010

Prof. Winni Johansen University of Aarhus Winni Johansen is associate professor at ASB and director of study of the executive master’s in Corporate Communication. Among others her research covers corporate communication, public relations and crisis communication.

Prof. Finn Frandsen University of Aarhus Finn Frandsen is professor at ASB and director of the ASB Centre for Corporate Communication. His research focuses on PR and communication in the areas of marketing, crisis, environmental and organisational communications.

Prof. William L. Benoit University of Missouri William L. Benoit is a professor of Communication Studies at Ohio University. He has published numerous articles and books, including “Accounts, Excuses, and Apologies”. He holds a PhD from Wayne State University.

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REPUTATION GATEKEEPER Reputation Management may seem to be an impossible challenge – how can you manage or control what other people think of you? The answer lies in meaningful engagement with each and every one of your stakeholder groups. by Dirk De Muynck

eputation management is fast becoming a required discipline for businesses. Master it, and you could win new loyalty from your stakeholders, and increased performance to boot. Fail, and your business might be severely challenged. Stakeholders are quick to judge and slow to forgive. In n an economic downturn, it is tempting to focus communication eﬀorts on core customers and spend less time developing relationships with other stakeholders. But that would be shortsighted: businesses must deal with all of the company’s stakeholders, especially in a time of uncertain perspectives. And that is where reputation management comes in.

A GOOD REPUTATION IS LIKE A MAGNET IT ATTRACTS RESOURCES A corporate reputation

can be defined as the overall image of a firm held by its stakeholders. A strong reputation is like a magnet: it attracts business opportunities, partnerships and talent. It generates trust and loyalty, and is reflected in the market value of a company. Companies operate in a stakeholder landscape that consists of different constellations of people that have an interest in them. Customers and employees are often seen as the most crucial stakeholders, but other important ones are found throughout the entire value chain. Owners, users, suppliers, the media, NGOs and business partners all have an inter03/2010

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est in the company – and a potential inﬂuence on it. Corporate reputations are the aggregations of how stakeholders perceive what the company says, what others say about the company and how the stakeholders personally experience the company. Based on these three sources of inﬂuence, stakeholders make up their minds to identify with – or against – the company. In this way, stakeholders take ownership of the company’s reputation.

other is knowing how to interact. Direct touchpoints occur when a stakeholder interacts directly with the company. Th is could be in the form of someone who contacts the customer support service, or a job hunter contacting someone within the organisation, or even a local living close to a production facility complaining about the noise. Being personal in nature, touchpoints

Being personal in nature, touchpoints are often the most powerful meetings between stakeholders and the company. They are also notoriously hard to control, as potentially all members of the organisation are involved.

STAKEHOLDERS OWN REPUTATIONS Reputation management

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takes an outside-in approach. The stakeholders are the real owners of the company’s reputation, not the company itself. True, the company owns the logos and the trademarks, and controls the tone and content of its own communication efforts. But there are other external sources of reputation that it cannot control. One key group is known as the reputation gatekeepers. These are external parties that play a key role in defining the image of a company. Gatekeepers are characterised by their independence from the company they communicate about, and by their power to influence others. Traditional media are the classic

are often the most powerful meetings between stakeholders and the company. They are also notoriously hard to control, as potentially all members of the organisation are involved. But there will be diﬀerences in corporate reputations in each market or continent: hence the importance of a customised model that can give you crucial strategic insight across stakeholders and markets. Research based on a customised model will show the top drivers for reputation for each stakeholder per market, and give an idea of possible actions to close the gap between perception and reality.

SUSTAINING

MEANINGFUL

RELATIONSHIPS

A strong reputation is like a magnet: it attracts business opportunities, partnerships and talent. It generates trust and loyalty, and is reﬂected in the market value of a company.

Reputation management is about creating and sustaining meaningful relationships with our stakeholders, and it involves the whole organisation. The foundation for strong reputation exists at the intersection of human resources, communication, marketing, ﬁnance and operations. It is the result of thousands of interactions between stakeholders and companies. At ﬁrst glance, reputation management can seem like an oxymoron – after all, who can manage a company’s reputation when it is so obviously outside the company’s control? But there are many steps you can take to asserting your control over your business’s image and developing a reputation management policy. Here is a brief, six point guide I suggest:

reputation gatekeepers, but the arrival of social media has severely upped the number of voices that talk about a company. Knowing who to interact with is just one part of the challenge. The

1. Understand your stakeholders Start with the corporate value chain. Who has a potential interest in your company? What are their interests? What is their agenda? Are they similar across markets, or is the same group driven by different agendas in different markets? Identify those in your organisation who are best informed about each group, identify similarities between 03/2010

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2. Understand your reputation. Customer surveys are not enough. Explore the company’s reputation among its stakeholders to uncover strengths and weaknesses, and focus on understanding expectations and reputation drivers. And don’t forget your reputation with employees: they represent the company on a daily basis. 3. Establish common metrics and set clear goals. Use one framework for monitoring reputation across stakeholders and markets. This is important to be able to compare knowledge across groups and facilitate meaningful relationships across stakeholders. 4. Break down the silos. Reputation cannot be managed, built or protected in one function only. The reputation team should have members from across the organisation. Its main task should be to ensure reputation alignment across all touchpoints and make reputation management an integrated part of business.

Dirk De Muynck Director, Global Reputation Management, Volvo Group

Dirk De Muynck is a communications specialist with 15 years of experience within Volvo Group. Prior to his role as global reputation management Director, he worked in Volvo Group’s Representation ofﬁce in Brussels from 2003 to 2009, focusing on expanding Volvo‘s opinion building activities with the EU institutions. He started his Volvo career as head of communications for the global sponsorship activities of Volvo Cars and Volvo Group. You can read about Dirk de Muynck’s activities on his personal blog www.CorporateComms .eu or follow him on Twitter.com/ Corporatecomms.

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5. Engage and activate. Involve people in the organisation. Make sure reputation insights are integrated into business processes. Activate the insights in conversations with stakeholders – let them know you hear their messages. 6. Have patience! Reputation management takes time. There are no shortcuts, but the effort is worthwhile. Ultimately, the key to successful reputation management is alignment. A sustainable reputation position balances a company’s mission and strategic direction, the organisation’s competences and capabilities, and stakeholder expectations towards the company. Needless to say, all relationships with the

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KEY CHALLENGES Where to draw the line? We are used to thinking about our companies as more or less independent entities. But listening to and engaging with stakeholders starts a process of breaking down boundaries between the organisation and the rest of the world. But beware: inviting stakeholders into a closer dialogue means that they expect to be listened to. Companies need to show they have listened to, and understood their stakeholders’ expectations. But how can you deal with expectations that are outside your business perspective, or expectations you are unable to live up to? From employees to reputation ambassadors? Employees are among the most potent factors in corporate reputation. Encounters between employees are reputation touchpoints and have an impact on the company’s image. Employee touchpoints are both formal and informal and can range from customer support to talking about the company at a dinner party with friends. Guidelines and training can only go so far; the challenge is how we energise employees to be active reputation ambassadors in all settings. One reputation across cultures? Managing stakeholder relationships is a regular organisational challenge. Some stakeholders are best dealt with globally while others require a decidedly local approach. Investors are normally dealt with globally: they have more or less identical agendas worldwide and are handled centrally. But unions are a stakeholder group that requires a local approach: they often have different focus areas, depending on the state of workers conditions in the country. Therefore, communication is both local and global – as is the relationship management. How can you ensure consistency across borders?

stakeholders should be supported by the strategic reputation position. It may sound like a huge challenge, but if you can master reputation management, you take a huge leap in deﬁning your company’s image to the outside world – and its success.

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groups and gaps in your knowledge, and map the overall stakeholder landscape.

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HANDLING SOCIAL MEDIA WITH CARE Social media are viewed with both scepticism and optimism by communicators. They can promote your reputation amongst new audiences, but, unless carefully applied, they can also backﬁre.

by Chiara Valentini

ocial media are considered useful tools in reputation management activities of the 21st century, as they have opened a new way for organisations to interact directly and engage with their stakeholders. Practitioners indicate that their main reasons for employing social media are their friendly usability, lower cost, their capacity to reach diﬀerent virtual communities 03/2010

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and their reputation of providing ‘non-ﬁltered’ and ‘unpolished’ information. Despite their importance and role, social media generate diverse problems of a logistical nature (how can organisations identify major stakeholders in the diﬀerent virtual communities, and then how can

companies create valuable systems of relations with them online?), of relational type (which kind of systems of relations can an organisation have in social media? Can an organisation create trust among its stakeholders using web 2.0?), and, above all, of evaluative type (which consequences on stakeholder relations and reputation may be encountered by an organisation that excessively uses social media?). To illustrate these main points, I’d like to present a recent campaign promoted by VisitDenmark, the Danish National Tourism Board. This case is particularly interesting because important considerations for communication mangers interested in adopting social media into their reputation activities can be seen, and because it underlines the implications of using social media for an organisation’s reputation and stakeholder relations.

UNSUCCESSFUL YOUTUBE CLIP In Autumn 2009, the Dan-

ish national tourism board, VisitDenmark, decided to employ social media to interact with its youngest group of stakeholders and promote Denmark as tourist destination. The whole promotional activity consisted of a video posted on YouTube that was, at ﬁrst glance, created by a single mother who was looking for the father of her baby boy, evidently the result of a one-night stand with a foreign tourist. VisitDenmark did not disclose the fact that they were the promoter of the video, thus ensuring that people believed in the authenticity of the story. The story received a lot of mass media coverage and created buzz among bloggers and other social network users. After 24 hours, 282,000 people viewed the video and many posted comments on it.

INTEGRITY AND ETHICS QUESTIONED At first glance, the video appears to have achieved its first objective: to make people talk about the story, attracting the attention and curiosity of a multitude of stakeholders. However, this short-term impact resulted in more negatives than positives. When a leak in a blog received media attention, VisitDenmark had to publicly admit to being the real source of the video. The young segment of the Danish population mocked the campaign – in fact, a great part of the population objected – and the mass media strongly criticised VisitDenmark for its communication strategy. Specifically, VisitDenmark was accused of using ‘tax payers’ money’ to show a misleading portrait of Denmark in a deceiving fashion, and for its subtle depiction of Danish women as promiscuous. VisitDenmark’s integrity and ethics were also questioned and the organisation was not able to respond to these criticisms in an adequate manner. When asked whether it is ethical or not to dupe people around the world into believing that the story was real, the director

VisitDenmark made the mistake of consciously sacrificing ethics and stakeholder trust for international attention, and paid a high price for a low-cost campaign. of VisitDenmark replied: “That depends on which media you use. This is why we have chosen to use YouTube. Here, you are in a social universe, where some stories are true and some stories are false”. This response implies that it is not a problem to mislead, depending on the particular channel used, in this case YouTube. After a few weeks, the video was taken down from YouTube and, despite official apologies for having offended groups of people, the executive director of VisitDenmark stepped down. The campaign obtained a great deal of attention among YouTube users and received mass coverage, but at the same time it alienated Danish stakeholders. VisitDenmark made the mistake of consciously sacrificing ethics and stakeholder trust for international attention, and paid a high price for a low-cost campaign. As a result, reputational damage for VisitDenmark followed, instead of reputational gains for Denmark.

DRAWING CONCLUSIONS What lessons can be

learned from this case in respect to an organisation’s reputation, stakeholder relations and social media? A ﬁrst consideration that needs to be made is how social media 03/2010

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are understood and used. Social media, by definition, are social; they exist because some individuals decide, and have the possibilities, to create social relations with others by building and interacting in virtual communities. It is through social networks that flows of communication pass from one person to another. Social media are thus a platform where stakeholders and organisations can create and promote relations. The primary scope of social media is creating systems of relations and not diffusing communications. Naturally, communication is an essential instrument for creating online relationships, but this does not undermine the reality – at least from an online user perspective – that social media are about creating, maintaining and/or sustaining existing and new relations, and not about promoting a product/service and/or a brand according to marketing logic, as the VisitDenmark case illustrates. Social media can thus be approached according to two paradigms: the marketing one and the public relations/ communication management one. Social media are conceived in public relations/communication management as environments for dialogue, where great attention is given to personal engagement and ethical aspects, such as disclosing the relationship between the persons interacting in social networks and their belonging to specific organisations, whereas in marketing communication terms, social media are another tool for publicity where sensationalisation, polarisation of ideas, amplification and rumours are some of the strategies to brand a product, service and even a country.

BENEFITS FROM SOCIAL MEDIA? Currently, many of

the organisations that employ social media tend to use the marketing approach rather than the public relations/communication management one. Online marketing, and specifically viral marketing, have understood the potential of using social media since these appear to be more effective in reaching audiences that are increasingly resilient to traditional advertising messages. However, marketing activities in social media that are too aggressive and/or audacious, as in the case presented, can result in compromising other stakeholder relations activities. This line of reasoning points to two important issues for organisations: can the marketing approach and public relations/communication management approach in social media be integrated without compromising the viral impact and stakeholder relations? And can social media enhance an organisations’ reputation? If online marketing activities are integrated and above all aligned with those activities for enhancing stakeholder relations, then the two approaches can be effective in their specific 03/2010

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EXECUTIVE SUMMARY VisitDenmark’s failed attempt at using social media has outlined some of the difﬁculties in using this medium. As it was so successful in getting people to talk about it, the outrage felt when people found out it was a marketing ploy brought a lot of negative publicity., speciﬁally within Denmark. Often, when social media are used for marketing purposes, the campaigns can result in compromising various stakeholder relations. Social media can enhance a reputation, but given its uncontrollable nature it can also quickly sully an organisation’s image.

goals without damaging relations with stakeholders that are active in social media. Furthermore, social media can enhance an organisation’s reputation – but not create reputation, and at the same time, they can also quickly destroy it. The second consideration regarding reputation and how organisations conceive ethical behaviour in online and oﬄine environments will clarify this point. If reputation is the result of a value judgement

Many organisations that employ social media tend to use the marketing approach rather than using the public relations management one. about the company’s attributes, and evolves over time as a result of consistent performance, a company’s image is the immediate mental picture that audiences have of an organisation in a speciﬁc period of time. When organisational deci-

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sions clash with stakeholders’ expectations, worldview and values, and part of these stakeholders have little or no prior direct experience and knowledge of the organisation, even one negative experience can be detrimental to an organisation’s reputation. A good reputation is the result of trustworthy behaviour, which comprise economically rational decisions to do exactly what companies have contracted or promised to do in an ethical and socially responsible manner. In today’s globalised world there is no longer a distinction between online and oﬄine reputations. Companies with great reputations show

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In today’s globalised world there is no longer a distinction between online and offline reputations. ethically and socially responsible behaviour on and oﬀ-line. Moreover, they are capable of engaging their stakeholders in a more dynamic manner by interacting constantly with them – also through social media conversations – and making them feel that they are heard and that each of them can contribute to the organisation’s growth. A third consideration emerging from the case deals with the conceptualisation and attributes of social media vis-a-vis stakeholder relations. Social media provide information that is also ‘ﬁltered’ and ‘polished’, mingling information and disinterested and sincere opinions with those that represent a particular perspective. In this environment, the identity of a blogger or online user is a synthetic construction of what they want to appear, or want people to understand about themselves. Therefore, it

is very difficult for a normal user to discern the information he/she receives. This has direct consequences on the level of communicative efficacy of an organisation and on relationships among organisation’s stakeholders. When a user cannot understand whether messages dealing with an organisation are initiated by the organisation or externally, an organisation may end unsuccessful in its communications as its messages are mixed together with non-official content. Furthermore, the uncertainty derived from the incapacity to distinguish the purposes of communicative intent in online environments has repercussions on the quality and strength of relationships among stakeholders. Typically this occurs when a stakeholder does not know if he/she should trust what person X says about organisation Y.

UNCERTAINTY If communication within an organisation aims to contribute to the achievement of organisational goals with management activities and the coordination of systems of relations that are active between the organisation and its stakeholders, and trust is fundamental in managing and coordinating such relations, then the social media environment does not necessarily facilitate the disintermediation resulting from a more direct approach between organisations and its multiple stakeholders. Instead, social media hold stakeholders in a state of continuing uncertainty, because stakeholders lose those traditional parameters that allow them to evaluate the received traditional communications and their scopes. As a result, organisaProf. Chiara Valentini tions should reconsider the Aarhus University consequences of employing Chiara Valentini is an assistant social media within their professor at the department of stakeholder relations proLanguage and Business Communication, Aarhus School of gramme and verify which Business, Aarhus University, in circumstances and situations Denmark, where she teaches are more suitable for using courses in corporate communication, public relations and social media with the aim public communication. She is of managing and coordinatthe author and co-author of ing speciﬁc systems of relaseveral books and papers in tions. A better use of social Italian and international communication journals on public media will then be translated communication, relationship into an enhancement of the management in international organisation’s image, along contexts, media relations and with its reputation. social media. 03/2010

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SCORING IN SOUTH AFRICA As the first South African corporate to sign up as an official national supporter of the 2010 FIFA World Cup, First National Bank harnessed its sponsorship of the event to effectively enhance its reputation as a financial services organisation. by Vicki Trehaeven

n organisation’s reputation is a fundamental component of its brand strength and overall positioning. However, while a brand can undoubtedly be built by means of eﬀective communication and marketing, merely talking about your reputation will never strengthen it. Reputation can only be established, and built, through demonstration. This belief lay at the heart of the decision by First National Bank (FNB) – one of South Africa’s four largest banks – to sponsor the 2010 FIFA World Cup in South Africa to the tune of 30 million US dollars.

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The ﬁrst South African corporate to take up the sponsorship opportunity, FNB approached its involvement in the event from the point of view of leveraging the many reputational beneﬁts it presented, rather than merely seeing it as another public relations or branding exercise. The reason for this approach stemmed from FNB’s recognition of the long-term value to be unlocked by enhancing its reputation among

its stakeholders – particularly its customers and staff – by ensuring that they reap tangible benefits from the bank’s sponsorship of the event. And the thinking is already generating dividends for the bank. By harnessing the FIFA World Cup sponsorship to further entrench FNB’s already strong reputation as a caring, pro-active and proudly South African organisation in the hearts and minds of its employees, clients and prospects, the bank has significantly bolstered its corporate image. In the process, stakeholder loyalty has deepened and the FNB brand has been further entrenched in the hearts and minds of the South African public as a highly credible and implicitly trusted icon of South African financial services.

DRIVING REPUTATIONAL GROWTH VIA A ‘BIGGER PICTURE’ VIEW Developing, enhanc-

ing, and demonstrating a corporate reputation can only be achieved when the business concerned is able to take a broader view than the immediate benefits or public relations opportunities associated with its actions. So, while the 2010 FIFA World Cup is essentially a sporting event, FNB recognised at the outset that its potential influence on South Africa as the host nation extended far beyond 64 games of international football. The potential legacy that the tournament could leave for the people of South Africa was every bit as important as the global attention and economic inflows it would generate in the short term. Ultimately, FNB recognised that the World Cup was nothing short of a unique nation building opportunity – one with the potential to achieve even more for the country than previous highlights in its democratic journey,

such as the first free and fair elections in 1994 and the hosting of the Rugby World Cup in 1995. This early identification of the ‘bigger picture’ led the bank to recognise the immense reputational benefits that could come out of its involvement in the event, not just by having its logo included amongst the list of sponsors, but by making sure that the sponsorship clearly positioned FNB as the bank that is willing to put its money where its mouth is and invest both money and effort into ensuring that the World Cup translated into lasting benefits for the people of South Africa.

REPUTATION BEGINS AT HOME With a staff of 26,000 spread across the whole of South Africa, FNB recognises its employees as the central component in the sustainability and lasting success of its business. And while it is common practice for most organisations to say that their people are their biggest asset, FNB has a policy of seeking out ways of demonstrating this fact. The 2010 FIFA World Cup sponsorship was immediately identified as a unique opportunity to build the bank’s reputation as a learning organisation and an employer of choice. At the same time, FNB acknowledged that achieving significant reputational enhancement

The World Cup sponsorship was immediately identified as a unique opportunity to build the bank’s reputation. amongst existing and prospective employees would never be achieved through half measures – and so the FNB LearntoScore employee incentive initiative was born. Unlike any previous staff incentive implemented by the bank, LearntoScore was immense in both its scope and planned impact. So much so, that FNB introduced a senior LearntoScore leadership position in the organisation, with responsibility for every aspect of the initiative, including its planning, implementation and marketing. This simple act of appointing a full-time manager to ensure the success of the staff incentive had the added-value effect of enhancing employee loyalty even before the game had begun, as it demonstrated the seriousness with which FNB was approaching its commitment to leveraging its World Cup sponsorship for the benefit of its people. The LearntoScore game itself represented something of a revolutionary approach to staff incentivisation. Open to all FNB employees, it encouraged staff to access and utilise online learning content in order to further their skills and 03/2010

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knowledge, and then score ‘goals’ by performing well in assessments relating to the learning modules. By scoring these performance ‘goals’ employees put themselves in line to win an array of prizes, most notably tickets to World Cup matches at every stage in the tournament. The effectiveness of the three-year LearntoScore initiative in entrenching FNB’s reputation as an attractive place to work was amply demonstrated by the feedback received from staff members who participated in the game. The majority of participants were overwhelmed by the fact that FNB had made the effort to leverage its sponsorship for their direct benefit – and the concomitant improvement in staff attraction and retention figures was further evidence of the reputation building power of having your staff’s best interests at heart. Interestingly, by focusing on bringing the benefits of the World Cup to staff members, the external reputation of the bank was also significantly enhanced, not just via word of mouth through the 26,000 employees and their families, but by raising the profile of FNB as a committed and proactive nation-builder amongst clients, prospects and industry peers. This is evidenced by the fact that, while limited external exposure was afforded to the LearntoScore initiative, FNB customers still talk about it, and some 50 per cent of staff appointed over the past three years have indicated that they approached FNB for employment as a direct result of the game and the positive perception it created about FNB as an employer.

REMEMBERING THE IMPORTANT THINGS An organisation’s reputation has the potential to make a massive impact on its long-term market capitalisation. Some would argue that reputation is a company’s most important asset because of the way in which it is able to inﬂuence perceived and actual share value, attract customers and employees, and promote positive long-term stakeholder relationships that eﬀectively enable the business to overcome the many economic and operational challenges it may face. With this in mind, the risk exists that organisations can become so focused on trying to build their reputation by communicating the ‘big wins’, that they lose sight of the immense reputation building power inherent in getting the ‘smaller’ issues right. FNB’s years of involvement in nation building have taught it this valuable lesson of not letting the ‘bigger picture’ view mentioned earlier in this article result in the business neglecting those things that are important to the very people on whom your reputation depends. Therefore, FNB decided at the outset that its support of the 03/2010

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EXECUTIVE SUMMARY First National Bank took advantage of the ﬁrst African World Cup to leave their mark on the coutry’s future. They leveraged their sponsorship to create a unique scheme to retain and attract new workers. They funded programmes to encourage saving scheme participation. They created artiﬁcial football pitches in some of the poorest communities.

World Cup would focus less on self promotion regarding the 30 million US dollar support of the event, and more on making sure that South Africa and its people enjoyed the long-term beneﬁts they deserved as hosts of the event. As part of this approach, FNB launched its Proudly Helping South Africa Shine campaign with the aim of raising awareness about South Africa’s readiness to host the 2010

The risk exists that organisations become so focused on trying to build their reputation by communicating the ‘bigwins’, that they lose sight of the immense reputation building power inherent in getting the ‘smaller’ issues right. FIFA World Cup. The campaign was conceived in response to the initial doubts expressed, internationally and locally, regarding South Africa’s ability to host an event of the magnitude of a World Cup. FNB identiﬁed at that early stage in the World Cup preparations that the success or failure of South Africa’s hosting experience hinged on the country’s conﬁdence in its own abilities. At

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the same time, the bank recognised the potential that existed to bolster its own reputation as a nation-building organisation by demonstrating its conﬁdence in its country and people. The Shine campaign proved hugely successful in helping to raise the levels of patriotism in the country. The subsequent Shine 2010 (www. shine2010) online portal became a repository of ‘good news’ and a platform for positive interactive engagement across all levels of society as the nation’s enthusiasm for, and conﬁdence in, ‘South Africa’s World Cup’ quickly grew. What’s more, the simple act of establishing and hosting such a forum spoke volumes about FNB’s own pride in its nation and willingness to work with the people of the country to ensure its success.

SOCIALLY DISADVANTAGED As a bank in a country where the vast majority of citizens have yet to realise the importance of saving, FNB understood that one of the most valuable legacies it could help create from the World Cup was the development of a greater savings culture. To achieve this, FNB launched its Save to Score campaign, which kicked off with 150,000 footballs branded with “FNB 2010” on offer to encourage entry-level investment by customers through the promotion of FNB Flexi Fixed Deposit accounts as effective savings vehicles. Of course, in a country still beset by poverty and economic imbalances, it would be unethical for a sponsorship of this magnitude not to have significant social upliftment spin-offs for South Africa’s disadvantaged communities. FNB’s visible legacy programme is an integral part of its support of the 2010 World Cup, and involves the construction of artificial turf football pitches in

less-advantaged communities around the country. Apart from the obvious link to the soccer spectacle, the decision to put social investment funds into sports facilities was driven by FNB’s recognition of the potential for sport to bring people together and transform lives. A reputation is certainly not something that can be cultivated overnight. Which is why FNB doesn’t suffer any misgivings about the ability of its sponsorship of the 2010 FIFA World Cup to establish the bank as a trusted and caring organisation. That work has been done over the more than 170 years that the bank has been in existence. However, the bank’s sponsorship of the 2010 FIFA World Cup offered an unprecedented opportunity for it to firmly entrench its long-established reputation as a bank that has the best interests of its stakeholders at heart. But football, money, patriotism, and public relations, aside, this World Cup has represented a platform from which FNB has once again been able to leapfrog its competitors by demonstrating its commitment to the development and sustainability of the entire South African nation. It has also allowed the bank to show, rather than tell, the people of South Africa that their faith in FNB is well directed – and translate that faith into action. By focusing on the long-term impact of everything it has undertaken as part of its support of the 2010 FIFA World Cup, FNB has ensured that its reputation will continue to grow exponentially in the years to come. Long after the final whistle of the final game has blown, FNB staff will be discussing their match memories and climbing the corporate ladder thanks to the skills they have acquired; South Africans will be enjoying the Vicki Trehaeven benefits of the savings plans Head of FNB’s 2010 FWC Marketing Communication they have implemented; and youngsters will be honing Vicky Trehaeven has been with their sporting skills in the FNB for more than 35 years. For a number of years, Trehaehope of one day representven has been the head of the ing their country. And at brand communications division the back of their minds will at FNB. Currently, Trehaeven is be the fact that FNB helped fulfilling a dual role, continuing to manage the FNB Brand make it possible. Communications team and And what better way is heading up FNB’s 2010 FIFA there to communicate your World Cup sponsorship marketing activities. reputation than that? 03/2010

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WELCOMING SCRUTINY Outsourcing operations overseas raises valid questions over ethics and standards, which in turn affect a company’s image. For adidas, it has been necessary to stake their reputation on accountability. by Jan Runau

T 72

rust? There are some words we use so often that we no longer really hear them. Trust is one such word. Everyone uses it and everyone believes that it shapes what they say and do. However, its commonplace character is precisely why the word is losing its exclusivity in language use. However, it still means something special. Trust means security and credibility. And this gives the customer the confidence of knowing they are making the right decisions. The ability to trust makes life easier for us. Distrust, on the other hand, generates stress because, wherever we turn, we are in danger of “being taken for a ride”. Trust isn’t just about fair prices or reliable quality, it’s also about decency and ethics. After all, who would buy the strong brand of a company that continued to break society’s rules? Presumably nobody, because the moral seismograph of consumers is very sensitive to injustices and inconsistencies. Today, people are concerned with questions about the quality of life and responsible business practices. Woe betide a company that doesn’t answer these questions well, as this will immediately result in conflict with pressure groups, political parties, churches, trade unions and consumers. Of course, there are companies that mercilessly pursue profit and don’t really care about criticism and admonitions. However, in order to achieve long-term economic success, a company has to be socially accepted. This is an inescapable truth. Translating this into corporate actions and earning social acceptance is difficult because it is exceptionally hard work.

THE STRUGGLE FOR MORALITY AND IDEALS Why is this so? Society is constantly evolving. Support and opposition, anxieties and emotions seem to come and go in 03/2010

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waves, creating values that can add an ethical dimension to a company’s activities. Sooner or later, if morals and ideals change, but companies continue to operate on another scale of values, diﬀerences emerge. For the adidas Group, these are not just theoretical issues. We are extremely practical in our approach. But how do we maintain a trust-based work ethic? What does transparency in everyday business actually mean? Our trustworthiness does not start in the store, in the stadium or on the

Trustworthiness doesn’t start in the store, in the stadium or on the trading floor. trading floor. It starts in our suppliers’ factories that are located in more than 55 countries. This is where we produce 221 million pairs of shoes and 284 million items of clothing, ranging from shorts and jerseys to tracksuits. Of course, it is not only potential customers, but also us, who want to know the conditions under which our products are manufactured, and furthermore, we want to have a positive influence on these conditions. This is why we are committed to high social and environmental standards at our production sites.

This is the moral dimension of our actions, and these ethics are absolutely binding for us. They illustrate quite clearly that we also accept our duty of care towards people working for us at our suppliers all over the world, and in the emerging countries in particular.

Photo: Archiv

GROWING PUBLIC INTEREST This has not always been the case. We started to outsource production from our own production sites in Germany and France to suppliers in Asia at the end of the 1980s. However, we only established a Social and Environmental Affairs department within the adidas Group in 1997. The same year, the adidas Group introduced its first code of conduct for suppliers (the so-called “Standards of Engagement”) and set up a monitoring team. The establishment of this department coincided with growing public interest in the conditions under which products in all sectors are produced in Asia for the global market. In particular, our main competitor, with headquarters in the US, came up against heavy criticism from American human rights groups and student organisations. The greater focus on this issue within companies operating in the sporting goods industry was set against the background of pressure from a growing number of critical consumers worldwide. At the same time, as a result of this public pressure, this industry – and especially its leading companies – committed to sustainability earlier than many other sectors, both of its own volition and in response to external forces. Much has happened in the 12 years since the Social and Environmental Affairs department was established. Since 2000, the adidas Group has been included in the Dow Jones

The manufacturing plant of one of adidas’ Chinese suppliers.

Sustainability Index, the best known and most important sustainability index for listed companies. Since 2004, adidas has been listed there as an industry leader. Since 2001, we have also been listed in the FTSE4Good Index. In 2007, the adidas Group received the BAUM environmental award for its social and environmental programme. For many years, numerous other independent organisations at both national and international level have conﬁrmed the adidas Group’s seminal commitment to sustainability. We have achieved a lot but, to use a sports metaphor, we have not yet crossed the ﬁnishing line.

THE ART OF CONSTRUCTIVE CRITICISM At our Annual General Meetings, for example, we are constantly criticised for the social, economic and ecological conditions at our suppliers’ factories as if we hadn’t done anything about them at all. Of course, we can and must be capable of withstanding criticism. However, some hardliners seem to have an emotional problem understanding that a DAX-30 listed company isn’t solely interested in 03/2010

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dividends and cash ﬂow. The dilemma faced by these critics is clear: we simply don’t equate to the negative notions of deep-rooted prejudices, and it is not easy to criticise conclusively. Whoever wants to get involved in the discussion has to have great expertise in the ﬁeld of climate research, chemistry and material science, and both micro and macroeconomic conditions in the emerging countries. It’s easy to compare the monthly wage of a factory worker in Thailand with the million dollar salary of David Beckham, who is without doubt one of the best-known celebrities to endorse the adidas brand. However, what is the point of this comparison if the factory worker manufacturing adidas products actually earns well above the national average in his or her own country and is even better paid than a teacher or nurse? So these are, in part, complicated inter-related issues that cannot be expressed with pithy slogans. We exercise patience with our critics but we invest our entire strength into rewarding cooperation with stakeholders who have the necessary knowledge and experience. It is precisely these experts that we involve in our important social and ecological decisions. We work with the International Labor Organisation (ILO); we are co-founder members of the Fair Labor Association (FLA), which carries out independent checks on supplier factories. We maintain a constant dialogue with governments and nongovernmental organisations on all continents and face the questions of representatives from US high schools. It goes without saying, and is only right, that we communicate the message that we cannot possibly do all this work alone and that we are thus dependent upon honest and sound collaboration. In this context, honesty and transparency are important to us: it’s not about secrecy or exclusion but about positive and viable results.

BETWEEN RULES AND CONTROLS For years, we’ve

been very clearly publishing on our website what it is we do, how we do it and what our targets are. We have published a social and environmental report annually since 2000. This report provides an overview of the adidas Group as a responsible company and describes the social and political background to our work. We now also publish a much more detailed social and environmental report on the Internet. Here, we explain to what extent we have achieved the targets we set ourselves for the year. We also publish our performance ﬁgures and provide further information about our dealings with social and environmental issues. Under the heading ‘Sustainability’, we present our position on critical work and environment-related issues, 03/2010

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EXECUTIVE SUMMARY Popular policies Reality of working with overseas suppliers is too nuanced for glib headlines Setting clear targets and constant monitoring ensures suppliers live up to your expectations. Investment in training courses, environmental compliancies, and HR management pays dividends in establishing a good reputation.

including case studies. In addition, we oﬀer a general overview of the employment law, and the health, safety and environmental standards

We’ve been publishing a social and environmental report each year since 2000. we have introduced, particularly in our supply chain. In the following, I have outlined just a few points in order to provide a brief overview of what our team of experts is achieving in the ﬁeld of sustainability:

1. We have deﬁned binding rules and standards for both our own production sites and our suppliers’ factories, based on International Labor Organisation and UN conventions on human rights and employment practices. These standards help us select partners for the manufacture of our products and serve as guiding principles in the early identiﬁcation and treatment of potential issues of concern at our suppliers’ sites. 2. To ensure that our partners are able to implement and further develop these rules, we support them, for

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example, with human resources management. This includes an in-house grievance system to recognise and resolve problems in the factories at an early stage. Furthermore, we empower workers at our suppliers’ sites to protect their own rights and take an active role in decision-making. 3. We offer speciﬁc training courses and workshops for supervisors and managers at our suppliers’ factories in order to help them apply our standards and implement best practices. These workshops include, for example, introductory training on our workplace standards and the operating guidelines, and detailed training on effective health, safety and environmental practices in the workplace. 4. To assess compliance with our workplace standards, we monitor the factories more frequently and more thoroughly than in previous years.

Photo: Andreas Pohlmann

5. Where a supplier is performing poorly in terms of workplace standards, we quickly work with them to find a joint solution. However, when we find ongoing instances of non-compliance, we issue an official warning. After three warnings, we terminate the business relationship. 6. We oblige our core suppliers to introduce environmental management systems, so they can immediately recognise any negative effects of production on the environment. We also press ahead with processes to both improve the environmental compatibility of materials used in our products and reduce pollution from factories. 7. We optimise our order and production planning in order to reduce the environmental impact of transporting our products worldwide.

8. When manufacturing and packaging our products, we place increasing value on the efﬁcient use of resources in order to minimise the ecological impact of our products without compromising on quality. With this in mind, we developed the “adidas Green” collection, our ﬁrst ecologically optimised product concept.

SUBSTANCE OVER MEDIA STUNTS We are not interested in easy headlines because our commitment is not a media gag but a deep conviction. It is also extremely dangerous to hype up a complicated and also emotionally charged issue with a few attention-grabbing messages. Experience shows that this often gives rise to misunderstandings and misinterpretations. We are extremely particular about the substance of our communication. We want to communicate sound content, and we can only do this if we are persistent. We want to be trustworthy because we know that reputation is the result of what we do, what we say, and what other people say about us. It is a great PR challenge to control your reputation in such a way that it loses none of its strength. This power does not work covertly but publicly, in view of all. This is not surprising as adidas is one of the most popular brands worldwide amongst young people. So even if we wanted to hide ourselves away from the public, we wouldn’t be able to do so. However, a high profile is not enough for us, we also want to be popular – and we are. Pollsters continue to confirm our high image ranking. At any rate, it’s clear that Jan Runau a high profile and popularChief Corporate Communication Officer ity are two sides of the same Adidas Group coin. Every day, we deal in this currency because peoJan Runau is chief corporate ple trust it. This currency is communication officer for the hard and calculable. This is adidas Group. He directs the corporate PR and internal why we do everything withcommunication of the adidas in our power to increase its Group and oversees PR acvalue on a permanent basis. tivities for all brands within the It is precisely because adidas Group (adidas, Reebok, Rockport and TaylorMade-adidas is an eminent company that Golf). A journalism graduate, we have to work even harder Runau worked as freelancer to meet the high expectaand editor for various German tions. newspapers for several years. 03/2010

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TEAM BUILDING EXERCISE Managers charged with tackling corporate reputation should not feel daunted by the scale of the task, as long as they can work together with other departments – from HR to sales – to achieve their common goal. by Alberto Andreu Pinillos

hen I ﬁrst started working on corporate reputation, I was invited to make a presentation to the management committee of one of the main business units of the company I was working for. I shall never forget the way I was introduced: “Alberto is in charge of corpo03/2010

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rate reputation, and his problem is that apparently we’re not doing too well in some of the rankings. He’s going to tell us about his problem, and we’ll see if there’s anything we can do to help him.” I was in the ﬁring line: the problem was mine! And on top of that

the problem consisted in scoring, or not scoring, better in the rankings! All in all, a diﬃcult situation, because: (a) it didn’t concern them: if I was in charge of reputation, it must be my problem; (b) it had nothing to do with management, but with communication, rankings, you know, that sort of thing; and (c) the phrase “anything we can do to help” relegated me to the position of a supplicant as opposed to someone sharing a problem. Years later, things have changed. Now I can recount very diﬀerent experiences. But this contribution aims not so much to share good news, as to look at how to bring about change. Managing reputation can be summarised under four headings:

Table I RepTrak: the seven core dimensions

O RF

A RM

PROD

NCE

S/S

I NN

High Quality, Value for Money, Stands Behind, Meets Costumer Needs

GOV E R N A N C E

P HI

FEELING

Rewards Employees Fairly, Employee well-being, Offers Equal Opportunities Open and Transparent, Behaves Ethically, Fair in the way it does business

Environmentally Responsible, Supports Good Causes, Positive Inﬂuence on Society

RepTrak TM

Innovative, First to Market, Adapts Quikly to Change

TRUST

LE ADE R

ESTEEM

ION

Well Organised, Appealing Leader, Excellent Management, Clear Vision for its Future

O V AT

SHI

Proﬁtable, Better Results than Expected, Strong Growth Prospects

UCT

OR K

2. ‘Vertical management’ of a functional unit In general, the reputation manager focuses on one pair of variables from the RepTrak diagram: integrity/ governance and citizenship. Therefore there is a clear relationship between reputation and CSR. But a word of warning – this responsibility is not merely an exercise in communication: it’s something diﬀerent

3. ‘Diagonal management’ with the communication areas One thing seems clear: RepTrak identiﬁes a number of core dimensions for generating positive opinions in consumers’ imagination. If this is so, the challenge is then to identify these dimensions and work with the communications area to give them the best ammunition for generating positive impacts. In other words: company information can and must be packaged so as to climb the RepTrak ladder, either by unearthing and displaying the company’s ‘hidden jewels’, or by demolishing any ‘false myths’ that there might be about the company. The reputation manger’s objectives here lie in his ability to create this ammunition for the communications areas (for example, such information as has been identiﬁed within the company). And that can be measured and assessed.

ADMI RE

1. Identify the core dimensions that constitute reputation For this, we used RepTrak, and now we can say that the pieces that go together to form a company’s reputation in the consumer’s imagination are an accumulation of perceptions about these variables: products and services oﬀered; being a good place to work; integrity; innovative capacity; commitment to society; ﬁnancial results; and the vision of its management team. This means quite simply that reputation management is in the hands of the whole company, not of a single department or person.

altogether. It involves identifying important projects in the company, setting objectives for them, monitoring them and promoting them within related areas. In fact, here it is easy to set objectives for the team: objectives linked to the progress of projects (for example, number of audits carried out in the supply chain).

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Table II How to set objectives for the reputation area RepTrakTM Horizontal Responsibilities

Effects: Situation

Diagonal Responsibilities Vertical Responsibilities

2. Working objectives together with the communications area

1. Objectives: CSR projeccts

- Level of responsibility Indirect Inﬂuence

4. ‘Horizontal’ management with all areas of the company It is clear that an HR policy builds reputation, that a policy of innovation builds reputation, and that a sales or after-sales policy also builds reputation. The problem comes when you have to go and tell these departments that what they are doing (or not doing) is creating reputational tension. How can you go to see a sales manager and ‘inspect’ his work? Or an HR manager? That is the problem with this concept. Not to be an inspector or a notary, but to add value to the manager, knowing that he has the sword of Damocles hanging over him in the shape of short-term results, while you have to try Alberto Andreu Pinillos to build a long-term reputaManaging Director of Corporate Reputation and tion. Having given it a lot of Corporate Responsibility, thought, I ﬁnally came up Telefonica with these guideline objectives that you can reasonably set for Alberto Andreu Pinillos has been the managing director of corpoyour reputation team:

rate reputation and corporate responsibility at Spanish telecommunications giant Telefonica since 2001. He started his professional career in the Research Department of the Instituto de Empresa. He worked for Compañía Española de Petróleos as a manager of internal communication development, before later, joining the banking sector, ﬁrst at Banesto, as a manager of internal communication and corporate identity; and later on at Santander Central Hispano, where he was a managing director of corporate identity and culture.

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- share diagnostics and train managers in the culture of reputation; - pass on to them in a timely and appropriate manner the information you have on the company’s reputational proﬁle in its sphere of activity (reputation studies); - provide the manager with studies on the correlation between its business indicators (whatever these may be) and

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the reputation indicators (for example, there is a clear correlation between customer satisfaction and reputation); - and (d) oﬀering the manager of each area in the company practical case studies of other companies’ (or your own) successes and failures in given situations; creating a kind of knowledge centre, and sharing these cases with all the aﬀected areas is usually a good thing to do.

AVOIDING FRIENDLY FIRE In conclusion, managing reputation is not just about managing the image, or communication, or the brand, or CSR. It’s about all those things,

Managing reputation is not just about managing the image, or communication, or the brand, or CSR. certainly. But it’s about much more than that: the products and services offered; after-sales service; innovation; HR policy; and performance. The problem is: either you organise the internal processes and define clearly who’s in charge of what, or the perennial corporate maverick will cause chaos, leading to ‘friendly fire’. And guess who gets caught in the crossfire? Right: the person in charge of reputation.

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+ Level of responsibility Direct Inﬂuence

3. Objectives consist of providing support to the operating units

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BASING YOUR GOOD NAME ON GOOD DEEDS When it comes to building reputation, a CSR strategy is an integral foundation. But communicators must ﬁnd a way to overcome stakeholder scepticism towards the motives behind these initiatives. by C. B. Bhattacharya

eﬁ ned broadly as “a commitment to improve societal well-being through discretionary business practices and contributions of corporate resources”, corporate social responsibility (CSR) occupies a prominent place on the global corporate agenda in today’s socially conscious market environment. More than ever, companies are devoting substantial resources to various social initiatives, ranging from community outreach and environmental protection, to socially responsible business practices. To give an example, General Electric is investing billions of dollars in healthcare technologies to reduce medical errors and improve patients’ lives.

EXTRINSIC VS INTRINSIC Interestingly, these unprecedented CSR eﬀorts are driven not just by ideological thinking, but more by the business returns corporations can potentially reap from their CSR endeavours. A growing body of research attests to the wide range of business beneﬁts a company can reap from its engagement in CSR: individuals react to a company’s CSR activities in multiple ways, not just by buying more products, 03/2010

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Photo: www.dreamstime.com

but by enacting other stakeholder behaviours, such as investing in the company, or seeking employment there. Needless to say, the business returns from CSR are contingent on stakeholders’ awareness of a company’s CSR activities. Awareness of a company’s CSR activities among its external stakeholders (for example consumers), or even its internal stakeholders (for example employees), is typically low, which constitutes a key stumbling block in the company’s quest to reap strategic beneﬁts from its CSR activities. Consistent with these ﬁ ndings, of the 20 attributes measured in the annual corporate reputation study published by the Wall Street Journal, people are most in the dark about corporate responsibility; questions about whether companies are socially and environmentally responsible consistently elicit the most “don’t know” responses.

AWARENESS Beyond awareness, the next key challenge of CSR communication is how to minimise stakeholder scepticism. While stakeholders claim they want to know about the good deeds of the companies they buy from or invest in, they also easily become wary of the motives of companies who aggressively promote their CSR eﬀorts. In general, stakeholders’ attribution of a company’s CSR motives may be of two kinds: extrinsic, in which the company is seen as attempting to increase their proﬁts, or intrinsic, in which it is viewed as acting out of a genuine concern for the focal issue. Since creating stakeholder awareness of, and managing stakeholder attri-

butions towards, a company’s CSR activities are key prerequisites to reaping CSR’s strategic benefits, it is imperative for managers to have a deeper understanding of the key issues related to CSR communication. These include questions surrounding what and where to communicate, as well as an understanding of the company- and stakeholder-specific factors that impact the effectiveness of CSR communication.

A KEY CHALLENGE OF CSR COMMUNICATION: REDUCING STAKEHOLDER SCEPTICISM My re-

search (done with various colleagues) shows that rather than simplistically attributing a company’s CSR activities to either intrinsic or extrinsic motives, stakeholders are capable of perceiving and reconciling mixed CSR motives. Interestingly, stakeholders are tolerant of extrinsic motives as long as CSR initia-

While stakeholders claim they want to know about the good deeds of the companies they buy from or invest in, they also easily become wary of the motives of companies who aggressively promote their CSR efforts. tives are attributed to intrinsic motives as well. Th is indicates that, as consumers learn more about CSR, and companies’ motivations, they are increasingly willing to adopt a ‘win-win’ perspective, believing that CSR initiatives can and should serve both society and business. The implication for businesses is to focus on maximising social and environmental value to generate favourable attribution and thus be able to reap business value.

WHAT TO COMMUNICATE: MESSAGE CONTENT Most CSR communication typically focuses on a company’s involvement in various social causes, rather than on the social causes themselves. In this context, there are several factors that the company can emphasise in its CSR communication, such as its commitment to a cause, the impact it has on the cause, why it engages in a particular social initiative (for example CSR motives), and the congruity between the cause and the company’s business (for example CSR ﬁt). I elaborate on these next.

1. CSR Commitment A company can signal its commitment to a social cause in various ways, including 03/2010

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donating funds, in-kind contributions, or providing other corporate resources such as marketing expertise, human capital (for example employee volunteering), and R&D capability dedicated to a cause. There are several aspects of commitment: the amount of input, the durability of the association, and the consistency of input. Depending on the context, a company can choose to focus on one or several aspects of its commitment to a social cause. 2. CSR Impact Instead of focusing on the input side of its involvement in a social cause, a company can focus on the output side of its CSR endeavour, that is, the societal impact, or the actual benefits that have accrued (or will accrue) to the target audience of a social cause. For example, Pampers has launched a social initiative, “1 Pack = 1 Vaccine” to give tetanus vaccines to expectant women in developing countries, and thus saving their newborns from a disease called newborn tetanus. The title of this programme clearly communicates the societal impact of the programme and the impact of consumer’s purchase of the Pampers’ products designated for the social programme. Emphasising a company’s CSR commitment or the social impact of its CSR endeavour is an effective communication strategy because CSR communication should be factual and avoid the impression of ‘bragging.’ 3. CSR Motives In addition to CSR commitment and impact, CSR communication can also focus on CSR motives. As we have stated earlier, one key challenge in CSR communication is to reduce stakeholder scepticism. Research shows that a company should emphasise the convergence of social and business interests, and frankly acknowledge that its CSR endeavours are beneficial to both the society and itself. 4. CSR Fit Another important factor to communicate is CSR fit, or the perceived congruence between a social issue and the company’s business. Stakeholders often expect companies to sponsor only those social issues that have a high fit, or a logical association, with their core corporate activities. CSR fit is important because it affects stakeholders’ CSR attributions. Low CSR fit, due to the lack of logical connection between a social issue and a company’s business, is likely to prompt consumers to think more and consequently make extrinsic motives more salient, thereby reducing stakeholders’ positive reactions to a company’s CSR activities. 03/2010

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EXECUTIVE SUMMARY Sweeping away stakeholder skepiticism Stakeholders will tolerate CSR motives that increase proﬁts (extrinsic), as long as they are also seen to bring about societal good (intrinsic). By focusing on the societal impact of the company’s CSR activities, communications can be seen to put forward facts rather than merely “bragging” and thus earn credibility. External/independent communicators often carry a greater credibility than channels completely controlled by the company.

WHERE TO COMMUNICATE: MESSAGE CHANNELS There are a

variety of communication channels through which information about a company’s CSR activities or record can be disseminated. A company can communicate its CSR activities through oﬃcial documents, such as an annual corporate responsibility report, press releases, and dedicate a section of its oﬃcial corporate

Instead of focusing on the input side of its involvement in a social cause, a company can focus on the output side of its CSR endeavour, that is, the societal impact, or the actual beneﬁts that have accrued to the target audience of a social cause. website to CSR; it can also use TV commercials, magazine or billboard advertisements, and product packaging to communicate its CSR initiatives. Corporate responsibility reporting has gone mainstream: nearly 80 per cent of the largest 250 companies worldwide issued corpo-

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rate responsibility reports, up from about 50 per cent in 2005.

CONTROLLABILITY A counter-

point to such company-controlled CSR communication channels is the large and increasing number of external communicators of CSR (for example media, customers, monitoring groups, consumer forums/blogs) that are not entirely controlled by the company. A company can control the content of CSR communication through its own corporate communication channels (for example Walmart is

Photo: private

Importantly, companies should also try to encourage informal yet credible communication channels such as word of mouth by stakeholders. a good steward for the environment), but usually has little control over how its CSR record is communicated in the media (for example Walmart provides insufficient healthcare for its employees). In summary, there are many communication channels of CSR, which are likely to vary in the extent to which they are controllable by the company. Moreover, there is likely to be a tradeoff between the controllability and credibility of CSR communication; the less controllable the communicator is, the more credible it is, and vice versa. Therefore, although getting media cooperation is often difficult, companies should try hard to get positive media coverage from independent, unbiased sources, such as editorial coverage on TV or in press. It would greatly enhance a company’s CSR association if it is

reported positively by specialty publications such as Business Ethics, or if it receives a good CSR rating by independent organisations such as the Dow Jones Sustainability Index or Fortune magazine.

WORD OF MOUTH Importantly, companies should also try to encourage informal yet credible communication channels such as word of mouth by stakeholders. For example, companies should not underestimate the power and reach of employees as a CSR communicator. Research on employee advocacy showed that about a third of employees have advised someone to use their company because it had acted responsibly. Consumers can also serve as an informal yet highly credible CSR communication channel. In particular, the power of consumer word-of-mouth has been greatly magnified given the popularity and vast reach of internet communication media, such as blogs, chat rooms, and social media sites. Companies like Stonyfield Farm and Ben and Jerry’s have benefited from consumer ambassadors who have raved, in the virtual world, about their social responsibility endeavours. The business case of CSR has been amply documented. Due to the identityrevealing nature of CSR activities, by investing in social initiatives a company will be able to not only genProf. C. B. Bhattacharya erate favorable stakeholder European School of Management attitudes and behaviours but also build reputation. C.B. Bhattacharya is E.ON chair professor in corporate responsiHowever, stakeholders’ bility at the European School of low awareness of and scepManagement and Technology in ticism towards companies’ Berlin, and Everett W. Lord disCSR activities are critical tinguished faculty scholar and impediments in compaprofessor of marketing at Boston University. His expertise is nies’ attempts to maximin the area of business strategy ise business benefits from innovation aimed at increasing their CSR investment, both business and social value, pointing to an urgent need specifically how companies can for managers to get a deepuse underleveraged “intangible assets” such as corporate idener understanding of how to tity and reputation, membermore effectively communiship and brand communities, cate CSR to stakeholders and corporate social responsito capitalise on reputation bility to strengthen stakeholder relationships. gains. 03/2010

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TRIED AND TRUE TECHNIQUES Bulgaria’s DSK Bank prefers to rely on established communication channels to build reputation, rather than risk the negative aspects of social media. by Kamelia Velichkova

F 84

or several years we have tried to shift the reputation of DSK Bank towards that of a ‘smart and funky’ company, in an effort to attract new young and well-to-do customers. The efforts to overcome the inertia in DSK Bank’s perception as dull, old and uninteresting were much greater than the outcome; on the other hand, they leveraged not only the prevention of reputation decline, but the image of the bank as providing shelter and security. DSK Bank EAD is one of the leading financial institutions in Bulgaria, ranking first in the retail business. With the largest branch network in the country, DSK Bank reaches 85 per cent of the population of Bulgaria. DSK Bank is widely known in colloquial language as “The bank of the people” due not only to its relatively long history, clients’ profile and brand awareness, but also due to the nostalgic reminiscences of a state-dominated financial system. This somewhat ambiguous image (as opposed to that of high quality service, high profile clients) turned out to play a significantly positive role in managing and maintaining DSK Bank’s reputation in times of crisis. Some 88 per cent of DSK Bank’s customers are satisfied with its services, and the bank’s loyal customer base has increased by 10 per cent over the last year. DSK Bank constantly charts top in consumer perceptions, and in the minds of its clients, Bank DSK retains its leadership on all image indicators.

MEDIA ENVIRONMENT: RESEARCH DATA AND EMPIRICAL FINDINGS The majority of Bulgarians, particularly amongst the young, do not use the mainstream media as a source of news. But traditional media still produce opinions. New media is the place to make so03/2010

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cial and economic experiments, but the pillars of public debate are based on traditional media; internet-based media are still pursuing this process. Bulgarian bloggers and social network users are described as young, right-wing, conservative, and welleducated city dwellers. The topics of economics, ﬁnance and banking

For several years we have tried to shift the reputation of DSK Bank somewhat towards that of a ‘smart and funky’ company, in an effort to attract new young and well-to-do customers. are far less represented than in other European countries’ rate of postings per topic. Of the 2,500 blogs on topbloglog.com, there are only 13 blogs listed in the economic category. a nationalist tone of voice deﬁnitely pervades the Bulgarian internet. Users of blogs and forums even ask why, if Bulgaria is part of the EU and the global economic environment, there have not been any bank failures? This fact is deemed highly suspicious, and suggests there must be something wrong behind the scenes. Or: If Bul-

garia is suffering an economic crisis, and the banking sector is one of the few profitable industries, why doesn’t the government take measures to return ownership of the banks, especially DSK Bank, back to the state, i.e. to the people? (DSK Bank continues to be perceived as a Bulgarian bank by 25 per cent of bank clients, while only 10 per cent know that the bank is Hungarian). The populist approach in definitions such as “national betrayal” (applied to the ethnical background of banks’ owners and/or top managers as a business motivation) is bizarre. The paradoxes in new media environment seem more puzzling when young and relatively educated people claim to support the neoliberal economic agenda.

Photo: www.dreamstime.com

TWO CASES: 19’ AND BG MAMMA Eighteen months ago, the

free newspaper 19’ published a series of harmful articles about banks in Bulgaria. It almost provoked a liquidity crisis by stating that Bulgaria’s two million pensioners (who are mostly DSK Bank customers) are the backbone of the Hungarian economy (a statement which was not based on reality, references to current banking conditions or macroeconomic allusions, and was vaguely connected to quotations from Bloomberg and analysis by Forbes). The day after, almost 200 million BGN was withdrawn from the BG banking system. The newspaper was held liable on the grounds of the Credit Institutions Act BG Mamma represents the largest Bulgarian virtual network – a platform for information and opinion exchange which has become quite inﬂuential over the past few years. Used by mostly young and relatively well-educated females,

85 the subscribers are also heavy users of ﬁnancial services. The extent to which they inﬂuence secondary public debate makes them an important player and indicator with regards to a bank’s performance and their communication policy, due to their high level of community feeling and synchronised actions. Some comments in the forum 03/2010

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OUR APPROACH We are more re-active than pro-active in our approach, not initiating and provoking but monitoring and measuring response. We witness an empirically defined and monitored phenomenon of “low profile with high-impact”, the actions of lower-profile individuals being equally supporting or devastating. We at DSK Bank try to measure and outline them on a daily basis; we track mentions; monitor blogs and sporadically comment on others’ blogs. WHY OPT AGAINST A CORPORATE BLOG? The choice is between authenticity, which DSK Bank preserves by maintaining its reputation as a stable and ‘oldschool’ bank, and extreme transparency, which could provoke insecurity, even fear among users. The information in a blog, essentially subjective in character, is a vulnerable area for interpretation; it could initiate negative sentiment towards the bank. As a feedback channel, it would duplicate existing and effective operating channels within DSK. It would be difficult to exert control over posted information. DSK Bank lacks a unified corporate blogging policy, and according to internal rules, approval for each posted opinion would require approval, which is a slow procedure; sufficient expertise is lacking, and so are the trained Kamelia Velichkova employees who could take charge of corporate blogging. Head of Communications & Coordination Department, DSK Bank

Kamelia Velichkova is the current head of the communications and coordination department for DSK Bank, where she is responsible for both internal communication and the process of outgoing messages. Prior to this experience, she worked at Hebros Bank as a marketing communications expert and marketing manager.

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REPUTATION MANAGEMENT TOOLS Extended customer satisfaction programme at DSK Bank as part of customer advocacy policies: a separate unit in the communications department deals with customer complaints. The unit in the Head Oﬃce of DSK Bank syndicates the information

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EXECUTIVE SUMMARY Why banks and blogs don’t always mix Known as “the bank of the people”, DSK Bank has had to adapt its reputation management strategies to the Bulgarian market. There are two notable examples of how word of mouth and inaccurate press reporting have had a negative impact on Bulgarian ﬁnancial institutions. DSK’s internal policies would make blogging a slow process and vulnerable to misinterpretation. They already have channels in place to obtain feedback. DSK takes a more traditional, and nonWeb 2.0 focused approach to reputation management, which it feels is easier for the bank to control.

from written customer complaints; it executes monitoring and control of the uniﬁed database gathered from diverse channels. The customer satisfaction programme merges the diverse incoming messages – from the branches, the call centre, institutions including the regulator BNB, blogs

The information in a blog, essentially subjective in character, is a vulnerable area for interpretation; it could initiate negative sentiment towards the bank. and forums (where the customer could be identiﬁed) etc., into one channel of outgoing messages. The customer can feel the vivid dialogue by the simple act of receiving a letter signed by the CEO, simultaneously with the standard and formal response. This approach ensures the identiﬁcation and improvement of bottle-neck places in DSK Bank’s products and services, thus providing

Photo: DSK Bank

are believed to be the source of the negative buzz and poor word-of-mouth which led to performance issues for a certain bank in Bulgaria two years ago. DSK Bank has recently posted a corporate message on the platform regarding its online banking for explanatory purposes, and in order to prevent any harmful speculation.

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Ms Marinova started working for the former State Saving Bank at 18, and gradually moved up the bank’s hierarchy. She knows every detail and aspect of the company’s operations inside out, and is highly respected by her colleagues

a habitat for the customer to feel satisfied. The way we address both the customer and fellow employees generates positive word-of-mouth and buzz. Part of the front office sales positions were transformed in order to keep customers informed about their poorly-performing loans and offering them different opportunities to pay back the debts. This also allowed us to preserve the number of employees at the same time.

VIOLINA

MARINOVA,

Reputation risk management at DSK Bank is handled by the CEO. Her being the Chairperson of the MB generates trust and credibility. as a role model for her strong spirit, high morale and discipline, as well as the way she often takes on the role of spokesperson of the banking industry. In her capacity as chairperson of the MB of the Association of the Banks in Bulgaria, Ms Marinova instigated several legislative initiatives in the field of banking in Bulgaria. She played an important role in the adjustment of EU Commission directives to local legislation, and their transformation into best practices. Efforts to maintain trust and confidence need to be made on a daily basis, taking into consideration all aspects of the changing customer expectation environment, the fragmented and heterogeneous media milieu, and the necessity to reinforce the bank’s values.

CEO

Reputation risk management at DSK Bank is handled by the CEO. As the Chairperson of the MB, she generates trust and credibility, emphasising her role as the principal guardian of corporate reputation. She is almost a household name, her career being a kind of Japanese model, which is very rare in the turbulent social and economic development of Bulgaria.

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03/2010

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BOOKS Communications Reader

wo recent titles on crisis communication and defending corporate reputation represent welcome additions to any communicator’s library, being equally erudite, enlightening and simply enjoyable to read (and how often can you say that about business books?). The title of Alan Zaremba’s Crisis Communication: Theory and Practice may seem to promise yet another dry reference book, but the author (a professor at Northeastern University and a former Communication Director contributor) has a lively and engaging writing style that renders his analysis of a wide-ranging collection of case studies as more than just a retelling; his observations and the conclusions he draws are refreshingly original and his colourful turn of phrase has the rare ability to bring communication theory to life. Chapters such as “Ethical Issues in Crisis Communications” and “Training the Spokesman” include useful exercises and discussion questions, as well as thoughtful reevaluations of words and concepts whose familiarity has ossiﬁed them. And the range of material covered is extremely impressive, with case studies, examples and allusions drawn from a much broader range of sources than we have come to expect from a business title. This is an excellent book.

USEFUL WEB 2.0 STARTER Wild West 2.0: How To Protect And Restore Your Online Reputation On The Untamed Social Frontier is an up-to-date overview of the plus points and perils of the internet and its threats to business reputation. A few of the findings by authors Michael Fertick and David Thompson can appear rather elementary (anonymity on the internet destroys accountability; everything digital is effectively permanent) or even hubristic for the sake of making a point (Is Barbara Streisand’s name really now “permanently associated” with her efforts to remove a picture of her beach house from the web?), yet the thoroughness of the analysis on offer here represents a useful starter for communication professionals tasked with heading up social media strategies. If concepts such as Google Truth or Eternal September are new to you, then having the authors describe them in detail is like getting help with your homework from the class computer geek. The inherent risk of a book like this is its inbuilt obsolescence – there are several links to web resources that may very well no longer be online by the time the reader gets their hands on the book. This smart book compensates for this by the sheer force of its good-natured erudition. 03/2010

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CRISIS COMMUNICATION: THEORY AND PRACTICE ALAN ZAREMBA ME SHARPE, MARCH 2010

WILD WILD WEST 2.0 MICHAEL FERTICK/ DAVID THOMPSON AMACOM JUNE 2010

BOOKS

BUISNESS FAILURES How They Blew It is a less successful attempt at providing an au courant overview, in this case a survey of the rise and fall of CEOs and entrepreneurs of recent infamy. These include Enron’s Ken Lay, WorldCom’s Bernie Ebbers, and James Cayne of Bear Stearns. The book has the feel of a rush job, with short, uneven chapters essentially comprising a string of press clippings and third-hand accounts. There are also stretches of rather clumsy writing (“Under two years later, he would be dead”) (“rather than using family names, as is the custom in other mainland European countries, Icelanders use patronymics”) and conjectural speculation (“Merckle will have believed that only he could have achieved this remarkable feat”). The references listed at the end of each chapter are mostly links to online articles, supporting the impression that the book was hurried into publication ahead of the introduction of website paywalls. HOW THEY BLEW IT JAMIE OLIVER/ TONY GOODWIN KOGAN PAGE JULY 2010

EMPLOYEES FIRST, CUSTOMERS SECOND VINEET NAYAR HARVARD BUSINESS PRESS JUNE 2010

PUTTING THE EMPLOYEE FIRST As an antidote

to these tales of corporate woe, Vineet Nayar’s Employees First, Customers Second explains how he turned around HCL Technologies (HCLT) after becoming CEO of the firm in 2005, taking it from a 700 million US dollar concern that was losing market share, to a 2 billion US dollar company at the front of their market. Nayar describes his reconfiguration of the corporate pyramid, locating what he calls the “value zone” at the interaction between employees and customers. It is the employees, essentially, who are the most valuable axis of the corporate triangle, and in his book, Nayar acts as a globe-trotting cheerleader for cultural change within his organisation. The most striking innovations here are the transparent communications that Nayar promotes: in his “Smart Service Desk” system, employees open a “ticket” on a work-related issue, which is then investigated and dealt with, and only when the employee is satisfied with the answer is the ticket closed. Managers are reviewed not only by their immediate peers but by everyone that their work touches or influences, thus encouraging them to reach out and inspire more people, particularly the employees. Ultimately, Employees First, Customers Second is a case study of one organisation’s transformation – readers must draw their own conclusions. It should also be noted that although Nayar alludes to both successes and failures along the road, while successes are fully explored, the failures are merely alluded to, leaving a feeling of imbalance in an otherwise worthy text. 03/2010

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ASSOCIATION

European Association of Communication Directors

THE 2010 EUROPEAN COMMUNICATION SUMMIT On July 1 and 2, communications professionals from across Europe gathered in Brussels for the annual European Communication Summit. by Neil Cranswick

T 90

he fourth European Communication Summit took place on July 1 and 2 at the SQUARE in Brussels. Over 500 communications professionals from a wide range of industries gathered together to learn from real-life case studies, workshops and keynote speeches. More than 60 prominent communications ﬁgures were invited in order to provide not only informative and eye-opening presentations to those gathered, but also to provoke fruitful discussion among the spectators. After each session, participants had the chance to actively engage in discussion with both the speakers and those gathered in attendance, as well as taking advantage of their free minutes and break times to continue their conversations, using every possible moment available to learn more about aspects of contemporary communication.

ADDRESSING THE FUNDAMENTAL CONCEPTS OF COMMUNICATIONS The event focused 03/2010

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on two major strands of communication: strategy and practice. Each subject had two keynote speakers, as well as a number of other speakers available across the two days. There was also an additional range of discussions and workshops available, giving participants a great level of choice as to what they were able to take away from Brussels. Despite the presentations being narrowly grouped into threads, each with four sub-categories, there was still a common theme which linked several of the presentations together: leadership. Be it the role of communicators on behalf of their organisations’ leadership, or the leadership roles that communicators should take within their organisations, the most successful case studies illustrated how a company can achieve, or even surpass, its goals by involving the communications function from the early stages of the decision-making process. If communicators were left in any doubt as to the role that leadership played in successful communications campaigns after the ﬁrst day of the summit, the second day’s programme will have removed any lingering uncertain-

Photos: Matthias Uhrlandt

ASSOCIATION

Participants watch one of the break-out presentations

The Art of Leadership concert

Keynote speaker Brian Lott (ATIC)

Attendees take a look through the participants booklet

ties. After the opening keynote, the attendees moved to a different room to experience a unique, interactive demonstration of the power of strong leadership communications. Professor Gernot Schulz and Professor Manfred Harnischfeger used the Brussels Philharmonic Orchestra, and a few willing volunteers (who performed magnificently!), to demonstrate the art of leadership to the participants, opening their eyes (and ears) to the power of visual and aural representation. As was the case last year, the Summit closed with Prof Dr Ansgar Zerfass presenting a selection of the results from the European Communication Monitor 2010 – the largest international communications survey in Europe. The report, which has recently been published, goes into great detail about the issue of leadership, and how communicators across Europe respond to different styles of leadership. It also revealed the increasing role of communicators in supporting, and defining, business goals, which is an excellent indicator of the greater acceptance of the communications profession across the top tables of European business.

ganisation who has most successfully in their European communications over the past year. Guests heard a speech from BBC News Europe Editor Gavin Hewitt, as well as music from jazz singer Mary Davis Jr, before witnessing the announcement that the winner of the European Communication Award 2010 was Sergio Marchionne, CEO of Fiat. Marchionne was chosen for the award, through an online poll amongst EACD members, in recognition of the impact his communications strategy had upon the resurgence of Chrysler, the struggling American auto manufacturer who Fiat were charged with returning to proﬁtability.

COMMUNICATING THE EUROPEAN IDEA At the close of the ﬁrst day of the summit, the participants were invited to an elegant gala event to celebrate the presentation of the European Communication Award. The award was designed to honour the individual or or-

“GREAT IDEAS FOR THE JOB” No doubt discus-

sions started during the summit will continue in its wake, as attendants take the opportunity to contact those they met over the two days in order to share strategies and success stories. Aurelie Valtat (online communications manager, Eurocontrol) summed up why she continues to return to the summit, when she said “What I really appreciate at the summit is that year after year, I come back with great ideas and examples that I can then emulate in my daily job - this is well worth the money!” The summit has established itself as a unique event, as shown by its increasinf popularity. Már Másson, executive director corporate communications, Íslandbanki, called it “the most relevant corporate communication event of the year.” 03/2010

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ASSOCIATION

GENERAL ASSEMBLY 2010 The European Association of Communication Directors hosted their fourth General Assembly on July 2, after the European Communication Summit in Brussels.

President Dr. Herbert Heitmann, Royal Dutch Shell

Managing Vice-President Florence Ranson, European Banking Federation

Assessor Assessor Marianne Amssoms, Marcello Berni, Anheuser-Busch InBev UniCredit Group

statutes, which allowed for an expansion to the EACD’s board. The number of assessors increased to eleven, making the EACD more representative of its members, who now number over 1,500, by allowing for a larger, more diverse board to provide a greater impetus over the next two crucial years of the EACD’s development. Below you will see the makeup of the new EACD board, which will serve until 2012.

EACD GENERAL ASSEMBLY Every year at the close of the European Communication Summit, the EACD board presents its reports to its members. Elections are held every two years, with the next scheduled for 2012.

Vice-President Anthony Gálvez Gooch, OECD

Vice-President Arja Suominen, Nokia

Treasurer Mark Redgrove, ORGALIME

Assessor Christian de Barrin, EU2020 Prospective Club - ETI

Assessor Jan Hol, Océ

Assessor Luulea Lääne, Tallink Group

Assessor Assessor Atte Palomäki, Juan Francisco Polo Wärtsilä Corporation Martin, Ferrovial

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Assessor Rudolf Ramsauer, Nestlé

Assessor Elisabeth Schick, BASF

Assessor Helmut Weixler, Group of the Greens/ EFA in the European Parliament

Assessor David Willows, International School of Brussels

Photos: Wolfram Scheible/SAP AG; private (7); Zebra Fotostudio‘s B.V. - venlo; private (4); BASF SE; Michel Gronemberger; private

he annual gathering of the EACD’s members provided the association with an opportunity to reflect on its growth and achievements to date, as well as to look to the future of the association, and consider which initiatives would work best in ensuring the continued success of communications and communicators within the European arena. After the board presented their report on the state of the association, some of the Working Group heads and Regional Coordinators presented reports on their activities over the past year. The members present approved the report of the board, as well as the financial report for the fiscal year 2009. They also passed an amendment to the EACD’s

ASSOCIATION

ASSOCIATION NEWS There have been several notable developments within the EACD over the last few months, some of the most important of which are described below.

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EACDnet Launched

The European Association of Communication Directors launched its own social network, the EACDnet, at the European Communication Summit 2010 in Brussels. The new network has replaced the old intranet section of the EACD website, and includes many community features which members may already be familiar with from other social networking websites, such as Xing, Facebook and LinkedIn. Members can add their existing contacts from the EACD’s database, as well as make new contacts, and share specialised information with their peers. They are able to manage their event calendar and participation using the website, as well as ﬁnd event presentations and articles from Communication Director magazine. All Working and Regional Groups have their own sections of the site, and you can join the discussions now at: http://eacdnet.eacd-online.eu

New Working Group Heads for Health and Risk & Crisis At the European Communication Summit in Brussels, the appointment of two new EACD Working Group Heads was announced. Firstly, Josep Catllà Planas (below left, director of communications and corporate aﬀairs at sanoﬁ-aventis Spain) has taken the reins of the Working Group Health. He has succeeded the previous Working Group head (both professionally and in the Working Group), Gloria Pujol de PabloBlanco. Secondly, Philip Springuel (below right, communications and business development manager at the European Food Information Council) has taken over from Laura Smillie, who had led the Working Group Risk and Crisis Communications since its inception. You can join both of these Working Groups, as well as the other seven Working Groups, online on the EACDnet, and keep up to date with all of their activities, publications and conversations at the click of a button.

Josep Catllà Planas

Philip Springuel

New Regional Coordinator

Alfonso González Herrero (director of external communication at IBM Spain) is the new EACD Regional Coordinator for Spain. He has replaced Gloria Pujol de Pablo-Blanco (communication director at Tresges Brokers), who had held the position since its creation in 2008. González began his professional career as a consultant at Hill & Knowlton’s New York Oﬃce, working for clients such as Bell Atlantic, NEC and Dunkin’ Donuts. He returned to Spain in 1995, joining Burson-Marsteller in Madrid, before joining IBM Spain in 1999 as Public Relations Manager. He took his current role at IBM in 2006. As well as a PhD in Marketing and Communications, and a bachelor’s in Advertising and Public Relations from the Universidad Complutense de Madrid, he holds a master’s in Public Relations Management from Michigan State University in the US.

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COMMUNICATION DIRECTOR

ASSOCIATION

REGIONAL FOCUS: UK The United Kingdom has traditionally been at the heart of the European PR and communications community. Here, Regional Coordinator Simon Warr gives his views on the EACD’s activities in his region.

The media and creative sector overall has always been very vibrant and fastmoving in the United Kingdom.

What seem to be the issues most affecting communicators in the United Kingdom at present? Are there any developments or tools that British communicators seem to be especially excited about? Naturally economic conditions continue to figure significantly within the minds of many communicators. Whether the agency side is balancing resources and revenues, or the in-house team is managing tighter budgets, the result is that everyone is still proceeding with only cautious optimism. The other big themes of recent months have been driven by the new and very different type of government that has just been elected into power in the United Kingdom. Stimulating or maintaining economic activity while addressing the deficit, public finances and services, business investment, defence and environmental issues and the overall role of the government in society are all topics which have been dominating the contemporary national debate and therefore a lot of public relations officers’ time. Trust, reputation, corporate social responsibility and digital/social, are of course, ever present. 03/2010

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What plans and/or ambitions do you have for the British regional group for the rest of 2010? We are hoping to increase the number of events we hold and increase our momentum in the second half of the year. We are currently looking into planning two events in the autumn semester, after hosting a debate in lateMarch on external and internal engagement for securing trust and reputation. Is there anything that you think specifically characterises the British PR landscape and communications community? The media and creative sector overall has always been very vibrant and fast-moving in the United Kingdom. This leads to a lot of innovation and exciting work. Given the global power of the English language, we have also always had a lot of international work and businesses based here. What do you see as the main benefit of the EACD network, with reference to the British communication community? So far there has been a strong focus on in-house communicators and on those with international roles or organisations. This creates a clear differentiation and rationale for the EACD.

SIMON WARR Simon Warr started his career in journalism and government press relations in the early 1990s, before joining Ford of Europe in Cologne in 1999. He has worked with all of Ford Motor Company’s brands outside of North America, in a number of locations around the world, and is currently director, communications and public affairs at Jaguar & Land Rover.

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Can you tell us about the format and topic of events that you have hosted and the feedback you have received? Our events to date have been focused on themed or case study presentations, with a healthy dose of networking alongside. The feedback has been very positive, both with regards to the speakers we have featured at our events, as well as the opportunity provided to meet and share news or experiences with professionals in similar roles.

ASSOCIATION

WELCOME! The following communicators have recently joined the EACD

Robert Admiraal, Director of Communication, Saxion University of Applied Sciences Philippe Anhorn, Head of Communication and Public Affairs, Transports Publics Genevois Tatiana Babakina, Public Affairs Leader, Eastern Europe, DuPont Science and Technologies LLC Philippe Barquet, Director Global Products Communication, Sanoﬁ-Aventis Groupe Charles-Yves Baudet, Communication Manager, Teradata France SAS Tim Baxter, Head of Corporate Communications, Standard Chartered Bank UK Limited Vinciane Beauduin, Project Manager, Events & Communication, European Foundation for Quality Management Alice Beijersbergen, Director Communications, Unilever Foodsolutions Oltea Belciuganu, Head of Communication & Marketing, CEC Bank Christophe Bélorgeot, Vice President Group Communications, Technip Svetlana Belova, Project Coordinator Information and Communication, Schlumberger Logelco.Inc. Paolo Black, Head of Visual Communications, Shell International B.V. Malcolm Booth, Director of Communications, The R&A Vanessa Bulkacz, Communications Manager, Climate Action Network Europe asbl Keith Burnet, Communications Director, Chatham House Ian Bustin, Head of Communications, Rolls-Royce PLC Richard Byatt, Corporate & Public Afairs Director, British Institute of Facilities Management Ailish Byrne, Head of Public Affairs and Communications, The Irish Stock Exchange Ingrid Capezzuoli, Communication Manager, B. Braun Milano Spa Lidia Capkovic Martinek, Spokesman & PR adviser, Zagreb Airport Ltd. Richard W. Carter, Director of Global Communications, Rolls-Royce Motor Cars Limited Josep Catlla Planas, Director of Communications and Corporate Affairs, sanoﬁ-aventis España Sophie Cedervall, Manager Corporate Communications, Inter IKEA Systems B.V. Francesco Chiurco, Head of Media Relations at BNL and Media Relations Manager for BNP Paribas Group in Italy, Haroula Christodoulou, Principal Associate, External Relations & Media, Black Sea Trade & Development Bank

Florence Coppenolle, Vice President Group Communications, Belgacom Group Anne Le Corre, Director of Communication for Retail Banking France, Société Générale Corporate & Investment Banking Maria Dahllöf, Head of Communications, TrygVesta Peri Desai, Corporate Communications Manager, CCP Games Nele Devolder, Marketing Coordinator, Kellen Europe Nevena Dimitrova, Communications Officer, Enel Maritza East 3 Daniela Dochia, Head of the Chambers’ System Corporate Image Office, Chamber of Commerce and Industry of Romania Irena Saric Dombaj, Corporate Communication Manager, LOREAL ADRIA D.O.O. Raphael Draschtak, Media Spokesman, Federation of Austrian Industries Anne-Laure Dreyfus, Communications Officer, European Group of Television Advertising Arnold Drijver, Director Group Communications, Grontmij Nederland B.V Maria Ehn Notrica, Communication Director, Micasa Fastigheter i Stockholm AB Richard Ellis, Communications Director, Public Relations Consultants Association Brant Emery, Head of Marketing and Communications, All Options Philippe Fieux, Senior Communication Manager, Belgacom Group Solfrid Flateby, Communications Director, Reitan Servicehandel AS Melissa Fleming, Head of Communications Service, Spokesperson for the High Commissioner, United Nations High Commissioner for Refugees Nicholas Francis, Head of Communications, Takeda Pharmaceuticals Europe Limited Heinrich J. Frontzek, Head of Corporate Communication, Festo AG & Co.KG Jesus Gabirondo, Director of Media Relations, Cuatrecasas Gonçalves Pereira Pedro Galvan, Marketing and Communication Director, Volvo Ocean Race, S.L.U Carole Gambini, Head of Internal Communications Directorate, Eurocopter France Rita Gijsemans, Communication & Marketing Services Director Benelux, Nestlé Benelux

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ASSOCIATION

Matthias von Glischinski-Kurc, Director of corporate communications, and Economic policy, Shell Deutschland Oil GmbH Wendy Gold, Senior PR Lead, Microsoft France Emma Gorman, Publicity Coordinator, Tourism Ireland Simon Gregor, Head of Corporate Communications, Medicines and Healthcare products Regulatory Agency Birgit Gronkowski, Director Internal Communications, Nycomed International Management GmbH Tanja Gruber, New Media and Brand Manager, schoenherr attorneys at law Svetlana Guzeeva, Communications Director, Association of European Businesses in the Russian Federation Karen Hackshaw, Publications Coordinator , Technical Centre for Agricultural and Rural Cooperation Minna Hakaoja, Communications Director, Invest in Finland Michael Hall, Communications Manager Europe, Pioneer HiBred Switzerland S.A. Claudia Hammerich, Manager Corporate Communications, Sappi Europe SA Marcelle Hendrickx, Head of Communication, Provincie Noord-Brabant Vania Henry, Director Marketing and Communications, PricewaterhouseCoopers Sarl Colin Hensley, General Manager, Corporate Affairs & Planning, Toyota Motor Europe NV/SA Adrian Hiel, EU Communications Officer, International Fund for Animal Welfare Béatrice Hirzel Corte, Head of Marketing & Communications, Schroder Investment Management (Switzerland) AG Sofia Hitzbleck, Vice President Corporate Communications, Kempinski Hotels S.A. Michael Holm, Director, Press Office, Vestas Wind Systems A/S Lucie Hribal, Issue Manager / PR, Swiss Post International Management AG Liviu Ion, Executive Director of Communication, SC Automobile Dacia SA Gregor Jagodic, PR Officer, University of Ljubljana Iwona Jarzebska, Head of Marketing and Communications, RWE Polska S.A. Monika Jaslowska, Brand Public Relations Manager, Polpharma Biuro Handlowe Sp. z o.o. Przemek Jedrysik, Manager Public Relations, QIAGEN GmbH Conny Johanson, Communications Director, SPP Livförsäkring AB Richard Johnson, Director of Corporate Communications, Fédération Equestre Internationale Toby Johnson, Senior Communications Officer, International Telecommunications Union Maryléne Jumel, Director of Communications and Change Management, EMEA, McCormick France S.A.S. Piril Kadibesegil, Corporate Communications Supervisor, HSBC Bank A.S. Marina Kaptein-Vasiljevic, Manager Marketing & Communications, IMCD Services B.V.

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COMMUNICATION DIRECTOR

Madelon Kaspers, Spokesperson & External Communications Manager, Capgemini Nederland B.V. Helen Kavvadia, Senior Communications Ofﬁcer, European Investment Bank Marc Kempe, Director Communications, Chevrolet Europe GmbH Lill-Torunn Kilde, Communication Manager, Oslo Renewable Energy and Environment Cluster Daniel Kiryakov, Communications and Safety Ofﬁcer, Enel Maritza East 3 Ingeborg Klunder, Associate Director Corporate Communications, NIBC Bank N.V. Jukka Koivisto, Director Communication and Strategy, Confederation of Finnish Industries EK Bart van Kuijk, Marketing & Communications Manager, Hogeschool INHolland Haarlem Oleg Kuzmin, Member of the Management Board, Director for Corporate Affairs, Interpipe Ukraine Pawel Kwiatkowski, Director of Corporate Affairs, Kompania Piwowarska SA Pierre-Philippe Lacroix, Internal & Corporate Branding Manager, Novartis Pharma S.A.S. Eugenio Lanzetta, Head of Internal Communication, Gruppo Banca Sella S.p.A. Jan Larsson, Head of Communication and Identity, Nordea Bank Anita Laxén, Communication Director, Fazer Food Services Mari Liljefors, Communications Director, Otsuka Pharma Scandinavia AB Jeanette Fangel Løgstrup, Director Corporate Communications, Codan A/S - Trygg Hansa AB Annika Loigu, Head of Communications and PR , Riigi Kinnisvara AS Miguel López-Quesada Gil, General Manager Corporate Communication & Institutional Affairs, ZED worldwide S.A. Sophie Lupcin, Head of Communications, Yehudi Menuhin Foundation Marta Madina, Communications & Development Director, Oceana Bérangère Mainguy, Marketing & Communication Manager, SCOR Global Life Kossara Marchinkova, Head of Communications, Enel Maritza East 3 Hedi Mardisoo, Head of Communication, Group IT, Swedbank AS Andreas Marmsoler, Director Communications EuCAN II, Global Communications, MSD Regional Business Support Center GmbH Naiara Martinez, Communications Manager, Brussels European and Global Economic Laboratory Melanie McCluskey, Director Corporate & Internal Communication, Belgacom Group Jane Mcleod, Communications Leader, WABCO Vehicle Control Systems Brenda McWilliams-Piatek, Spokesperson, Managing Director Communications & Brand, Federal Express European Services

ASSOCIATION

Rob Meijers, Director of Marketing & Communications, Ernst & Young Nederlands Véronique Mely, Communication Director, Ministry of education and Ministry of higher education and research Teresa Menezes, Communications Manager, Sonaecom Helen Mills, Director, External Communications, Amgen (Europe) GmbH Carsten Nemitz, Communications Director, ALSTOM Power (Schweiz) AG Nikki Nichol, Head of Public Relations, The Caravan Club Limited Kathleen Noonan, Communications Director, CEE, Russia & CIS, GE Energy, GE Power Suzanna Norberg, Nordic Marketing and Communications Manager, Tata Consultancy Services Sverige AB Kati Nyman, Communications Director, Pharma Industry Finland André Oberholzer, Head of Corporate Affairs, Sappi Limited - South Africa Aileen O’Donoghue, Director of Strategy, Policy & Communications, The Irish Stock Exchange Gwendoline Ornigg, Corporate Affairs Manager EMEA, Cargill Europe BVBA Joanna Osborn, Communications Team Senior Manager, Eli Lilly Italia S.p.A. Sarah Elisabeth Parkes, Senior Media Relations Officer, International Telecommunications Union Kjell Pettersen, Executive Vice President Corporate Communications, Kommunalbanken Norge Astrid Pockfuss, Spokesperson, Fellner Wratzfeld & Partner Rechtsanwälte GmbH Juan Francisco Polo Martin, Director of Communication & Corporate Responsibility, Ferrovial Seda Pumpyanskaya, Special Adviser Communications, Conseil de l’Europe Esther Dora Rado, Head of Public Relations, Institut for Selskabsledelse Mugurel Radulescu, Public Affairs and Communication Director, Coca-Cola Romania Rudolf Ramsauer, Senior Vice President, Corporate Communications Director, Nestlé S.A. Jen Roach, Chief Communication Officer, SAP AG Valérie Roduit, PR and internal communication specialist, Pictet & Cie Banquiers Adam Rogers, Senior Strategic Communications Adviser, The United Nations Development Programm (undp) Holly Rossetti, Director of Public Relations , Amdocs Ltd Patricia Rousseau, Communication & PR Officer, Vlerick Leuven Gent Management School Rosana Rumschisky, Marketing & Communication Director , GÓMEZ-ACEBO & POMBO Abogados Rudi Schmidt, Executive Vice President Corporate Communications & Marketing, Asklepios Kliniken GmbH Milica Slijepcevic, PR Managing Director, Dunav Osiguranje Elena Sosnovtseva, Head of PR department, Banque Societe Generale Vostok

Philip Springuel, Communications and Business Development Manager, European Food Information Council Miriam Stackpole Dahl, Press Officer , Mission of Norway to the EU Andrea Stelzer, Communications Manager, Japan Tobacco International / Austria Tabak GmbH Aleksander Straunik, Regional Communications Director, BT Global Services Linda Strömsten, Head of Communication, TrygVesta Dagnija Stukena, Head of Public Relations, Press secretary, Nordea Bank Finland Plc Latvia branch Sally Sykes, Communications Director, HSE - Health & Safety Executive Eszter Szabó, Corporate Communications & Public Relations Affairs Leader for Central-Easter-Europe and Turkey, GE Hungary ZRt. Lyudmila Terekhova, Communications Director, M.Video Irte Topaloglu, Corporate Communications Project Manager, Pfizer Inc Victoria Torrano, Head of Languages & Information, Bank for International Settlements Jean-Charles Tréhan, Director of Public Affairs and Corporate Communications, Sodexo France Helen Tueni, Marketing and Communication Manager, Technopolis Belgium Kurt Tuerlinckx, Manager Corporate Communication, Antwerp Port Authority Hanna-Mari Tuovinen, Communications Director, Pöyry PLC Dionisio Uría Menéndez, Director of Communications, Uría Menéndez Abogados, S.L.P Sofia Valleley, Communications Manager (EU Projects), European Food Information Council Saskia Verhoeven, Manager Corporate Communication, Teijin Aramid B.V. Helene Vos Vuadens, Head of Internal Coprorate Communications, Pictet & Cie Banquiers Anita de Werd, Global Communications Manager, DSM NeoResins Erik Werkman, Head of Corporate Communication, schoenherr attorneys at law Paige Wesley, Vice President of Marketing & Communications, International Association of Business Communicators Jorma Westlund, Senior Vice President Corporate Communications, Stora Enso Oyj My Wiborg, Communications Officer, Advokatfirman Vinge KB Sanna Wigg, Head of Corporate Communications, Sanitec Corporation Teri Wishart, Director of Development & External Relations, National Library of Scotland Edna Yahil, Manager Operations Communications, Philip Morris International Management S.A. Atilla Yerlikaya, Corporate Affairs Director, Coca-Cola Içecek A.S. Dan Zavoianu, Press and Public Affairs Manager, Private Pension System Supervisory Commission

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COMMUNICATION DIRECTOR

QUESTIONS TO... The personal side of communication directors

LÍGIA VÁRZEA ARAÚJO Head of Communication and Public Relations, Somincor (Lundin Mining Corporation) How do you explain your job to your friends? I am the protector of our corporate image and the reputation of the company, while helping foster positive relationships with all our stakeholders and institutions. I promote dialogue and communications, both internal and external, making sure people are kept informed and their opinions recognised. What has been the most emotional moment in your career? It was the acknowledgement and the excellent opinions given by our directors after just two months of my admission into a mining mompany where we commenced a new tin mining business. The inauguration of the new tin business was a grand event with all the professional procedures, the protocol, the presentation, the booklet, the gifts, the media, the politicians, the shareholders, the opinion makers, the customers, the suppliers, the public, and so on. It was an important regional and national event and it was my ﬁrst task in a

strange and new world of underground mining.

A masterpiece of corporate communication was…? This is a diﬃcult question. I haven’t yet found the masterpiece, but I continue to search for it! If heads of Corporate Communications didn’t exist, what would your profession be? Journalist, teacher or classical ballet dancer. What personal object decorates your desk? My agenda, my fountain pen and two mobile phones. Who are your present-day heroes? I have no heroes, but I admire Nelson Mandela and Dalai Lama for character, belief, courage and determination. Which natural talent would you like to possess? To dance like Margot Fonteyn.

Lígia Várzea Araújo Head of Communication and Public Relations, Somnicor Lígia Várzea Araújo is the head of communication and public relations at Somincor (part of Lundin Mining Group), a position she has held since 1990. She represents Lundin Mining Group as a spokeswoman in Portugal, where she is responsible for all press, public relations, corporate communications, research and reputation management. Prior to joining Somnicor, she was the head of social relations, and later public relations, at Transport Company. Between 1976 and 1978, Várzea Araújo worked in the journalism department of a publishing ﬁrm.

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COMMUNICATION DIRECTOR

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