Holmes Report Blog

The Holmes Report blog focuses on news and issues of interest to public relations professionals. Our main site can be found at www.holmesreport.com.

Friday, July 28, 2006

Rumor Control: If you work in public relations, you’ve probably heard the one about Procter & Gamble donating a portion of its profits to Satanist groups, or the one about 7-11 store managers celebrating after the 9-11 attacks, or the one about Mexican brewery workers urinating in Corona beer, but this one might be new to you: an e-mail doing the rounds suggesting that CVS pharmacies only place anti-theft devices on black hair care products.

This put me in mind of a story in The Wall Street Journal more than a decade ago involving a Brooklyn-based soft drinks company that had been making major inroads in the black community with a sugary soft drink. (I don’t remember all the details, and couldn’t find the article via either Google or Factiva.)

Posters started appearing claiming that an ingredient in the drink was designed to make black men sterile. “Did you see last week’s 60 Minutes,” they asked, giving implied credibility to the rumor, even though there had been no such report on the CBS show. The company suffered substantial losses before it was eventually revealed that the posters had been put up by a rival drinks company.

The Wall Street Journal story painted the company as a victim, which is true as far as it goes. But a company that had built good relationships with the black community—its largest demographic—would have been a lot better placed to fend them off.
Information is Empowerment: Tony Blair, according to this headline in the Financial Times, “Puts Onus for Good Health on the Individual.” The story goes on to quote the British prime minister: “Government cannot be the only one with the responsibility if it’s not the only with the power. The responsibility must be shared and the individual helped, but with the obligation also to help themselves.”

All of which would make sense, except for the British government regulations that are designed to prevent its citizens taking responsibility for their own healthcare, by placing restrictions on the ability of pharmaceutical companies to communicate directly to patients. Those restrictions are not only anachronistic—the information is freely available on the internet—they are also counterproductive when it comes to empowering people to take control of their own health.

Wednesday, July 26, 2006

Reflective Leviathans: The Financial Times reports on a new initiative by British think tank Tomorrow’s Company, undertaken with the support of 11 major multinational corporations, to address the governance issues faced by the next generation of corporate leivaithans.

According to John Manzoni, head of refining and marketing at BP and co-chair of the inquiry, “Companies should be addressing some of the problems facing the world, not in a philanthropic way but in a core, strategic way. But we seem to be among the least-trusted institutions, so there’s a dilemma.”

The inquiry will conduct interviews with major business leaders, NGOs, writers and academics, seeking the answers to four broad questions. Since they’re unlikely to ask me, I figured I’d provide the answers here anyway.

What should be the role of a company in society, globally and locally?: The role of business is to meet stakeholder expectations. That obviously means delivering profits to shareholders, but other stakeholders—customers, employees and communities—have more complex and changing expectations. Failure to live up to them will be costly for business. Companies need to monitor these expectations constantly, manage them as far as possible, and do what what they can to meet them.

How should companies collaborate with financial institutions, governments and civil society to tackle problems such as climate change? Err, yes.

How can companies manage and benefit from a diverse workforce while maintaining a strong core purpose? Put values as the center of the company. Make sure that those values are both real and distinctive (bland generalities mean nothing). Communicate those values aggressively internally and externally. Find ways to make them relevant to that diverse workforce. Empower people rather than exploiting them.

How can companies form productive and positive relationships with their critics? Listen. Go away, think about what you’ve heard. Then listen some more. Engage in conversation that is both honest and human. Make concrete promises and then deliver on them.

Tuesday, July 25, 2006

Risky Business: And Tony Snow thinks his critics are tough.

Monday, July 24, 2006

The Media's Role in Governance: Some new research from the University of Chicago suggests that media coverage can be more effective at enforcing high standards of corporate governance that regulation.

The authors analyzed two Russian companies: Sidanco, a little-known holding company in the oil and gas sector, and MGTS, the telecommunications company for Moscow. In 1998, both companies attempted to issue shares to parties linked to insiders at well below the prevailing market price. But while both companies committed similar corporate governance abuses, Sidanco included the Hermitage Fund—an activist fund—among its investors.

Hermitage was actively involved in trying to generate media coverage about Sidanco. The authors found that Sidanco’s actions were reported in 23 news articles, 14 of which appeared in credible international publications, including the Financial Times, The Wall Street Journal, and the Economist. In contrast, MGTS had only three articles mentioning its corporate governance violation. In the case of Sidanco, the abuse was reversed, while in MGTS the dilutive share issue was quickly approved.

According to the article at Capital Ideas, “the authors were able to show that it was a component of foreign press coverage driven by the Hermitage Fund action that drove the results, suggesting the link between coverage and outcome is more than a mere correlation.”
Fox Flacks Flame Foes: An amusing AP article suggests that Fox News takes the same hardball approach to public relations as it takes to anyone who opposes its pet administration. Author David Bauder chronicles all the critics of Fox who have been “wished well” by the network’s PR pros over the years, something it likens to “a kiss from a Mafia don.”

Says Fox PR chief Brain Lewis: “Has there ever been a more disingenuous phrase in the corporate handbook, or the PR handbook, than ‘we wish him well’? ‘Earnings have fallen in the last eight quarters and we wish Joe well as he leaves the company to pursue other interests.’ We know what they mean, so we just thought we’d have some fun and point out the hypocrisy of the term.”