What Journalists (and Business Executives) Don’t Understand About Public Relations

“A company’s aim is to frame the narrative in a favourable manner. Any firm wants to be seen not as a money-grubbing corporation that pollutes the environment and exploits its workers but as an innovative pioneer with sustainable operations and a social conscience.”

So wrote Philip Coggan in a “Bartleby” column for The Economist a few years ago. Coggan is a Cambridge-educated British journalist who has worked for the Financial Times and The Economist for almost 40 years, and the remainder of his column was a condemnation of the public relations industry and its practitioners (whom he terms “parasites”).

Coggan has spent his career mostly covering the financial sector, from London, so I grant that his experience of the public relations world may be different from mine, but he misunderstands the purpose and practice of public relations (a phrase I use here to encompass all of communications, which can include government/community relations, investor relations, internal communications, crisis communications and more).

Who cares what a grizzled financial journalist thinks?

Well, what struck me about Coggan’s views is that they are shared by many business executives, few of whom really understand the purpose of public relations (communications) and how it can/should support organizational strategy.

Coggan was not wrong when he wrote, “A company’s aim is to frame the narrative in a favourable manner.” But the job is also to create the narrative. Only very large businesses have the luxury of assuming customers and other stakeholders have any interest at all in their activities. Public relations is storytelling: “Who are we, what do we do, and – most importantly, why should you care?” And seen from the stakeholder perspective: “What can you do for me?”

Coggan correctly observes that many companies (this starts at the executive level, and trickles down to the junior PR people they hire because they don’t understand the importance of the function) believe public relations is simply the process of getting coverage for product releases. Which, yes, could involve simply pestering (Coggan’s word) reporters until they beg for mercy. Indeed, this sub-specialty of communications is called “media relations” and many executives believe this is all that is required.

But what about government relations and community relations? I don’t know how it works in London, but Wall Street (i.e. U.S. financial institutions) spent $2 billion during the 2017-2018 election cycle to try to influence decision-making in Washington.

And several years ago, McKinsey & Company estimated the business value from government and regulatory intervention at about 30% of earnings for companies in most industries, and at over 50% for companies in the banking sector. According to McKinsey, one European utility found that the ongoing value at stake from regulation of its business was €1.5 billion, or about €30 million for every employee involved in handling the company’s regulatory affairs. Another large global company estimated that in a major acquisition, value at stake from regulation amounted to over €500 million a year over a decade.

At the same time, McKinsey’s consultants wrote: “Since there’s so much money on the table, you might assume that companies would organize government relations as carefully as they do other business functions. Yet the reality is quite different. In our most recent annual survey, fewer than 30% of the executives responding said that their external-affairs groups had the organizational setup and talent necessary to succeed. Only about 20% of executives reported frequent success at influencing government policy and regulatory decisions—a proportion that has not increased in the four years we’ve conducted the survey.”

Classic McKinsey – getting paid to tell business executives what they already know: that they don’t understand how communications, or how to build a communications function that supports business strategy.

If your communications department comprises a handful of 20-somethings who sit around writing and rewriting press releases, then “pestering” journalists to publish them, you’re doing it wrong.

You want a communications function that is integrated into the management process, including into the strategic planning process.

You want a communications team that can help the CEO and management team look at business issues in the larger context, considering the perspective of every stakeholder (employee, customer, partner, supplier, local community, host country government, home country government, home country general public).

You want a communications team that develops and delivers consistently outstanding content that engages stakeholders and prompts them to action in support of organizational goals.

You want a communications team that will ask “What if?” A communications team that looks at every issue from the stakeholder perspective, and works to (gently) remind the management team that by definition, a stakeholder wants to know “What’s in it for me?”

Philip Coggan wants a communications team that will “supply useful facts about the company when asked, give an accurate steer on whether market rumours are true, and arrange an interview with the chief executive when required.”

That’s what he wants, but it’s not what you want. You want a communications team that has over time (ideally, the lifetime of the company) comprehensively built your brand – built your reputation – to the point that your stakeholders trust you. You’re not going to get that from a handful of product press releases.

What was most interesting to me in reading Coggan’s column was how oblivious he apparently is to the work that thousands of public relations professionals have done to shape his perceptions of the hundreds of brands he interacts with every day.

If Coggan is like 91 percent of his British compatriots, he believes that “the way a company behaves towards its customers and communities is influential when making a purchase.” And he may be one of the many travelers who is willing to pay $18 more for a plane ticket for every one-point increase in airline reputation.

As a financial journalist he must be aware of the value of reputation in IPOs and mergers and acquisitions, and that shareholders perceive a company with a solid reputation to be less risky than companies with equivalent financial performance, but whose reputation is less well established.

Perhaps Coggan believes – like many business managers – that a good reputation materializes from thin air because a company’s products and services are excellent. Yes, quality is important, but very few businesses rely on word of mouth alone for growth.

Indeed, when Coggan wrote his column, The Economist was looking to hire a Senior Vice President of Communications. Someone “who will be responsible for defining and executing comprehensive, multi-platform internal and external communications strategies to build awareness and equity for the Group.” Someone who “will serve as integral part of the marketing leadership team and will be responsible for developing and implementing the firm’s overall communication strategy, including the implementation of communication plans, initiatives, and programs and will lead all strategic and operational aspects of the global corporate communications function including focused messages to external and internal audiences, crisis communications management, and executive communications.”

In other words, someone who will do quite a bit more than “pester” journalists to publish The Economist’s press releases. Just sayin’.