Renown crisis consultant James Lukaszewski wants to rebuild trust between U.S. corporations and the American public. He also believes public relations can lead the way.
So far, so good.
Then Lukaszewski offers his prescription. “Restoration of trust begins by focusing and rebuilding the most essential element of an ethical reputation: integrity,” he writes in a recent column for the Public Relations Society of America.
He calls upon corporations to create an executive position – the Chief Integrity Officer – to ramrod this effort. The CIO’s job is to establish the “trust-building organizational principles” for the corporation, and to practice “uncompromising vigilance” to see that those principles are followed.
Moreover, Lukaszewski expects the PR profession to “play a vital role in restoring and enhancing trust” by doing for corporate integrity what lawyers do for compliance: serving as advocate, guardian and sage.
While I agree with Lukaszewski on the vital need for Corporate America to rebuild its relationship with the public, I strongly disagree with his prescription for three reasons – all of which are tied to an overarching concept.
Shareholders come first
First, there the notion of the “corporate conscience,” which is popular among PR counsels who champion “corporate social responsibility.” By definition, a U.S. corporation has no conscience. This has been true since the Dodge Brothers won their case against Henry Ford in 1916. The principal of “the best interests of the shareholder” requires all CEOs to hold their shareholders’ interests above all others – including the dictates of conscience.
This is known as “shareholder primacy,” and it remains the law of the land. The idea that this will change soon is nonsense. There is no significant movement afoot to re-charter the U.S. corporation, and frankly such a change in corporate law would be disastrous for the nation. We are much better off allowing corporations to follow their self-interests, and leaving it to a combination of government regulation and public opinion to set the boundaries.
Second, there is the widely accepted idea that corporations can build trust by “acting responsibly.” As I’ve noted, corporations are in effect and by design sociopaths. They cannot act responsibly. They can only pursue their self-interests.
Self-interest may include following a regulation, because to do otherwise will lead to a civil or criminal penalty that outweighs the reward. It may also include yielding to public opinion, because to do otherwise may threaten the corporation’s “social license” to do business.
Barring these, the CEO is bound by precedent and pragmatism as well as by culture and climate to pursue the path that is most likely to increase shareholder value. “Acting responsibly” is irrelevant.
Third is the idea that PR counsels can sway CEOs from the Dark Side by appealing to their better angels. Modern CEOs cannot afford to listen to conscience if they hope to keep their jobs. Such an appeal is futile. By championing such an appeal, PR is in danger of furthering its current reputation as being severely out of touch with corporate culture.
All of this may sound cynical. And I would agree if I failed to propose an alternative to the Chief Integrity Officer.
Introducing the Chief Responsiveness Officer
Instead of a CIO, corporations should establish a CRO: Chief Responsiveness Officer.
Just as the Chief Legal Counsel guides the CEO toward compliance with government regulations, so the Chief Responsiveness Officer guides the CEO toward compliance with prevailing public opinion, especially among stakeholders.
In this way, the CRO helps the corporation to
- Communication and collaborate effectively with key stakeholders, with an emphasis on the corporations’ critics.
- Identify and mitigate conflicts with public opinion well before they become controversies.
- Establish and maintain trust with key stakeholders as well as with the American public at large.
Responsiveness is the art of figuring out “how companies can lose gracefully (and profitably) to the demands of stakeholders.”
(Note: I borrowed the phrase in quotes from risk communication consultant Peter M. Sandman, who has worked on issues related to corporate responsiveness for the last four decades.)
As you may expect, there’s a strategic gulf between the CIO and the CRO.
As defined by Lukaszewski, the CIO attempts to build trust with the public by improving the corporation from the inside.
Let’s be clear about this. Ethics are good. Integrity is laudable. Business schools should steep future CEOs in both. But if the goal is to re-establish trust with our publics, then a campaign to teach ethics to a corporation is doomed to failure.
Why? Because the effort begins with a faulty assumption: that corporations can curry favor with their publics by improving their internal behavior. They can’t.
“Integrity” may be a virtue, but it’s not persuasive. A corporation can set the highest ethical standards. But if it ignores the need for responsiveness, its publics are likely to assume the corporation is aloof, greedy, reckless and arrogant.
The new paradigm: Trust, but verify
Corporations still suffer from the delusion that they can control their message and their visibility. That may have been true in the heyday of Madison Avenue, when a brand provided something for the consumer to aspire to become. (Think Marlboro.)
It may have been true in the Eighties and Nineties, when a brand indicated a preference (think Tylenol), or the 2000s, when a brand indicated a passion (think Apple).
All of that is changing rapidly. Today, a brand is a mark of interaction. It’s a wikibrand. Every corporation must now contend daily with the people formerly known as “the audience.”
“Customer trust and satisfaction in brands is declining precipitously, while the customer’s ability to find pertinent information, inform others, and self-organize has never been stronger,” authors Sean Moffitt and Mike Dover write in their recent book, “Wikibrands: Reinventing Your Company in a Customer-Driven Marketplace.”
They continue: “Positive and negative brand experiences and content now spread rapidly across social circles as barriers have virtually been erased by evolving Web software, multimedia, mobile, electronic, and file storage technologies. Today’s successful brand strategies rely less on ‘managing perceptions,’ ‘spinning information,’ and ‘controlling the message’ – the hallmarks for an earlier time.”
Thus to succeed, corporations must take actions that most CEOs will instinctively distain: They must share power with the public. They must let the public participate in setting policy. And they must make themselves accountable to the public.
In the words of Ronald Reagan, corporations much submit to a policy of “trust but verify.” They must learn and practice the art of responsiveness.
Fortunately for the PR counsel, it’s not necessary to develop a responsiveness program from scratch. I strongly recommend Peter Sandman’s web site (psandman.com) and the following articles from that site:
- Giving Away the Credit: Managing Risk Controversies by Claiming You're Responsive (though maybe not responsible) http://www.psandman.com/col/credit.htm
- Responsible or Responsive? http://www.psandman.com/articles/netwrkr.htm
Tapping into the CEO’s worldview
So why is the Corporate Responsiveness Officer more likely to find champions within a corporation than is the Corporate Integrity Officer? Because the CRO concept addresses all three objections listed earlier:
- It recognizes that a corporation cannot develop a conscience under current law.
- It recognizes that a corporation must always act in its self-interest.
- It appeals not to a CEO’s conscience, but instead to something that the CEO understands, and is legally bound to observe: shareholder primacy.
Here’s the underlying logic.
A conflict with prevailing public opinion will lead a corporation toward controversy, which can lead in turn to slower sales, lost revenue, closed plants, abandoned projects, demoralized employees, angry investors and *gasp* a plummeting stock price.
Therefore, it is almost always in the shareholders’ interest for a CEO to adapt to prevailing public opinion.
For example: It was in the interest of shareholders for Nabisco to remove transfat from its Oreo cookies instead of resisting prevailing public opinion about food purity. And Steve Jobs acted in his shareholders’ interest when Apple agreed to remove toxic materials from its computers instead resisting prevailing public opinion about environmental protection.
Neither Nabisco nor Apple suddenly developed a conscience. Their CEOs didn’t act out of integrity or social responsibility. They made the risk/reward calculation that CEOs are trained and hired to make every day. They decided that responsiveness to prevailing public opinion was the better choice for shareholder value.
With all of this in mind, the Chief Responsiveness Officer serves two strategic roles for the corporation:
- To recognize potential conflicts with prevailing public opinion and to help the CEO navigate the corporation around them.
- To carefully analyze unanticipated conflicts with prevailing public opinion, to design plans to effectively respond to those conflicts, and to advocate those plans to the CEO.
So, let’s sum this up.
A corporation is as likely to grow a conscience as a frog is to grow wings. It’s time for public relations to stop expecting that to change.
Like a frog, a corporation is doomed to bump its ass on the ground. An effective Corporate Responsiveness Officer can help make those bumps far less frequent and a lot less painful.
