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The Limits of Public Relations

Public Relations That Isn’t Proactive Ends Up Being Reactive, And That Is Highly Problematic.

The profit motive and the golden rule form the eternal yin yang of business.


For most managers the fundamental art of running a company is creating ways to decrease expenses. Cutting costs was at the heart of Taylorism and Total Quality Management, the two most influential business movements in the last 100 years, and it led to the invention of the assembly line, the proliferation of plastics and passing of NAFTA legislation.

When taken too far, cost-cutting calculations also led to Ford Motor Co. deciding that it was more profitable to pay off wrongful death claims than to redesign the Pinto gas tank, and more recently, it justified Volkswagen executives’ chicanery when they developed and installed diesel engine software to trick Environmental Protection Agency (EPA) monitors.

Sadly, accounting, finance and management schools don’t teach their graduates that businesses are essentially social institutions. Frugality only goes so far. Ultimately profit is dependent on constructs studied in liberal arts colleges – things like reputation, ethics and good will. The relationships with employees, customers and the community are so important that sometimes it is even necessary to lose money in order to make money.

Yes, Martin Winterkorn and Tony Hayward – the former CEOs of Volkswagen and BP, respectively – this is the tricky part. There are no columns on the Excel page for measurements of shareholder panic, public disgust and legislative retaliation. Investor relations, product promotions and lobbying are all advanced in relationships of mutual respect.

They depend on social interactions that take place in an atmosphere of trust, appreciation and kindness. They add up to the liberal arts’ yin in contrast to the business school’s yang.

The most important responsibility of a chief executive officer is to keep the two forces in balance. Ideally the CEO should make the voice of the public relations department part of the decision-making process.

The public relations staff might include a director with a public relations degree who is monitoring and predicting reactions of key publics, a writer who is a former journalist who knows exactly how an issue will play out in the news media, and perhaps even a philosophy major who is bold enough to point out that it is just wrong to lie.

As silly as this might sound, there are issues that require that the input of a proactive PR staff be given equal status to the input from the chief financial officer. Given a more holistic approach to business decisions, Arthur Anderson might have come clean while it still had a chance, BP might have overbuilt its underwater drilling operation in the Gulf, and Volkswagen wouldn’t have tried to dupe its customers and federal regulatory agencies with a digital shell game.

Public relations that isn’t proactive ends up being reactive, and reactive public relations is highly problematic. Sometimes the PR staff can guide a company through an apology and a rebranding campaign, but rebuilding a positive reputation may require the resignation of senior leadership personal who are perceived to have damaged public trust.

Even after taking extreme measures, it is rare for a company with a reputation crisis to break even. Five years after the Deepwater Horizon Disaster, BP is still reporting quarterly losses in excess of $5 billion.

Public relations is more than just business communication. To think of public relations professionals merely as spokespeople overlooks their potential to monitor and predict changes in the social environment. At best companies use the public relations function to avoid problems, not to fix them.