Lerbinger O. Corporate Public Affairs. Interacting with Interest Groups, Media, and Government

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agement, which is a major tool discussed in chapter 1; the downward

loop (on the right) completes the issues management process, showing

how a public policy formulation is communicated and promoted to oth

ers. The public affairs campaign (Function 5) is a major organizing tool.

Public relations professionals will recognize that Fig. I.1 is a special

ized application of functions that apply to the practice of their field. The

upward loop is essentially the same but the downward loop would ap

2 I PART I

FIG. I.1. Public affairs functions and levels.

ply to programs in investor relations, employee relations, community

relations, customer relations, and relations with all publics that affect

the corporation or that the corporation affects. Government and the va

riety of interest groups (e.g., environmental, consumer, women’s, and

human rights groups) that participate in the public policy process are

simply seen as additional publics.

This view is in keeping with definitions of public relations. In its brief

est form, public relations is the “management of communication be

tween an organization and its publics.”

Thus, as the seminal book,

Excellence in Public Relations and Communication Management points out,

the term public affairs “applies to fewer communication activities than

does public relations/communication management. Public affairs ap

plies to communication with government officials and other actors in

the public policy arena.”

Earlier definitions of public relations, which

tended to be longer and more comprehensive, include the well-known

definition by Public Relations News: “Public relations is the management

function which evaluates public attitudes, identifies the policies and

procedures of an individual or an organization with the public interest,

and plans and executes a program of action to earn public understand-

ing and acceptance.”

As shown in chapter 1, most listings of public affairs activities include

more public relations activities than activities of any other type. Besides

government relations, they include, among others, community rela-

tions, media relations, employee communications, and stockholder re-

lations. The emphasis in these programs would, of course, relate to

public policy issues.

The other public relations contribution to public affairs is its empha-

sis on establishing and maintaining long-term relationships between an

organization and its publics. Thus the general orientation of public rela

tions is not to get the upper hand over opponents and “to win,” but to

seek solutions that are mutually beneficial. Some of the more aggressive

public affairs strategies, such as proactive media relations and fierce

lobbying, would be replaced with collaborative efforts, such as those

discussed in chapter 3.

The central role of communication in public affairs is fully reflected in

chapter 1, and each of the succeeding parts of the book treats a predomi

nant type of communication. Thus part II on interest groups highlights

opinion leadership; part III on media relations highlights various forms

of public communication; and part IV on government discusses lobby

ing, involvement in the electoral process, and the growing role of

litigation communication.

For readers who are not sufficiently familiar with the modern public

affairs department, chapter 1 also provides an overview of this func

tion: its objectives, major activities associated with it, and political re

sources that support it. The chapters of this volume explain how these

resources can be generated and applied.

INTRODUCTION I 3

ENDNOTES

1. James E. Grunig, editor, Excellence in Public Relations and Communication Man

agement (Hillsdale, N.J.: Lawrence Erlbaum Associates, 1992), p. 4.

2. Ibid., pp. 5–6.

3. One source of this definition is in the popular textbook, Scott M. Cutlip, Allen

H. Center, and Glen M. Broom, Effective Public Relations, 6th edition (Engle

wood Cliffs, N.J.: Prentice-Hall, 1985), p. 4.

4 I PART I

Chapter 1

An Overview

of Corporate Public Affairs

The purpose of corporate public affairs is to attain sufficient power to

enable an organization to achieve preferred outcomes in the political

arena and to forge and maintain a sociopolitical environment favorable

to it. To achieve this goal, public affairs professionals identify and ana-

lyze the environmental forces in the political arena and engage in politi-

cal activities and various forms of communication to craft public

policies. Political scientists, too, recognize the importance of the con-

stant flow of messages among participants who initiate and influence

what policies, laws, and regulations will govern society.

The process

can aptly be called strategic communication, which seeks to manage the

behavior of people and organizations to enhance the chances of achiev

ing a desired outcome. As described by Jarol B. Manheim of George

Washington University, it is “a term of art that refers to the use of so

phisticated knowledge of such attributes of human behavior as attitude

and preference structures, cultural tendencies, and media-use patterns,

as well as knowledge of such relevant organizational behaviors as how

news organizations make decisions regarding news content and how

legislatures and government agencies form their agenda, to shape and

target messages so as to maximize their desired impact while minimiz

ing collateral damage.”

The three most important participant groups—interest groups,

news media, and government—comprise the major forces in a corpo

ration’s sociopolitical environment. All three relate to the foundation

of public opinion. As stated in Bernard C. Hennessy’s classic book Pub

lic Opinion, “The measurement of public opinion is as important in a

society as is the extent to which the support of the masses is necessary,

or is thought to be necessary, for the legitimating or the operation of

government.”

In a democracy, public opinion links individuals with

society’s governing bodies, which on the widest level is government

and on the narrowest level, a company’s board of directors and man

agement. Developing this idea more broadly, Harold Brayman, a pio

neer corporate public relations director, said, “Because public opinion

has learned nearly everywhere how to dominate governments, or in

fluence them strongly, it has become the dominant force in our late

20th-century world; and it imposes upon institutions, our enterprises,

and our philosophies a new demand for effective communication so

thatthedecisionsofthepeoplewillbewiseandinthelong-terminter

est of a civilized society.”

The growth and importance of public relations and the specialized

function of public affairs is closely linked to public opinion. This con

nection was recognized by John W. Hill, one of the founders of the gi

ant public relations firm of Hill & Knowlton. His book, The Making of a

Public Relations Man, states, “as long as we live in a society where free-

dom of speech prevails and public opinion is the ultimate power, public

relations will be an essential and important force.”

Public relations

professionals are concerned not only with opinions of the general pub-

lic but with those of specific groups of people with common concerns,

which they call publics. Hennessy’s definition of public opinion reflects

this focus: “for any given issue, public opinion is the collection of

views, measurable or inferable, held by persons who have an interest

in that issue.”

Instead of speaking of publics, this book uses the term stakeholders,

which refers to any group that can affect an organization or be af-

fected by it. The same definition applies to publics, but sometimes a

distinction is drawn. James E. Grunig, editor of Excellence in Public Re-

lations and Communication Management, says that publics become

stakeholders when they become more aware and active. He describes

stakeholders as “people who are linked to an organization because they

and the organization have consequences on each other—they cause

problems for each other.

Communication means more than the creation of messages to in

form and persuade. The aim in public affairs is to participate in the

public policy process with government, interest groups, and the public

with the aim of producing reasonable laws, regulations, and other un

derstandings that enable a company to function at an optimal level.

Although efforts are always undertaken to win others over to our own

way of thinking, we must also be willing to listen to the views of others

and modify our policies to achieve the best and most workable solu

tions. The goal is not necessarily to win a battle in the short run but to

establish sound relationships with one’s stakeholders and thereby

achieve sustainable long-term growth and profitability. Public affairs

professionals continually face the dilemma of seeking to get the upper

hand in short-term contests without sacrificing existing relationships

with opponents and the public good will necessary in the long term.

6 I CHAPTER 1

MODERN FUNCTION OF PUBLIC AFFAIRS

Simply defined, public affairs is an organization’s concern for its

sociopolitical environment. A fuller and more formal definition, used in

a Foundation for Public Affairs survey, is “the management function re

sponsible for interpreting the corporation’s non-commercial environ

ment and managing the corporation’s responses to that environment.”

Douglas G. Pinkham, president of the Public Affairs Council, further ex

plains public affairs as “the management function that interprets and

works to strengthen a corporation’s business environment.”

Public af

fairs refers to a company’s political strategy, which John F. Mahon, an

academician, defines as “those activities taken by organizations to ac

quire, develop, and use power to obtain an advantage (a particular allo

cation of resources) in a situation of conflict.”

Although emphasizing the social and political factors, this environ

ment indirectly includes economic factors, which, however, are already

adequately represented by the duties and responsibilities of operating

managers. Sometimes public affairs is called external relations because

of its emphasis on the environment surrounding a corporation. Schools

of business and management now recognize the importance of a busi-

ness’s sociopolitical environment through books and courses such as

Business and Society,

Business Environment and Public Policy,

and Busi-

ness, Government, and Society.

What happens in the public affairs arena can have an impact on the

bottom line as great as, or even greater than, financial, marketing, and

manufacturing decisions. Success in achieving deregulation, for example,

has helped energy and telecommunication companies expand and de-

velop new markets. Corporate executives used to fret over the question of

whether it was proper for business to become active in the political arena.

The clarion call for a change in attitude was reflected in a 1959 book, The

Businessman’s Guide to Practical Politics, in which J. J. Wuerthner, Jr., the

author, proclaimed:

The handwriting on the wall is perfectly clear for all to read. Businessmen

must either set aside their traditional aversion and timidity regarding politi

cal action and accept the responsibility for the free enterprise system that

is their privilege to bear or else stand silently by, content to see others—

who realize that the game of politics and government are one and the same

thing—destroy not only American business but also the United States as

we have known it.

The business community gradually decided that when corporate

profitability, growth, and survival are affected by what government,

innumerable interest groups, and the media do, they must not merely

react but become proactive. Strengthening the corporate public affairs

function, therefore, has been a top priority of corporations. Further

more, public affairs is seen not just as a staff function. Chief executive

AN OVERVIEW OF CORPORATE PUBLIC AFFAIRS I 7

officers (CEOs) and other top-line managers have become personally in

volved and all line managers are expected to assume some responsibility.

In the academic world, corporate political activity was recognized by

Edwin Epstein in his 1969 book, The Corporation in American Politics.

He refers to John Kenneth Galbraith’s The New Industrial State,

which the author not only perceived a symbiotic relationship between

the “industrial system” and the state but predicted that the “previously

sacrosanct line between publicness and privateness” would become less

and less distinct.

Mapping the Sociopolitical Environment

Public relations professionals have long found it practical to view the re

lationship of their company to society by listing the publics who are in

some way connected with the corporation. A minimum list includes in

vestors, employees, customers, community citizens and groups, and

government, as shown in the “wheel” diagram in Fig. 1.1.

A useful way of visualizing the public affairs function is to map a

company’s sociopolitical environment by recognizing the specific per-

sons and stakeholders that relate to the company. Indirectly, this

mapping recognizes the major “forces” that exert pressure on the corpo-

ration. This essential information enables a public affairs professional

to analyze a situation, problem, or crisis faced by a corporation. For

public affairs purposes, the stakeholders shown in Fig. 1.2 can be listed

in a column and next to each additional columns can show the following

8 I CHAPTER 1

FIG. 1.1. The corporation and its publics.

information: (a) the basis of the relationship (e.g., investors provide

capital); (b) attitude toward the company, whether cooperative, antag-

onistic, or neutral; (c) issues important to it; (d) its stand on each issue;

and (e) the kind and amount of power possessed by it.

A more complete list of publics appears in a management book, Orga-

nization Theory and Design, by Richard L. Daft. He refers to “sectors”:

• Financial resources.

• Market.

• Technology.

• Economic.

• Government.

• Sociocultural.

• International.

• Industry (e.g., competitors).

• Raw Materials (e.g., suppliers).

• Human resources.

In addition to maintaining a core list of stakeholders, a company can

add supplementary items to the list for specific situations or campaigns.

For example, in dealing with a crisis, a list might include all the public

officials and other stakeholders who should be notified when a crisis oc

AN OVERVIEW OF CORPORATE PUBLIC AFFAIRS I 9

FIG. 1.2. Key economic stakeholders and forces in sociopolitical environment.

curs; in a lobbying campaign in support of a trade agreement, another

list might include those groups for or against it.

A more sophisticated and practical representation of an organiza

tion’s stakeholders—this term, rather than publics, is favored in almost

all management literature—and sociopolitical environment is John F.

Mahon’s extended organizational chart. It depicts three circles around a

corporation:

• Resource base: Investors, shareowners and lenders; customers and

users; employees.

• Industry structure: Regulatory authorities; joint venture partners

and alliances; supply chain associates.

• Social political arena: Governments, local communities and citi

zens; unions; private organizations.

Figure 1.2 is a simplified depiction of McMahon’s extended organiza-

tional chart. The inner circle is like Mahon’s resource base except that it

includes the community. From an economics viewpoint, which refers to

capital, labor, and land as the three basic factors of production, the com-

munity represents land and the accompanying infrastructure (roads,

utilities, etc.). In addition, the inner circle includes customers because

they provide the revenue needed to pay for the factors of production and

provide the incentive for entrepreneurs. Omitting the middle circle of in-

dustry structure, the outer circle shows the three forces discussed in this

chapter: government, interest groups (including labor unions), and, not

shown in other diagrams, the media. It should be noted that whereas

management can exercise authority of its employees, it cannot do so

with its extended stakeholders; it must rely on persuasion.

Generating Political Power

The basic function of public affairs is to help an organization generate

political power and use it effectively to influence public policy. Political

power is the external equivalent of authority within an organization,

namely, the capacity to get things done in a desired way, rather than be

“pushed around” by government, labor, public interest groups, and the

media. A manager typically craves maximum autonomy in affecting

outcomes—to operate with the least constraints on decision making and

actions. Public affairs extends the concept of formal authority to influ

ential relationships with stakeholders in the company’s external envi

ronment, thus affording managers greater discretion and wider

freedom of action to make the kinds of business decisions that are effi

cient and profitable.

The purpose of this and following chapters is to help public affairs

managers recognize the types of power they possess and to apply these

resources effectively and efficiently. Box 1.1 lists the political resources

10 I CHAPTER 1

developed by Microsoft to influence government when its president Bill

Gates belatedly realized that it had to enter the political arena.

Converting Economic Resources Into Political Power. Because cor

porations, especially large ones, have more economic resources than

other groups in society, a core public affairs function is to convert eco

nomic resources into political power, for example, using money to pur

chase media space and time, sponsor surveys, and hire well-connected

and expert lobbyists.

The corporations’ economic role enables them to gain political clout

through patronage, which Edwin Epstein defines as the dependency of

other businesses and social groups on the activities of the corporation,

such as providing jobs. Furthermore, financial and other economic re

sources enable a company to make political contributions that help it to

gain access, if not outright influence (see chap. 11). Corporate philan-

thropic contributions, rather than being purely altruistic, may also be

intended to influence nonprofit organizations and social action groups.

As Richard Eells has convincingly stated in his Corporate Giving in a Free

Society, corporations may engage in a “philanthropic design” that seeks

to strengthen and preserve the many nonprofits in the private sector of

society, thereby lessening the potential growth of the government sec-

tor.

His rationale is consistent with the modern approach of strategic

corporate philanthropy, which is discussed in chapter 15.

Human and Other Relational Resources. A corporation’s human

resources and relationships with various stakeholders are a further

source of political strength. Employees constitute a talented techno-

structure with expertise in such politically significant areas as public

relations, lobbying, and law. When a company, or coalition of compa-

nies, imbues employees with a common sense of purpose, it can mobi-

lize them to write letters and engage in other forms of grassroots

lobbying. The impact is enhanced when a company employs large

numbers of employees who are geographically distributed in many

congressional districts. When employees are willing to do volunteer

work in community and political organizations, a company’s reputa

tion for public service is strengthened, and this may be translated into

political gain. Companies can extend and fortify their relationships

with other stakeholders: investors, community citizens, customers,

suppliers, dealers, and others.

The high organizational and social status of the CEO and other top

managers is a special human resource because it provides easier access

to political figures and possible influence. Prominent executives may be

on newspaper advisory boards and even on boards of directors. Further

more, because of the wide acceptance of marketplace economics and the

free enterprise system, corporations enjoy considerable legitimacy as

long as they produce valued products and services. Legitimacy might be

AN OVERVIEW OF CORPORATE PUBLIC AFFAIRS I 11