Chapter 2 Public Affairs Management Public Issues Managing the Public Affairs Function Issue Management Crisis Management Public issues Public issue An issue that is of concern to an organization’s stakeholders. Stakeholder expectations A mixture of people’s opinions, attitudes, and beliefs about what constitutes reasonable business behavior. Performance-expectations gap A gap between what stakeholders expect and what an organization is actually doing. Figure 2.1 A stakeholder network focusing on a public issue Stakeholders with a shared focus on an issue Stakeholders Stakeholders with a shared focus with a shared focus on an issue on an issue Stakeholders Stakeholders with a shared focus with a shared focus on an issue on an issue Phases of the public issue life cycle Phase 1: Changing Stakeholder Expectations When a performance-expectation gap emerges, the seeds of a public issue have been sown. Phase 2: Political Action When a problem is placed on the agenda for government action. Phase 3: Formal Government Action When legislative proposals or draft regulations emerge. Characterized also by an increased number of people involved in the conflict. Phase 4: Legal Implementation When a new law or regulation is implemented and companies are forced to comply with the law. Figure 2.2 The public issue life cycle High Phase 1: Changing Stakeholder Expectations Phase 2: Political Phase 3: Formal Government Action Implementation Action Life Cycle of Issue Management Management discretion to resolve the issue Discretion Low Phase 4: Legal Time Public affairs activities External forces Loss of public trust institutions Globalization of world markets Rise of the Internet Internal forces Better communication within organizations More experience dealing with significant change and complexity Growing focus on the interplay between the organization, its environment, and its strategies Public affairs management The active management of a company’s external relations, especially its relations with external stakeholders such as government and regulatory agencies, customers, investors, and communities. Table 2.1a Corporate public affairs activities of 250 companies Activity Percentage of Respondents Political action committee 89% State government relations 84% Issue management 84% Local government relations 77% Direct corporate contributions 75% Community relations 75% Business/trade association membership 73% Public policy group relations 73% Grassroots communication 71% Corporate foundation 71% Table 2.1b Corporate public affairs activities of 250 companies Activity Percentage of Respondents Employee volunteer programs 66% Media relations 64% Public relations 61% Employee communications 59% Strategic philanthropy 55% Regulatory affairs 43% Educational relations 34% International public affairs 32% Environmental affairs 23% Stockholder relations 21% Figure 2.3a Public affairs management’s relevant stakeholders and functions Public Affairs Management Government Stockholders • Public policy • External and internal audit •Lobbying • SEC filings, compliance •Political action • Communications • Trade associations • Proxy election management • Advocacy ads • Grassroots mobilization Figure 2.3b Public affairs management’s relevant stakeholders and functions Public Affairs Management Employee Customers • Communications • Customer service • Union negotiations • Total quality management • OSHA, EEOC, and labor law compliance • Liability lawsuit defense • Diversity and family-work programs • Recall management Figure 2.3c Public affairs management’s relevant stakeholders and functions Public Affairs Management Environment • EPA and state environmental compliance • Internal environmental auditing • Recycling, take-back programs Community • Corporate philanthropy • Partners with schools, NGOs • Volunteerism, employee time contributions Figure 2.3d Public affairs management’s relevant stakeholders and functions Public Affairs Management Media Activists, General Public • Public relations • Environmental scanning • Executive speeches • Stakeholder dialogue • Image advertising • Social reporting • Crisis management • Social monitoring • Web page management An effective public affairs function must: Manage public affairs as an ongoing, year-round process. Cultivate and harvest the capability to build, develop, and maintain enduring stakeholder relationships. Influence stakeholders using refined information. Recognize the importance of managing the grass roots. Communicate in an integrated manner. Continuously align its values and strategy with public’s interests. Improve its external relations using the accepted facts of contemporary management practice. Issue management A structured and systematic process to aid organizations in identifying, monitoring, and selecting public issues that warrant organizational action. Environmental intelligence The acquisition of information gained from analyzing the multiple environments affecting organizations. Customer Competitor Economic Technological Social Political Legal Geophysical Figure 2.4 Eight strategic radar screens Customer Geophysical Environment Competitor Environment Environment Legal Seeking Economic Environment Environmental Environment Intelligence Political Technological Environment Environment Social Environment Figure 2.5 The issue management process Research Performance evaluation Issues Identification Issues Analysis Judgment and priority setting Policy Options Results Implementation Program Design Policy and strategy selection Crisis management Corporate crisis A significant business disruption that stimulates extensive news media coverage. Crisis management The process organizations use to respond to short-term and immediate corporate crises. An effect crisis management plan involves: Preparing for action by creating an internal communication system that can be activated the moment the crisis occurs. Communicating quickly, but accurately. Using the Internet to convey the public affairs message. Doing the right thing by not minimizing the seriousness of a problem nor exaggerating minor incidents. Following up and, where appropriate, making amends to those affected.