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The Conference Board Review® Article
Your Good Name: Before You Lose It
CEOs get the PR counsel that they allow -- and a lot of it is bad.
By Dick Martin
Dick Martin retired from AT&T after a thirty-two-year career in public relations, the last five as executive vice president. He is author of Tough Calls -- AT&T and the Hard Lessons Learned From the Telecom Wars (AMACOM).
Martha Stewart, Ken Lay, Dennis Kozlowski, Bernie Ebbers, John Rigas, and other CEOs who have executed a perp walk through the news columns -- if not literally up the courthouse steps -- have more in common than a rap sheet and seven-digit legal fees. They all had high-priced, fancy-titled public-relations counsel.
I held such a title at AT&T myself, and I even know some of the PR people in question, but I would not presume to pass judgment on the efficacy of their advice. After thirty-two years managing public relations for a company that often looked like the gang that couldn't shoot straight (unless it was to take a bead on its own foot), I know how different the world looks from inside the belly of the beast. We'll never know for sure whether those PR people were in the loop, what counsel they offered, or whether it was followed.
But one thing seems clear: Perception matters. Just ask Dick Grasso. In a matter of months, the New York Stock Exchange CEO went from the post-9/11 personification of corporate courage and resilience to Exhibit A of unbridled corporate greed. Even Jack Welch discovered how quickly public sentiment could turn, despite having increased his company's market value more than 3,600 percent over his tenure at GE.
They are not alone. CEOs today labor under a presumption of greed bordering on larceny. Public officials nurse a hair-trigger urge to either regulate or litigate their activities. Public-interest groups paint them with the same brush -- a fluorescent bull's-eye. And the press reports it all the same way it covers sports: keeping daily score, declaring winners and losers, and reveling in the game's myths. No wonder CEOs vacillate between instincts of fight and flight.
One of the lessons CEOs should draw from recent history is that they need good PR counsel before someone slides a subpoena under the boardroom door. Plenty of so-called image-makers and spin doctors are more than willing to take their money. But few CEOs and boards know how to discern genuinely effective PR counsel. And popular wisdom could lead them to precisely the wrong choices, mistaking wordsmithing, glad-handing, and do-gooding for the kind of seasoned judgment, creativity, and business problem-solving they really need. Further, the effectiveness of whomever they hire will depend in large measure on the one thing they have probably not considered: their qualities as a client.
Here, then, are seven simple truths about public relations that I learned the hard way.
Perception is not reality, even though some people treat it as if it is. While perceptions can wreck reputations and move markets, it's a mistake to assume they can be managed directly.
Welch solved his problem by renouncing some of his retirement benefits. Grasso's solution was to have surrogates write op-eds defending him and then sue his former employer for disparagement. One pulled himself out of a hole; the other kept digging. One dealt with reality, the other with perceptions. CEOs should look for PR counselors who are more interested in the nuts and bolts of their business than in their newspaper clippings. Perception matters, and attention must be paid to it. But CEOs and boards go astray when they spend more time tending to perception than to the reality that underlies it.
In 1996, as part of a historic restructuring, AT&T announced the elimination of forty thousand jobs. The company's chief financial officer sent the PR department off to document that it was the largest single downsizing in history. He knew that Wall Street would love it. Unfortunately, we had to report that we were only fourth: IBM, General Motors, and Sears had beaten us to the summit of layoffs. Bummer. Wall Street was nevertheless impressed, and the company's stock-market value increased $6 billion in two days.
Investors weren't the only party interested in the news. AT&T's downsizing announcement came in the midst of a presidential primary campaign, and populist candidate Pat Buchanan seized on it as a symbol of corporate greed and rode it to an unexpected victory in New Hampshire. The press -- surprised by Buchanan's victory -- ascribed it to his fiery rhetoric about "forgotten Americans," wracked by job insecurity.
And then the press picked up the theme with a vengeance. The New York Times produced a seven-part series on downsizing. Business Week produced a special issue on "economic anxiety." A Newsweek cover story fingered twelve "hit men" who threw workers on the pyre to stoke the engine of corporate profits. CBS News' 60 Minutes devoted a segment to greedy CEOs who collected millions while (if not exactly for) laying off thousands of ordinary, hard-working men and women. And in all the stories and broadcasts, AT&T's CEO, Bob Allen, was front and center as the symbol of cold, unfeeling corporate avarice.
Comments? Write a letter to the editor.
Return to the November/December 2004 The Conference Board Review® issue.
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