Ongoing PR can be crucial to success of corporate ethics programs

Michael Coates is president and CEO of Toronto-based Hill and Knowlton Canada. The following is adapted from a presentation he gave to the annual conference of the International Institute for Public Ethics (IIPE) in Ottawa earlier this fall. His topic: the...

Michael Coates is president and CEO of Toronto-based Hill and Knowlton Canada. The following is adapted from a presentation he gave to the annual conference of the International Institute for Public Ethics (IIPE) in Ottawa earlier this fall. His topic: the relationship between public relations and corporate ethics, and the role that ethics can play in building corporate reputation.

It should come as no surprise that, in some circles, public relations and corporate ethics are seen as mutually exclusive. In fact, even before I began my IIPE presentation, a public servant sitting in the front row growled, ‘What does a public relations person know about corporate ethics anyway?’

I hope that by the end of it, he got the point. PR people do know a lot about ethics. Why wouldn’t we? Every day, we find ourselves dealing with crises and complex situations where we are called upon to make ethical judgments.

The simple fact is that public relations can play an invaluable role in strengthening corporate reputation by helping to communicate corporate ethics effectively, both within and outside an organization.

When a company wants to reinforce consistent, ethical patterns of behaviour, then effective communication among members of that organization can make the difference between success and failure. Companies cannot act ethically without good communication – and helping companies understand what constitutes good communications is what the PR industry is all about.

There are three essential points I want to convey. First, good ethics is good business. Second, ethics is a culture, not a code. And third, ethics represents an asset to be strategically managed.

Good Ethics is Good Business

Putting an effective ethics program in place can help a company strengthen its reputation with employees, media, shareholders, consumers and other key stakeholders. Such a program can, among other things:

• Help support a company’s vision

• Identify clearly the corporate values and principles

• Instill a sense of pride among employees and management

• Unify corporate culture

• Sustain corporate change

• Foster ‘ethical’ behaviour and culture

Morality aside, ethics can often serve as a kind of ‘insurance policy,’ helping a company to build equity in its name, which in turn can enable it to survive during times of crisis and instability.

For example, unethical conduct such as illegal activity by an organization or its employees, environmental breaches, price fixing and negligence can all have a severe impact on a company’s reputation and its relationships with stakeholders. And in many cases, companies fail to disclose relevant information quickly enough, due to fear about lawsuits or hits to the bottom line. In such cases, it is very difficult for a company to recover and re-establish its credibility.

However, a company can actually see an increase in reputation ‘equity’ if it acts ethically during times of crisis and maintains a public relations policy of consistent full disclosure.

An excellent example of this was Johnson & Johnson’s handling of the Tylenol recall of the 1980s. While that crisis could have had a devastating effect on the reputation of both the company and the brand, Johnson & Johnson maintained and gained loyal consumers, thanks to an immediate recall and a PR policy of open communication with consumers.

Here in Canada, Tim Hortons recently faced a similar challenge, when the company issued a recall on its home brewer coffee pots after learning of a manufacturing defect that could result in a possible handle breakage problem. Notices were issued through the media, in stores and on the company Web site, urging consumers to return the pots, in exchange for a replacement and a gift certificate booklet. A toll-free number was also set up to address customer questions and concerns. The problem was dealt with swiftly and immediately, and Tim Hortons was able to communicate clearly that it values the well-being of its customers above all.

If there’s a crisis, the first steps are to identify, acknowledge, and rectify the problem immediately. The primary communication objective should be to rebuild trust and credibility with key audiences. A particular focus should be placed on the ambassadors of the company – the employees. They embody the corporate culture and ethical standards of a company. If a company’s ethics are regularly communicated and reinforced, employees will be able to respond to a crisis in a way that will enhance rather than harm the corporate reputation.

Ethics is a Culture, Not a Code

It’s very easy to post an ethics policy on a wall and then forget about it. But rules alone are meaningless. An ethics policy must be a living document that is kept alive through constant communication within an organization.

A corporate ethics program can serve as the basis for efforts to develop and maximize the strength of corporate reputation. But for this to happen, communications tools must be used effectively, so that employees live and breathe the vision – and are not afraid to question it. In any corporate ethics exercise, a company can and should measure the impact on corporate reputation. Employees should be trained and held accountable for living the vision, and their recall about the ethics program should be measured. Public relations practitioners can play a key role in making all of this happen.

In the wake of the Kuwait controversy, our organization developed a clear definition of our principles, and a code of conduct that is now used at Hill and Knowlton around the world. All employees must sign the code of conduct, acknowledging that they will abide by it. Breach of the code is grounds for dismissal. The principles guide our day-to-day conduct and dictate how we serve our clients – essentially, they mold our corporate culture. Employees are surveyed about the company’s enforcement of ethical standards and, through employee appraisals, query peers and superiors on daily ethical conduct.

Ethics Represent an Asset to be Strategically Managed

Today’s business environment is in constant flux. Corporate structures, customer demands, technologies, competition – all are constantly changing. But ethics don’t change. A company’s values are constant, and can provide a solid foundation for managing corporate change without jeopardizing reputation. That makes ethics an asset of growing importance.

Research suggests that CEOs today recognize the need for ethics policies in theory, but not in practice. According to a recent survey by KPMG, 86.4% of Canadian CEOs say they have a document outlining their corporate values and principles – but less than 10% provide more than eight hours of ethics training per year.

CEOs need to recognize that when a company is going through a change management process, it needs to include ethics as a fundamental component of the corporate reputation renewal plan. In so doing, a company can begin to rebuild its image – first internally, then with its partners, and finally externally, by communicating the new corporate vision to its consumers.

The integration of ethics into the corporate culture never stops – it’s an ongoing daily activity. And while there’s no magic formula, there must be complete commitment from the CEO and senior executives. The CEO sets the tone and direction of the company’s reputation, and must drive corporate ethics through continuous communication with stakeholders and employees. Development and implementation of an ethics program must be more than just a public relations exercise.

Also in this report:

- Candour gaining currency with execs: Once seen as a necessary evil, media relations is now considered essential to building corporate and brand reputation p.24

- Media convergence good for PR: Fewer gatekeepers, more open gates p.25

- Targeted PR builds partnerships: Can play key role for IT companies seeking alliances p.32