The Business of Business is… Responsible Business: where public relations becomes relevant, in the form of stakeholder relationship management

The perspective of this new-year note on ‘the business of business is responsible business’ is that the current economic crisis is only one of the consequences of a historic discontinuity (see here) in which we all find ourselves immersed since the end of the twentieth century.

A discontinuity originated by the radical subversion of the way we think of space and time induced by communication technologies and their impact on the acceleration of the globalization process.
A phenomenon which Nation States -sometime abstract overlaps between political and socio/cultural entities of a territory- have not been capable of effectively governing.

In parallel to this crisis, a second explosive consequence of that discontinuity has been the planetary migration which is horizontally impacting the whole world in these last two decades.
Again in this case, Nation States have not been capable of governing the phenomenon to the point that, by its integration and contamination with the economic crisis, it produces alarming consequences in our social and public orders, mostly in the great mega urban areas of the planet, albeit only in a small measure compared to what is to come.

These are issues that cannot be dealt with in only a few years by a business as usual approach.
The implication therefore for us -students, educators, consultants or managers dealing with relationship and communication policies- is to be capable and effective in assisting our organizations to adapt to these consequences for the long term, abandoning the illusion of a return, sooner or later, to society as we have learned to know it.

In fact, the conflict between these two issues and Nation States will live until the latter either disappear (an unrealistic option), or will prove capable of adopting and agreeing rules and monitoring systems which facilitate the governance of phenomena which have proven to be irreversibly global (a more likely option, but certainly not in the short term).

I cannot think today of any aware organizational leadership (social, private or public) which is not wondering, with urgent determination, whether its current management approaches, systems and methods should not be radically revisited.

In this context, the considerable explosion of our professional body of knowledge over these past two decades has brought us an advantage, in the sense that it has, at least in part, absorbed recent cultures immersed in the ‘cultural space’ of that very discontinuity.

Let me explain: if we assume an organizational perspective, it is evident that corporate management science remains entrenched in twentieth century models. If we instead assume a societal perspective, the worldviews of political, social and public organizations are anchored on parameters which belong more to the 19th century.

In organizations as well as in society, this conflict between the ‘old which resists’ and the ‘new which advances’ is clearly detectable, and specifically painful in its effect on the twentieth century’s pervasive culture of homogeneity of models and behaviours, now sentenced by a globalization that, rather than generating more standards, has emphasized diversities induced by those communication technologies as well as that planetary migration.

From this overall perspective, the responsibility of an organization implies, a priori, that it is not the organization who selects its stakeholders.

I accept Freeman’s economic approach as long as it clear, for the management analyst (not necessarily for the economist), that it is the stakeholder who decides to hold a stake:
a) because interested in interacting with the organization;
b) because aware that the organization’s activities produce consequences on it, and viceversa.
Admittedly, the organization can always decide to dialogue, negotiate or confront with whomever it wishes, but that is in itself a managerial choice to be defined within a specific competitive context.

If one of the ultimate purposes of an organization is to reach an effective integration with its varied environment, in order to formulate decisions whose quality is also based on taking into consideration stakeholder expectations, the process of choosing one’s own interlocutors only to avoid sometimes complicated and painful dialogues and confrontations, does not appear reasonable.
Therefore, the specific identification, recognition, involvement and engagement of the actual and potential stakeholders of an organization is much more a ‘governance’ than a ‘management’ decision, where by governance I mean a board’s management of management on behalf of stakeholders.

This first principle of leadership responsibility thus contemplates decisions and activities which are also (but not solely) in line with the expectations, values, opinions and behaviours of those publics on whom the success and the social legitimacy of the organization largely depends.

This axiom, if acceptable, eliminates any possible doubt over what one should intend when referring to the concept of organizational social responsibility: it is that constant and daily effort of renewal of its ‘license to operate’: intended as society’s enablement of an organization to legitimately pursue its general aims and specific objectives.

I am conscious that full awareness of these concepts finds difficult acceptance in our professional community.
However please bear with me:
° an organization exists when different subjects gather together resources and competencies and relate with each other to achieve common aims and objectives;
° to achieve both, the organization relates with various other subjects who produce consequences on those aims and objectives and viceversa.
Economics, services and products being equal, the success of the organization relies on the quality of governance of those relationship systems with its stakeholders (who are never the same for two organizations, even when operating in the same sector).
Therefore, if a second principle of managerial responsibility is to take effective decisions and implement them in the scheduled timeframe (see brazil2) because what seemed like a good decision inevitably becomes a bad one, to the point that its very quality is strongly conditioned by the timing of its implementation, this will include:
a) a specific competency in listening to the expectations, the opinions, the behaviours and the decisions of its specific stakeholders as well as to the overall environment surrounding the organization;
b) a specific competency in the effective governance of those stakeholder relationships;
c) a specific competency in punctual and transparent reporting of organizational performance, which is certainly not expressed in those contemporary coffee-table books represented by a large majority of social, sustainability or responsibility reports in circulation.
The result is that an effective governance of stakeholder relationships –the new frontier of what we have for a century called, in their most noble definition, public relations- assumes today a central and focal role in organizational governance and management.

There are many other questions related to how social responsibility affects organizations which remain open, but one more at least is worth debating in this specific context.
Stakeholder relationship management needs to consider at least three levels of interests which interact and of which management must be fully aware:

° the interest of the organization, situationally self defined by management itself, coherent with specific objectives but in the context of a strategy, intended here as the operational path which transits the organization from its mission (where we are today) to its vision (where we want to be in a determined timeframe);
° the always different and often conflicting interests of the organization’s specific stakeholders;
° the one we normally define as the public interest.
In European culture, the concept of public interest may be interpreted as
a) the spirit, as well as the letter, of the norm/law/regulation,
integrated by
b) the societal interests represented by active citizenship.
This latter point raises a highly delicate interpretative issue related to which indicators an organization adopts in its recognition of representativeness to the ever increasing number of subjects who declare themselves to be specific stakeholders. An issue which obliges management to a much more attentive reflection than is normally undertaken.

Some years ago, in the context of the always precious Colloqui di Frascati -an established annual tradition where Cittadinanza Attiva, one of Italy’s most reputed social organizations (please see frascati programme the draft program of the next one to be held on February 9 and 10) convene the more attentive scholars and practitioners of responsible management- the reputed sociologist and social activist Giovanni Moro called for organizations to transit from the generic principle of representativeness to that of relevance indicating some plausible indicators and separating them between quantitative (dimensions, territorial presence, sectors and levels of activity, stability, resources, transparency and accountability) and qualitative (experience, competence, reputation, independence, trust, networking ability internal organization, ability to give visibility to specific interests, quality of projects).
A suggestive approach, but it is clear that much work still needs to be done to avoid that frequent intentional behaviour which sees organizations give prevalence to criteria such as friendship, political relations and lobbying abilities.

Should you accept these arguments, you should also conclude that the qualities and primary competencies required today of management are substantially different from those currently adopted by head hunters and taught in even the best business schools…. not to speak of communication and public relations courses, many of which are still well anchored in the twentieth century.
A more than excellent reason to drastically review current management approaches in this ‘historic discontinuity’.

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4 Replies to “The Business of Business is… Responsible Business: where public relations becomes relevant, in the form of stakeholder relationship management

  1. Heather,

    According to Wikipedia, management comes from the italian ‘maneggiare’ and from the latin ‘manus'(hand the latter, to handle the former)and Mary Parker Follett (1868–1933)defined management as “the art of getting things done through people”.

    I agree with you however that it stereotipically implies the concept of control of others’ activities.
    And this is why in this post I used specifically the term ‘to govern’ or ‘governance’to indicate the strategic direction (what is the right path) from ‘to manage’ or ‘managing’ as the actual walking that right path.

    As for organisation, I wonder if it having become ever so liquid and so porous is a sufficient reason to think of another term, rather than to ask oneself how to better assist the organisation in coping with this new fact of life.

    Of course I am sure that both David Phillips (who in this blog, as you say, has repeatedly questioned the concept of organization) and Emanuele Invernizzi (who was the principal protagonist of the recent thematization of the institutionalization of the public relations function concept) will want to weigh in on this, hopefully however taking into consideration the overall perspective of this post.

  2. Toni,

    Very interesting post. A couple of thoughts:

    1. I wonder about the future of the concept of “management”, which carries with it notions of control that appear to be less and less relevant. Freeman & McVea wrote in 2005 wrote about stakeholder partnerships (the bridging concept), and this seems to me to be the future in terms of shifting understanding from how an organisation seeks to organise and control its resources and activities, into how it can achieve optimum results in partnership with others operating in the internal and external environment.

    2. As David Phillips has mentioned frequently, the concept of “organisation” is also challenged. This is especially the case in respect of its boundaries which become increasingly fluid and porous.

    The efforts of PR practitioners to gain greater recognition has been based on the concepts of management and organisation – seeking to be part of the dominant coalition and represent (even control) the organisation in terms of its communications, relationships and reputations.

    If we no longer can control or manage in the traditional way of thinking, and our notions of organisation also change – what does this mean for PR?

    Perhaps rather than the discussion around institutionalisation (as per many earlier posts), we need to dis-institutionalise PR and consider its role in a world that is much less organised and managed than we’ve previously believed.

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