Corporate Governance? Not only. (I/III)

Corporate Governance? Not only. (I/III)

Defining public relations along the matrix of crisis, reputation and governance requires some preliminary explanation. In our view, these three dimensions represent three distinct yet intrinsically interrelated levels of public relations. Less effective governance practices can indeed lead up to a communicative crisis. This  same crisis however can represent a unique challenge to your structure and resources as it is a unique chance to work on a tarnished reputation.

Through regular posts on this blog we will explain why the crisis-reputation-governance matrix in particular allows meeting the demands of contemporary public relations. To that end, the present blog will first outline our understanding of governance by extending its external dimension. In a second post, we will question the concept of corporate social responsibility and will close that loop by drawing the connection between the governance lens and corporate responsibility. This will further underline the pertinence of our crisis-reputation-governance matrix and the effective and earnest public relations we seek.

Corporate governance…

In business environments and public relations language, the term governance all too often refers to what is implicitly understood by corporate governance: the organisational structure and rules within a corporation that distribute rights and responsibilities, in consideration of the corporation’s social, economic and legal environment. In recent years, and in particular since the financial crisis and the recurring debates about fiscal evasion and financial flows, the financial aspects of corporate governance have been in the spotlight. Nowadays, both transparency and accountability are two of the key demands activists just like regulators have expressed, and that corporate governance departments have had to cope with. As a consequence, much of corporate discourse has often been on the defensive, or even dominated by legalistic notions of compliance.

However comprehensive this understanding of ‘governance’ may be, there is more to it. Let’s filter it out.

… and its limitations

First, this understanding of governance follows a relatively top down and self-centred approach. For good reason, much attention is given to the control exerted by managers and directors, to the roles of creditors and auditors, to the interests of shareholders and other stakeholders. Nonetheless, from this point of view, the corporation represents above all a centre of action rather than one single actor in a wider environment of action, which crucially remains a neglected dimension in terms of policy as well as public relations.

Second, talking corporate governance seems to make sense mainly when the corporation in question has reached a certain overall size, turnover, complexity to its internal structure or when it operates at a multinational level, in different markets or regulatory systems. Yet, very pertinent governance issues such as the management of stakeholder relations or value positioning can just as well be raised within the context of public relations for small and medium enterprises, which often remain left out of the equation altogether.

Therefore: open up to ‘external governance…

In response to these two reservations, and most importantly, one key shortcoming of the established meaning of governance is its failure to encompass what we would describe as ‘para-political’ issues. Digitalisation, globalising trends and the unprecedented flows of information, data and people (not speaking of goods, services and capital) are heralding an era of a changing ‘public sphere’. This requires a new take on public relations at the level of crisis, reputation and governance alike. The very political space of debates, problem solving and decision-making is evolving. To a certain degree, public spheres are integrating across borders and along the lines of different, separate communities based on values potentially different from each other. Public spheres and communities have become increasingly sensitive and reactive to a set of issues that may erupt and turn into a political affair at any given moment. The trouble is that conventional political channels of authority and regulation, be they at the national, European or global level, are less and less able or willing to find answers to the problems common, global goods confront. To give but two examples: consider for a moment what is being done to enhance financial literacy, or to effectively integrate refugees into labour markets and society?

In what way does this observation regard companies and corporations?

… and adapt your public relations

As regards corporations and their public relations departments, it is crucial to understand that only if we fully acknowledge the interdependence of policy and public relations can we have a constructive effect upon reputation and a preventive effect upon crisis situations. In other words, the lines between policies such as the stakeholder relations and the related pubic relations work are more than blurred. This is the neglected dimension mentioned above, which is of interest to companies regardless of their magnitude and reach.

While the adequate communication tools will directly spring from your stakeholder map and value positioning, the importance of pragmatic and pedagogic communication for corporations cannot be over-estimated. Therefore, it is time for the economic actors to individually reconsider their public relations positioning, to ideally look out for an additional role beyond profit-making, based on corporate values and in different forms of policies or collective regulation of social affairs. These must not only be vertical, but to the contrary are increasingly horizontal, inclusive of stakeholders placed on an equal footing. This way, economic actors in cooperation with other societal actors have the chance to take the lead on given issues, to fill a para-political space and to negotiate a larger share of authority where there is a lack of it. This is the understanding of governance we put forward.

At the end of the day, does this governance approach merely lead to conventional policies of corporate social responsibility, of corporate philanthropy or something like corporate altruism? No, just like corporate social responsibility, governance policies must not only be the result of a risk assessment or be adopted with the intention to seize new business opportunities.

However, in order to provide a comprehensive answer to these questions, we will, in the second blog post, revisit the notion of corporate social responsibility as a key corporate governance policy. In the third blog post, we will then assemble the pieces of the puzzle by drawing the connection between governance and responsibility, and thereby underlining the importance of the crisis-reputation-governance approach to effective and earnest public relations.

Stay posted!

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