Lerbinger O. Corporate Public Affairs. Interacting with Interest Groups, Media, and Government

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Box 2.1 Case: Naturewise Deliberates Its Media Relations

Policy

Dana Osborne, founder and CEO of Naturewise Apparel, makers of

chemical-free natural-fiber children’s wear, suddenly faced a potential

crisis. A local TV news station and a local paper in Chicago carried a

story that the company condoned the bombing of an abortion clinic in

Joliet, Illinois, by a group called TermRights. The only actual connec

tion with Naturewise was that a division of the company contributed to

the nonprofit organization called CHICARE. TermRights, a radically

pro-life group, was only one of 140 social service organizations in Chi

cago and the Midwest supported by CHICARE.

The company’s contribution policy was as follows: It had recently

decided that its $400,000 annual donation to charities, formerly ad

ministered by corporate headquarters, would now be allocated by

each regional division as a way of paying back the various communi-

ties that supported it.

Facing Osborne was the immediate problem of whether to answer

a call from a reporter of the Chicago Daily Bulletin. In the case study,

five experts present their analysis of the situation and recommenda-

tions. They gave their reactions to the headquarters communication

director’s advice: “We’re going to need to make some kind of state-

ment to the press.”

One expert, Mike Woods, senior editor of Los Angeles-based Inves-

tor’s Business Daily, said he wanted to be ready for the possibility of

regional and national media coverage by assembling three relevant

facts: (1) a list of all the charities Naturewise has supported and of

other companies that have given to the same charities; (2) information

from CHICARE about how long it has been in business and which

other companies have supported it; and, (3) whether this type of inci

dent has ever happened before. As the experts commented, these

questions should have been asked before making the contribution.

Another expert, Madge Kaplan, Boston bureau chief for Market

place, Public Radio International’s program on business and finance,

favored calling the reporter to announce a press conference for 1 p.m.

Pacific time at company headquarters.

Stephen Greyser, a marketing professor at the Harvard Business

School, made a different recommendation: that Osborne take the call

from the Chicago reporter, even if only to arrange a callback. He saw

the possibility of the Chicago Daily Bulletin reaching a large audi

ence, some of it through syndication pickup. Greyser was explicit

about what the reporter at the Chicago paper and other media should

be told:

lations professionals, know whether a story is of great public or media

interest. A content analysis of the print and broadcast media—even an in

formal scanning—indicates whether an issue or story appears on the

public agenda. Survey findings, even a quick, overnight telephone sur

vey, would confirm whether the public has become aware of an issue.

If there is evidence an issue has broken the bounds of containment

and stands a good chance of reaching the second life cycle stage, the

strategy of preemptive communication must quickly be employed. An

organization is then in a race to try to shape public thinking before the

opposition does. Reaching the public mind first is like checking into a

room at an overcrowded hotel before other guests do. The sign over the

door leading to a particular “issue room” then reads “occupied,” making

it difficult and awkward for someone else to enter. This is known as the

law of primacy in learning theory: What is learned first tends to remain

in memory better than that which is learned later. For those entering an

issue discussion late, the challenge is to find attention-getting ways of

invoking the opposite law of recency that what is heard last is better

remembered.

A company can choose one, or a combination, of three containment

strategy variations: (a) oppose an interest group, (b) weaken antago

nists, and (c) foster offsetting interest groups.

Oppose an Interest Group

Most issues are initiated by interest groups or government, and many

are targeted at business. Understandably, therefore, companies feel at

tacked and become defensive. A typical expression of defensiveness is to

counterattack and weaken the “enemy.”

SLAPP Suits. A legal tactic used by some companies to discourage

or stop activists from attacking them is to threaten, or actually take,

civil law action, alleging that injury has been caused by the party. Such

legal action has been labeled strategic lawsuits against public participa

tion (SLAPPS.)

Industry groups, such as land developers, typically file

INTEREST GROUP STRATEGIES I 43

• Reiterate the company’s well-known corporate giving policy and its

rationale of “we do it because it’s the right thing to do.”

• Admit that Naturewise’s Midwest division did give money to

CHICARE, “as do many companies in the area, adding that while

CHICARE is involved with so many worthy causes,” the company

should have checked into all of the agency’s associated groups.

• Deplore the bombing.

these suits. Their targets are generally not radicals, such as extreme en

vironmentalists, but ordinary, middle-class citizens concerned about

their local environment or other problems. What started as a tactic

against small targets, however, has expanded to national groups, ac

cording to Al Meyerhoff, a senior attorney with the Natural Resources

Defense Council.

Each year thousands of Americans are sued for speaking out against

governments and corporations, states Sharon Beder, who wrote a chap

ter on SLAPP suits.

Individuals and groups are sued for such acts as

“circulating petitions, writing to public officials, speaking at, or even

just attending, public meetings, organizing a boycott and engaging in

peaceful demonstrations.”

These actions are all legal and protected by

First Amendment rights. Nevertheless, plaintiffs who file suits claim

that such injuries constitute defamation, invasion of privacy,

conspiracy, nuisance, and interference with business.

SLAPP suits typically have the intended effect of silencing opponents.

Defendants must often spend years entangled in the court system. Law

suits distract antagonists from the main controversy by using up their

time, energy, and money in the courtroom. Although most of the suits

are eventually dismissed or dropped, they nevertheless have a chilling

effect, making antagonists and their supporters cautious in speaking

out. That was the intention of McDonald’s when it filed a libel suit

against two unemployed members of London Green Peace (no connec-

tion with Greenpeace International) who engaged in a smear campaign

against the company (see Box 2.2).

Weaken Antagonists

A corporation can weaken the power base of an opposition group in at

least two ways: (a) remove funding sources and (b) create obstacles to

membership drives.

Remove Funding. When a utility publication ran an article called

“Where Do the Antis Get Their Money?” it pointed to Carter administration

programs that were creating, training, and funding so-called public inter

est groups critical of business.

Government funding started in 1977

when the director of the independent federal agency ACTION started

granting millions of tax dollars to groups such as the Association of Com

munity Organizations for Reform Now (ACORN), which, according to its

preamble, sought to gain “neighborhood control of the private sector … by

including workers on all corporate boards.”

This practice was continued

by former Nader associate Michael Pertschuk after he became chairman of

the Federal Trade Commission. He granted more than $150,000 to various

Nader and other antinuclear groups, such as the Union of Concerned Sci

44 I CHAPTER 2

Box 2.2 McDonald’s SLAPP Suit

McDonald’s UK became aware that activist groups were distributing

leaflets containing such appellations as McDeath, McDestruction,

McProfits, and Big MacNasty. A pamphlet, “What’s Wrong with Mc

Donald’s,” blamed McDonald’s for being cruel to animals, destroying

the rainforest for cattle raising, having poor employment practices,

and being an “aggressive capitalist.”

Eddie Bensilum, McDonald’s spokeswoman, said, “This leaflet

first came to our attention in 1984 and we wrote then asking London

Green Peace to stop defaming McDonald’s. We wrote repeatedly but

never got a reply, and we were concerned many people would think

the leaflet came from Greenpeace International.”

With the approval

of McDonald’s headquarters, McDonald’s UK started investigating

the group by attending meetings and collecting printed materials. In

1990, writs were served on five group members. Three backed

down; two, David Morris and Helen Steel, decided to fight it out.

They received financial support from an international “McLibel Sup-

port Campaign.”

Selecting to represent themselves, the two activists contrasted

sharply in the courtroom with McDonald’s senior trial lawyer, a bar-

rister who wears the traditional black gown and white wig. Steel, a

former gardener, wore a striped T-shirt and slacks, and Morris, a for-

mer postman, wore sandals and socks. Some of McDonald’s wit-

nesses appeared foolish. On cross-examination, McDonald’s senior

vice president Edward Oakley said McDonald’s menu items are nutri-

tious because they include “nutrients.” And a U.S. vice president for

marketing said the Coca-Cola drink served is nutritious because it

contains water “and this is part of a balanced diet.”

Throughout the years of court proceedings, the trial served to

broadcast the group’s message to millions. The trial became Brit

ain’s longest libel suit ever and turned into a public relations disaster

for McDonald’s, demonstrating the risk of a SLAPP suit. Legally, Mc

Donald’s eventually won the case in February 1997 when the trial

judge found some claims untrue. On the other hand, he considered

the claims true that hamburgers have poor dietary value, employees

were underpaid, children were exploited through advertising, and

cruel animal practices were employed in producing the meat for the

hamburgers.

But “besides spending $16 million to get a $98,000

settlement (which the defendants couldn’t pay), the company

brought international attention to the activists’ allegations, and set it

self up as a corporate bully for going after them in court.”

entists, Friends of the Earth, the Sierra Club, the Environmental Defense

Fund, and the National Resources Defense Council.

Some businesspeople have accused their brethren of financing the

“antis.” David Packard, a cofounder of Hewlett-Packard, stated that it

was foolish to support institutions, such as Harvard University, that

produce so many anti-business proponents. His view found expression

when Central Michigan University came under fire from Dow Chemical

following an antibusiness speech given by Jane Fonda. Central Michigan

University received about $70,000 a year in direct cash grants from

nearby Dow.

Although the announced title of the talk was “Politics in

Film” and she was expected to speak on women’s issues, Fonda lam

basted multinational corporations and criticized the lack of economic

freedom in America. She specifically mentioned Dow Chemical by quot

ing from the chairman’s book Global Reach: “I have long dreamed of

buying an island owned by no nation, and of establishing the World

Headquarters of the Dow Company on the truly neutral ground of such

an island beholden to no nation or society.”

Angered by Fonda’s speech, Dow Chemical threatened to suspend its

support for the university. In a letter to the university president, Dow

Chemical’s president wrote,

While inviting Ms. Fonda to your campus is your prerogative, I consider it

our prerogative and obligation to make certain our funds are never again

used to support people intent upon destruction of freedom. Therefore, ef-

fective immediately, support of any kind from the Dow Chemical Company

to Central Michigan University has been stopped, and will not [be] resumed

until we are convinced our dollars are not expended to supporting those

who would destroy us.

Philip H. Knight, CEO of athletic shoe and apparel maker Nike, Inc.,

followed the same reasoning as Dow when on April 24, 2000, he an

nounced that he would no longer donate money to the University of

Oregon, his alma mater. The reason: A few days earlier, the university

announced that it would join the Worker Rights Consortium, supported

by students and several U.S.-based labor unions, to fight for higher

wages and better working conditions in Nike’s overseas manufacturing

operations. Knight preferred that the university choose the less threat

ening Fair Labor Association, which had grown out of President

Clinton’s Apparel Industry Partnership initiative and was vigorously

backed by Nike. Knight broke off tentative plans to make the company’s

biggest donation ever to renovate the football stadium. He said, “For me

personally, there will be no further donations of any kind to the Univer

sity of Oregon. At this time, this is not a situation that can be resolved.

The bonds of trust, which allowed me to give at a high level, have been

shredded.”

Another example of undermining an opposition group’s source of

funding is the campaign by business to prevent unions from using dues

for political purposes. After the AFL-CIO spent $35 million in the 1996

46 I CHAPTER 2

elections, business introduced H.R. 1625 on the federal level; it would

prohibit unions from using dues for lobbying, issue advocacy, election-

related contributions and expenditures, and communications to union

members on political topics.

Similar legislation was introduced in 25

states and the right-wing Americans for Tax Reform will eventually seek

it in all 50 states. California’s Proposition 226, introduced in June 1998

and supported by Republican governor Pete Wilson, “would force un

ions to get annual written permission from members before donating

money to political campaigns.”

The further effect of this measure is

that labor would be forced to siphon off millions of dollars from its

congressional campaign, which did actually help secure the Republican

victory.

Create Obstacles to Membership Drives. The opposition can be

weakened by creating obstacles to their membership drives. Companies

have established union avoidance programs when confronted by labor

unions seeking to organize their employees. Using labor laws to its ad-

vantage, a company announces that no union solicitation may take

place on its premises. It openly tells employees that it opposes unioniza-

tion, and states its reasons. It is allowed to do so under section 8(c) of the

Taft-Hartley Act, provided that neither a promise nor a threat is made or

implied. It cautions its supervisors not to intimidate any subordinates.

One likely reason why union membership has been declining is the

greater use of antiunion tactics, which was BusinessWeek’s answer to the

enigma of “What’s behind labor’s poor showing lately?” Otherwise, ac-

cording to a survey by Peter D. Hart Research Associates, some of the

43% of employees surveyed nationally who say that they would vote

for a union at their workplace might just do that.

Richard Bensinger, the former head of the AFL-CIO’s organizing de

partment who was ousted by its president John J. Sweeney, criticizes

business leaders for deterring unionization through a range of unethical

tactics. He characterized labor laws as “a joke,” and that “the right to or

ganize isn’t respected by most companies.… There’s not a free and open

debate in a union election. Instead, there’s coercion by management,

which has total access to and control over the electorate. And there’s no

real punishment if they violate the law.” When asked how CEOs should

behave toward their employees who want a union, he answered: “Un

ions and companies should be adversaries, not enemies, which is how

most executives treat us. We’re the price business must pay to keep

America a democracy. There is no example on earth of a democracy

without unions. Unless CEOs respect their employees’ wishes about

whether to form a union or not, America can’t really be called a demo

cratic country.”

Wal-Mart, the country’s largest employer—it had 1.3 million work

ers as of June 2004 who earned an average of $9.76 an hour

—has

been expert in keeping out unions, as its record of having won all but

one of seven union votes in the United States proves. Coleman Peterson,

executive vice president of the company’s People Division, reflects the

INTEREST GROUP STRATEGIES I 47

company’s attitude: “Where associates [which is how Wal-Mart desig

nates employees] feel free to communicate openly with their manage

ment, why would they need a third party to represent them?”

discourage unionization, employers, like Wal-Mart, play hardball in

these ways, as summarized by BusinessWeek:

• Hold mandatory antiunion meetings with workers (92%).

• Direct supervisors to meet one-on-one with workers (78%).

• Hire an antiunion consultant (75%).

• Mail antiunion letters to workers at home (70%).

• Fire union activists (25%).

Foster Offsetting Interest Groups

Instead of weakening opposition groups, a corporation can offset them

by fostering probusiness groups and forming coalitions with existing

interest groups on specific issues. Why leave the designation of a public

interest group only to others? Some probusiness interest groups already

exist. Citizens for a Sound Economy, for example, seeks “to return deci-

sion-making to citizens by reducing government interference in the

economy.”

Many think tanks that support business or its ideology re-

ceive corporate financial support.

Ethical lines are sometimes crossed when business establishes a “front

organization” that reflects its interests. A company may create or use

the name of an organization that has the ring of an independent and un-

biased group while serving the undisclosed interests of the company or-

ganizing and funding its activities. For example, a company may

establish a “citizens’ task force” for the purpose of opposing an environ-

mental bill that negatively affects the company.

Instead of looking for

outside supporters, corporations have extraordinary opportunities to

develop true, formidable grassroots support by mobilizing stakeholders

who share economic interests with them—investors, employees, local

communities, and sometimes customers. The opportunity is greatest

with employees, who are a company’s largest natural constituency. A

company can use its own channels of organizational communication to

reach employees. If a unity of interest exists between company and em

ployee interests, the likelihood of employee support is high. Chances are

further enhanced when companies have excellent human resources pol

icies that build employee cohesiveness, a feeling of belonging, and

dedication to the corporate culture. This approach merges with engage

ment strategies.

ENGAGEMENT STRATEGIES

In contrast to containment strategies, a company can deal with interest

groups by recognizing their legitimacy and working with them in a mu

48 I CHAPTER 2

tually beneficial manner. Engagement means developing relationships

with interest groups and the stakeholders they represent. Although as

pects of power and influence, as in containment strategies, are involved,

the usual goal is to understand the concerns of an interest group and the

more ambitious goal is to involve it in the decision-making process.

Unilateral Strategies

With engagement strategies, monitoring activities associated with issues

management are focused on the concerns and demands of specific interest

groups. Through formal opinion research, focus groups, and informal

contact, an organization seeks to understand the perceptions of a target

group: what aspects of organizational policy and actions it criticizes,

what reasons underlie this evaluation, and what it plans to do to change

the organization’s behavior. This information enables an organization to

determine whether a group’s perceptions are accurate in terms of the re-

ality of corporate performance. A company can go a step further and also

consider its goal of how it wants to be seen by the public.

These three reference points—the perception, the actual facts, and the

organization’s ideal self-image—are summarized in so-called gap anal-

ysis as illustrated in Fig. 2.2.

This diagram of how an organization relates to a target audience sug-

gests two strategies, used singly or in combination: (a) a communica-

tion strategy to address the perception gap, and (b) a performance

strategy to reduce the gap between current performance and that

sought by the organization. These strategies are often confused with en-

gagement strategies, but they shouldn’t be because they do not require

involvement with a target audience. Unilateral action is not collabora-

tion. Nevertheless, they are discussed here because they are often a pre-

cursor to engagement.

INTEREST GROUP STRATEGIES I 49

FIG. 2.2. Gap analysis.

Communication Strategy to Manage Perceptions. Conflict with an

interest group arises when corporate performance does not measure up

to its expectations, as reflected in the perception of the target group. A

large gap between the two reference points triggers interest group ac

tion and indicates the rise of an emerging issue. In response, a company

can close the perception gap through various communication actions,

such as publicity, advocacy ads, speeches, seminars, and publications.

Box 2.3 illustrates a McDonald’s communication effort to address criti

cisms of protest groups.

Sometimes an organization’s management may see the perception

problem not as giving a target audience correct and adequate infor

mation but as changing the expectations of the group. Corporations

have used this strategy with its employees; for example, telling them

50 I CHAPTER 2

Box 2.3 McDonald’s Attempts to Set the Record Straight

McDonald’s has increasingly been the target of protest groups abroad.

In France, a variety of incidents received wide media coverage. Among

them are the destruction of a restaurant under construction in the

central French city of Millau in August 1999 by a left-leaning farm

organization and the bombing of an outlet in the western region of

Brittany in mid-2000, killing a young manager. McDonald’s risked los-

ing more customers as unions accused it of exploiting its workforce of

35,000, composed largely of youth and ethnic minorities.

McDonald’s France decided on a communication strategy to pro-

vide its critics and customers with more information about its opera-

tions. It decided to acknowledge what its critics had been saying and

to answer them by publishing a book, McDonald’s Se Met a Table

(McDonald’s Turns the Tables). By doing so, the company challenged

the precept that communicating one’s troubles to the public is not

always a sound strategy—a precept based on the notion that public

awareness of the criticisms and actions taken by some protesters

leads to further dissemination of negative messages.

McDonald’s France president Denis Hennequin and his two man

aging directors, Jean-Pierre Petit and Philippe Labbe, authored the

book for the purpose of setting the record straight. They sought to

explain why consumers flock to the chain while French opponents of

globalization roast it over the coals. In their 110-page book, they de

fended the quality of its food, the company’s role as a major player in

the French economy, and its commitment to good employee rela

tions. The time has come to say enough is enough, the trio said. They

stated, “Like any company, we are exposed to the problems of society,

to the problems of change, to the problems of employment. And so it

is in this context that we should know how to make our brand liked,

beyond prejudice, rancor and partisan interests.”

that the old social contract of providing lifetime jobs is no longer fea

sible. Changing people’s expectations is a difficult task that requires

much long-term effort. When a crisis occurs, however, such as the

prospect of job loss, the task is easier because people’s frame of refer

ence is different.

Performance Strategy. The performance strategy is an alternative

suggested by gap analysis. If a company decides that its actual perfor

mance—the fact—is truly short of meeting its desired goal or the legiti

mate interest groups’ expectations, it can narrow the performance gap

by taking concrete actions, such as removing human rights violations,

reducing pollution, or improving employee and community safety.

In “Engagement with Integrity,” Michael A. Santoro discusses public

criticism of the human rights violations of multinational corpora

tions.

He states that most business executives believe they have no par-

ticular responsibility for human rights. However, public attention to the

issue has led some business groups to issue statements. On the interna-

tional scene, the American Chamber of Commerce in Hong Kong

(AmCham) made a strong and direct pledge to “refuse to do business

with firms which employ forced labor, or treat their workers in inhu-

mane or unsafe ways.”

It subscribed to the author’s fair share theory,

which states that business bears some but not all responsibility to un-

dertake the burden of advancing human rights. It proposed that a

corporation has these responsibilities:

• Maintain acceptable working conditions in its own operations and

uphold the rights of its employees to freedom of expression.

• Take responsibility for the actions of its business partners in such

matters as employment practices, wages and benefits, working

hours, use of child labor, use of prison labor or forced labor, dis-

crimination, and disciplinary practices.

• Resist pressure from the Chinese government to use the multina

tional corporation as a vehicle to abuse human rights, for example,

by not hiring (or rehiring) employees who are punished by with

holding jobs from them.

Nike, mentioned earlier, has been targeted by student activists and

others for paying low wages and ignoring human rights violations in its

Asian plants. The company received much negative publicity in the me

dia. Two stories were particularly damaging. Life magazine documented

the use of child labor in Pakistan to produce soccer balls for Nike and

other companies, showing photographs of small children sitting in a

dirty environment stitching together the panels of a soccer ball. The sec

ond was a CBS News 48 Hours broadcast in October 1996 that focused

on low wage rates, extensive overtime, and physical abuse of workers in

Nike’s factories in Vietnam.

INTEREST GROUP STRATEGIES I 51