The clouds that have hovered over the public relations industry for the past few years are beginning to clear, according to the third annual Public Relations Generally Accepted Practices Study (“GAP III”), published by the USC Annenberg School for Communication’s Strategic Public Relations Center (“SPRC”) and sponsored by the Council of Public Relations Firms. (That’s a mouthful.)
Released on Monday, the GAP III report is a look at the state of the PR industry. More accurately, the study provides important insight into how PR professionals view the health of the profession, and how companies, organizations and governments are not just utilizing PR, but managing the PR process.
The report, which can be accessed online, is filled with intriguing statistics and commentary.
“The authors of the GAP II [ed. note: the previous year’s] study suggested that a ‘Bunker Mentality’ created serious problems on a number of fronts for the PR industry in 2003. The ‘Bunker Mentality’ was attributed to factors outside of the immediate purview of PR, including fear of terrorism, a spate of heavily publicized corporate scandals, the war in Iraq, and general uncertainty about the economy. These conditions led to a decline in the perceived value of PR and a corresponding rise in the stature of finance and legal, the more defensive functions,” the study’s authors write.
“PR’s comeback in 2004 would strongly suggest that the same external conditions that precipitated the ‘Bunker Mentality’ the previous year had begun to decline in significance,” the authors continue. “More specifically, America is learning to live with the fear of terrorism, the economic outlook has generally improved, the war in Iraq is less inflammatory (if not less controversial), and corporate scandals were not so prevalent – and may even be contributing to the increased significance of public relations in the C-suite. As a consequence, companies in all revenue categories, MAC (“most admired companies”) and non-MAC, viewed PR with more favor in 2004 versus 2003.”
This assessment, while seemingly obvious, fits in with what I’ve been seeing across corporate America, not just in terms of PR, but also when it comes to IT spending and other expenditures, including travel, recruitment and employee retention. Nonetheless, the still-rising cost of health care (look to General Motors to see the devastating impact) and the historically high prices for certain commodities and cyclical products, or commodity derivative products, may still be keeping a tighter lid on all of the aforementioned spending.
One of the most interesting parts of the study related to how PR professionals interact with corporate executives.
“PR functions among private companies, public companies, government agencies, and non-profit agencies, reported most frequently to the Executive Office, by a significant margin. An average of 63% of Fortune 2000 private companies reported to the CEO in 2004, an increase of 13% over 2003. In the Fortune 2001+ category, marketing was second for private (43% of the time) and public (27% of the time) companies, as well as government/non-profit agencies (23% of the time). However, among Fortune 2000 public and private companies, PR reported to Legal more often than Marketing, though not by a wide margin,” the report states.
What I found surprising was that in 21% of Fortune 2001 to Fortune 5000 companies (annual revenues of $580 million to $1.6 billion), PR people said they report directly to Human Resources (“HR”). Perhaps it’s my own naiveness here regarding the function of HR in larger companies, but I don’t quite understand why PR would report HR. I can see HR being “in the loop” on certain PR matters, especially when it pertains to a company’s employees, but otherwise, I don’t get it. Even more surprising, this 21% was up from nil a year earlier, and outside of Fortune 500 companies ($6 billion or more in annual revenues), the percentage of PR people reporting to HR increased across all company sizes. This, at least to me, is a disturbing trend.
Less disturbing, however, is that outside of the two largest classes of companies ($3.1 billion and higher), the number of PR people reporting to the “C-Suite” (CEO) rose across the board. In the top two classes of companies, the difference was mostly made up by increased reporting to the legal department, which is what I would expect considering new Securities and Exchange Commission rules and federal laws (the majority of the large class companies are public). Regardless, that PR people are more frequently reporting directly to the “C-Suite” is a strong indication that executives are taking PR more seriously, and not only that, but one can at least argue that PR people are garnering more responsibility.
Digging beneath these initial numbers, the study concludes, “In companies where PR reports to the ‘C-Suite,’ PR is significantly more likely to: [ed. note: their words not mine]
1. Believe this is the most appropriate reporting line; 2. Have a CEO who believes reputation contributes to organizational success; 3. To describe the organization as proactive; 4. To describe the organization as strategic; 5. To describe the organization as having a good external reputation; 6. Be invited to participate in organizational strategic planning; 7. Be invited to senior level meetings that may or may not have PR implications; 8. Have a CEO who encourages PR to be involved with and provide counsel to other organizational functions; 9. Have a CEO who encourages PR to be creative and flexible in planning; 10. Have a CEO who encourage PR to get a sense of the organization from non-traditional sources; 11. Have a CEO who encourages PR to experience non-PR related events, venues, etc., where target audiences will be present; and 12. Have a CEO who believes that PR evaluation methods exists and are effective.”
I keyed in on the last takeaway, because this reveals that the majority of PR people believe that their CEO can quantify the role of PR, and this is rather important during budget time. It’s worth noting that in instances where PR reports to Marketing, “PR is significantly less likely to believe … that PR is taken seriously.” Show your VP of Marketing Page 18 of Section 3 of the study the next time you report to him/her.
Moving on, when asked what evaluation methods they use, PR people said that their work’s influence on a company’s reputation was the most significant measure used. (How this is actually measured was not disclosed.) Near the top of the list was content analysis of clips, influence on employee attitudes, influence on corporate culture and total number of clips in “top tier” media. While these are good measures on the surface, this reveals that PR people believe the relevant way to evaluate their work is by the smiles on the faces of employees and a fat clip book. There’s more to PR, no?
Meanwhile, at the bottom of the list was increased compensation, which shows that PR people understand that getting a raise sometimes has little to do with the quality of one’s work. Near the bottom of the list was contribution to profitability, contribution to market share, influence on stock performance and praise from friends/neighbors. I’m not sure why the last method was included, but I agree that praise from my neighbors R.C. and Renee about my own PR performance would not be included in a self-evaluation.
The data from this portion of the study suggests four things according to the authors: [ed. note: their words not mine]
1. The movement away from ad equivalency, impressions, total circulation, etc. is clear evidence of a movement away from the traditional methods of evaluation that do little to reflect or support the profession’s increasing stature and potential.
2. Currently there are no consistently reliable, generally accepted, quantifiable methods for correlating PR activities with reputation. More work is needed in this area.
3. Unfortunately those evaluative measures that PR practitioners would undoubtedly prefer to utilize (impact on sales, profitability, market share, etc.) are ranked near the bottom of the list, no doubt due to the lack of measurement tools to analyze impact in those areas.
4. Organizations have been reluctant to allocate adequate resources to PR evaluation, preferring to focus on execution. At a time when the profession is under increasing pressure to demonstrate its value in “hard” terms, this may be a dangerous, self-defeating posture.
Point number one is very positive, while point numbers two and four need to be addressed, and no doubt cause much consternation for PR people. I’m not sure if point number three is accurate, but I’ll take a PR person’s word on it.
Among the other findings in the study: companies turn to outside agencies more often than not for “extra arms and legs” and to complement internal PR capabilities; PR budgets are on the rise, though public companies tend to allocate more of the budget for salaries than do private companies (this is alternately good and bad, depending on how well you’re paid, of course); and, the concept of an agency of record may be a thing of a past.
“The traditional agency of record model may become an endangered species. This has implications for the continuity of agency/client relationships, agency staffing, agency/client loyalty, etc.,” the report states.
The GAP III study is worth reading, especially for PR professionals who believe that there needs to be a fundamental change in how PR is measured and interacted with internally. The study could serve a nice blueprint, or at least a stepping stone, for small and large companies to make organizational changes that positively impact the role of PR.
This article, written by Ben Silverman, originally appeared in PR Fuel (http://www.ereleases.com/prfuel), a free weekly newsletter from eReleases (http://www.ereleases.com), the online leader in affordable press release distribution. To subscribe to PR Fuel, visit: http://www.ereleases.com/prfuel/subscribe/.