Tuesday, October 28, 2008

PR - Is it about relationship management?

Tomorrow, thanks to Mafalda Eiró-Gomes (who is always so charming), I will be giving a lecture on the role of Public Relations as a relationship management discipline at the Escola Superior de Comunicação Social, Lisbon, Portugal. My chairman is Nadim Habib, Managing Director of Hill and Knowlton Portugal who I am looking forward to meeting.

I shall begin with a hypothesis about what happens if an organisation loses its relationships with its publics, how much would it cost?

I thought that I would quote Sir William Rees-Mogg's article in the Times today where he recalls the story of the Clydesdale Bank many years ago and the first Mr McAlpine. He writes: “When asked for security for a loan to develop his building company, Mr McAlpine turned up at the bank with a group of his sons. The bank lent on the security of the character and potential of those young men. This turned out to be very good business for the bank and made possible the success of the McAlpine business.”

He continues: “Where relationship banking still survives, there have been relatively few problems of bad debts. The problems have arisen in transactional and unsecured credit card banking with one-off or completely unknown customers. Of course the customers have often behaved badly; if a bank does not know its customers, who are only blips on a computer screen, some of them will behave badly. The bank only has itself to blame.”

The loss of relationships has serious consequences.

The loss of relationships between banks and their depositors and between banks is casting a long and very black shadow across the world and thus, I shall explore the nature of public relations as a relationship management discipline.

Perhaps now we should accept that relationships both personal and corporate are precious assets but where does such wealth come from, what is its nature of the relationship asset and how extensive is this value?

Furthermore, in organisations, who has the role of relationship understanding and management?

For much of its history, public relations in one guise or another has claimed this space and now there is evidence that economist, accountants, marketers, knowledge managers and, all of a sudden, bankers, also seek to understand and deploy relationship value in the organisational context. But the idea of ‘relationships with publics’ is inherent in public relations theory and practice. Its management is sought by many practitioners.

Now, more than at any time since the Great Depression, we need to reflect on the nature of relationship management and who has the corporate responsibly for its governance.

In extending the concepts in Ledingham (Ledingham et al 2000), the paper embeds the practice of public relations deeper into management. As such, it becomes the function for wealth creation and, with misuse, for its loss. In this respect one examines relationships beyond Grunig's and Huang's view that “Public relations makes organizations more effective by building relationships with strategic publics (Grunig and Huang in Ledingham 2000) and views relationship management in a more potent role within the organisation by acting upon its wider intangible and tangible assets to meet corporate value protection and value enhancing objectives.

In the tradition of public relations as relationship management process exposing organisational assets to affective publics to affect wealth, I argue that we need a re-definition of organisations in an era where they are becoming more porous, to an extent more transparent, and with high levels of contracted out services and global partners.

In turn, this points to a practice that accepts relationships as both valuable in their own right and pivotal to wealth generation.

From this postulate, the concept opens up the practice of public relations to offer solutions to the new forms of management in the creation of wealth.

Accompanying the lecture is a 7000 word paper re-worked from the one I gave at the Alan Rawl conference in 2006. It is now even more pertinent and explored the economic value of relationships from a number of perspectives.

Image from Farsight http://www.farsightglobal.co.nz