US study shows how large organisations handle PR internally

published  2003

If it’s important that you get an international ‘big company’ perspective on how to run an internal PR function, then the findings from a survey of internal public relations departments of significant US public and private organisations will be of interest. It covers:

• How PR is regarded by management
• What communication functions internal departments fulfil
• The reporting lines of PR departments
• Practices and trends in budgeting
• What measurement techniques are most used and valued
• How PR agencies are used.

Called ‘Public Relations Generally Accepted Practices’, the study was commissioned by the Council of PR Firms and conducted by the University of Southern California in May/June 2002. Results, from over 300 respondents, were released in the first quarter of 2003.

1. For PR to thrive within an organisation it must play a strategic role. Only this will earn for it bigger budgets.
2. The reporting line is vital. Generally, it pays to report to CEO/Executive office, rather than Marketing.
3. Measurement is key. You will only earn respect and win budgets if you can prove the return on investment through outcomes.
4. Concentrate on building a reputation reserve for the organisation and its brands. To protect this reputation reserve, have a strong crisis avoidance/management capability.
5. Use outside PR agencies - 85 percent of organisations surveyed do so in order to add strategic, intellectual and experiential value, rather than just ‘extra arms and legs’.

How PR is regarded by management

How PR is regarded by management is essentially related to where the function reports to.

The report concludes that where there is a high level of support for PR from senior management, PR reports directly to the Executive Office. It is also viewed positively where PR is seen as making a relatively strong contribution to strategic planning.

For the purposes of gaining management support, the worst place for PR to report is Marketing. However that can be mitigated where organisations have a ‘visionary’ approach and marketing is valued.

The report suggests that senior management values PR’s contribution to the marketing effort more if it does not report to Marketing.

Key findings include:

• Overall, respondents indicated that their senior management teams view PR as making less of a contribution to their company’s success than Finance, Marketing, Strategic Planning and IT. However this does not translate into less support for the PR function - simply that relative to the others it is seen as less important.
• PR, HR and Legal finish in a virtual dead heat in terms of making a perceived contribution.
• In organisations where PR’s contribution to success is perceived as high, PR’s evaluation methods tend to include Contributions to Profitability, Market Share and Sales. It is interesting to note that in those same organisations, PR evaluation methods include Influence on Corporate Culture, Influence on Corporate Strategy, Employee Morale/Satisfaction, Share of Voice and Corporate Reputation.
• Respondents who rely on content analysis of clips as a measurement of PR effectiveness receive slightly higher levels of support from senior management. A possible interpretation is that senior management prizes numerical analyses of results, and content analysis is perceived to be such a measure (in the absence of more outcomes-oriented measures).

Communication Functions

Respondents gave these responses when asked to specify those areas for which they had budgetary responsibility (multiple selections were allowed).

Reporting Lines

• The majority (51 percent) of PR organisations report to the Executive Office (CEO, COO, Chairman)
• In larger companies, PR is much more likely to report to the CEO than in smaller ones
• Only 28 percent of respondents actually report to marketing.
• The percentage of cases in which PR reports to HR, Legal or Finance is insignificant
• Around 10 percent of respondents have multiple reporting lines.

Budget

• The larger the PR budget:

1. the more seriously PR is taken when making a recommendation to top management
2. the higher the level of support for PR from general management
3. the more the organisation perceives itself as having a good external reputation
4. the more the PR organisation has responsibility for community relations and, to some extent, philanthropy
5. the more likely that an organisation employs measurement techniques to evaluate the results of PR
6. the less likely that an organisation uses advertising equivalency of media clips in measuring PR success.

• In companies with lower percentages of revenue dedicated to PR, PR is more likely to report to Marketing. The reports says a possible interpretation is that when PR reports to Marketing it is less integrated with other functions and more likely to focus on sales and marketing oriented activities, rather than a broader array of assignments.

• Companies that support PR to a greater extent, as indicated by a higher percentage of revenue spent on PR, increased their budgets even more than companies with smaller percentages of revenues spent on PR. The report notes that once again this suggests that companies that support PR invest in it to an even greater extent during difficult times.
• Overall, respondents dedicate 23 percent of their total PR budgets to PR agency fees.

In future issues of ‘PR Influences’ we will summarise what the report says about evaluation and measurement and PR agency usage.

Note: The author of this article is a senior Sydney-based independent corporate PR consultant who advises, coaches and mentors PR Managers and undertakes PR audits of PR Department structures and programs as well as helping review or select PR agencies. In addition he also provides specialist corporate PR and communications advice where issues or change are impacting on an organisation. He also blogs regularly on PR and communications topics similar to those in this article.