Strategic Issues Management

Organizations and Public Policy Challenges

Robert L. Heath, Michael J. Palenchar

• Publisher: SAGE Publications, Inc
• Year: 2008
• Print ISBN: 9781412952118, 9781412952101
• eBook ISBN: 9781452278759
• Edition: 2
• Topic: Languages & Linguistics
• Subtopic: Public Relations
• Index: Languages & Linguistics

Strategic Issues Management explores the strategic planning options that organizations can employ to address crucial public policy issues, engage in collaborative decision making, get the organization?s "house" in order, engage in tough defense and smart offense, and monitor opinion changes that affect public policy. In this fully updated Second Edition, authors Robert L. Heath and Michael J. Palenchar offer practical, actionable guidance that readers can apply to organizations from large Fortune 500 companies to nongovernmental organizations and start-up high tech companies.

Features

• Includes a NEW chapter on brand equity, updated examples, theories and cases throughout, new information on activists and activism, and increased attention to the role that technology plays in issues management
• Explores ways public relations, risk communication, and crisis communication can be used to address crucial public policy options
• Advises managers on ways to lessen the chance of a crisis becoming an issue through an examination of crisis preparation and responses
• Addresses the topic of reputation management by exploring the connection between issues management and brand equity using examples from McDonald?s and Wal-Mart
• Challenges managers to engage in collaborative decision making with community leaders and residents to reduce the chance that undue fear will translate into unnecessary regulation or legislation
• Opens each chapter with case study vignettes and closes with summary questions and issues management challenges

Strategic Issues Management is appropriate for courses in Corporate/Strategic Communications, Public Relations Management, Crisis/Risk Communication, Strategic Management, Public Relations Management, Organizational Communication, and Public Policy and Administration.

1

A Foundation of Community

Issues Management as an Organizational and Academic Discipline

Vignette: British Petroleum—Enlightened Leader or Lightning Rod?

In recent years, the British Petroleum Company (BP) has branded itself as one of the leaders in the petrochemical industry because, according to its branding campaign, it can balance consumer energy needs, quality products and services, environmental stewardship, and profits. It uses the environmentally friendly logo of a stylized flower—or sun—in its branded yellow and green colors. It expanded its operations into alternative energy sources. It is recognized in some circles as being very employee friendly, especially working mother employees.

Nevertheless, several issues related to risks failed, and crisis events had, by 2006, brought BP to be a media and environmentalist target on many issues. At the same time, it was interested in leading efforts to open the Alaskan National Wildlife Reserve (ANWR). Those efforts were severely hampered by the Exxon Valdez spill in the 1980s that caused significant negative economic and environmental impact. Even more recent environmental impact events, by BP and other companies, have continued a crisis aura that slows or prevents U.S. Congress’s opening of the reserve to oil exploration and production.

Undoubtedly, part of the recent issue attention BP has received began with a March 23, 2005, explosion in its Texas City refinery. Fifteen workers were killed and another 180 were injured (U.S. Chemical Safety and Hazard Investigation Board, 2007). This crisis led to close scrutiny over its safety policies as well as its maintenance and operating procedures. The explosion occurred in what had been an AMOCO refinery that was acquired during BP’s merger with that oil company. Investigation centered attention on deferred maintenance schedules as well as training and operations. This industry is one of the potentially least safe, or most dangerous. However, following the release of methyl isocyanate (MIC) in Bhopal, India, at a Union Carbide plant, members of the refining and chemical manufacturing industry bonded to achieve a high safety record that would draw favorable attention rather than make it a regulatory lightning rod. Numerous lawsuits followed, with BP eventually settling. One key case was that brought by Eva Rowe, whose parents were both killed. According to The Wall Street Journal,

After fading from the headlines, the accident had become BP’s biggest public-relations headache as the trial approached. In recent days, the U.S. Chemical Safety and Hazard Investigation Board, one of several agencies looking into the blast, partially blamed cost-cutting at BP for the accident, citing internal BP documents. (“BP Settles Claim,” 2006, p. A2)

After this crisis event, others occurred that has kept BP on the issue hot seat. It was held responsible for a pipeline leak in the Northern Alaskan Prudhoe Bay oil field, and there were allegations that management had manipulated the U.S. propane market, an allegation that would eventually be fought out in court. Following these mishaps, another article in The Wall Street Journal (Cummens, 2006) summarized BP’s commitment to improvement in this way:

The British energy giant said it will increase spending on safety and engineering at its American refineries and Alaskan oil operations, order an independent audit of its trading operations and form an outside advisory panel to help steer the company’s American unit. The moves come after a series of accidents and compliance failures in the U.S. BP said it was cooperating with related investigations. (p. A2)

The news story continued in its report of changes BP was undertaking to raise its standard, or achieve its own standard, of corporate social responsibility (CSR).

One fallout from these crises and issues was the early retirement of BP’s chief executive officer. He was given great credit over the years for making BP a successful and forward-thinking company. The buck stopped on his desk, however. During the 2006 crises, his retirement was announced to be effective in 2008. That date was changed to July 2007 under the veil, at least, that he was punished for heading a company that could not manage these crises in ways that stopped them from being nagging issues. Such dramatic events suggest how closely strategic issues management (SIM) links to strategic business planning and effective management.

A connection also existed between strategic business planning and CSR. One of the outreach efforts by BP following the Texas City incident was to commission James A. Baker III (former cabinet member of Presidents Reagan and Bush and co-chair of the Iraq Study Group, also called the Baker-Hamilton Commission) to identify problems and suggest ways for BP to operate at a higher safety standard. ABS Consulting performed the technical review. One major conclusion was that the culture of BP led the company to focus more on personnel safety than on plant operating safety: Findings of many inspections were unheeded, the company did not allocate sufficient money to perform needed maintenance, safety equipment was not properly inspected and operable, and safety audits were not thorough. In short, as the company was spending millions on advertising to announce how it was reshaping itself to be a better, more environmentally responsible oil and gas company, application of known safety standards was becoming worse and worse.

Criminal charges can be brought against managers and executives whose policy and operational decisions would endanger their employees. One fallout from the BP case continues to be a working issue. In 2007, U.S. Representatives Gene Green and Al Green introduced federal legislation to extend that protection to contract workers. The employees killed in the Texas City explosion were contract workers.

On June 15, 2007, new BP CEO Tony Hayward said, in the words of a Houston Chronicle reporter, that “he is committed to improved safety, a culture in which all concerned voices are heard and making good on promises of improved performance” (Hays, 2007b, pp. A1, A8). He continued by stressing the importance of achieving change, not merely committing to it in principle. On the same day, a business editorialist headlined, “New Boss Knows He Has Plenty to Do to Repair BP’s Tattered Image” (Steffy, 2007a, p. A1). The challenge is to bring high standards of corporate responsibility into sound management and operating practices to avert recurrence of harm to industrial workers.

Three days before the press conference Haywood held in Houston at plant facilities, the Houston Chronicle reported that the Occupational Safety and Health Administration (OSHA) was stepping up refinery oversight by assigning a massive 300-person taskforce the job of inspecting “refineries across the country over the next two years as part of a stepped-up enforcement program prompted by the BP Texas City Blast and other deadly refinery accidents” (Ivanovich & Clanton, 2007, p. D1). BP’s actions before, during, and after had raised the issue of refinery safety. OSHA had to respond lest it become tarnished and demonstrated to be insensitive to the issue of worker safety. These OSHA inspections were programmed to target 81 different facilities, about half of the nation’s capacity. A bit more than one month later, OSHA announced that it would fine BP $92,000 for operating “conditions they said were similar to those that preceded the deadly March 2005 blast” (Patel, 2007). “Regulators cited BP for one willful and four serious safety violations” (Patel, 2007, p. A1). This fine followed a $21.3 million fine in September 2006 for 300 willful safety violations. The actions of BP kept the issue of worker safety alive and top of mind within management, regulatory, activist, and legislative circles. In fact, in December 2007, facts of management errors continued to make headlines: “BP Engineer: Facts Hedged to Make Unit Appear Safer” (Hays, 2007a, p. A1).

What does this vignette tell us about SIM? It suggests that how a company operates—the execution of its strategic business plan—can please or offend others, especially employees and regulators. It can meet or violate the expectations others have of how willing and able it is to operate in ways that please or offend others. As a fundamental principle of SIM, forces seek to hold organizations to a certain performance standard. Once it fails to achieve that level, it is subject to criticism. Some of the criticism can be answered through strategic communication, messages that address key issues. However, the BP case also suggests the need for strategic business planning that is sensitive, reflective, and responsive to the public policy arena; a need to monitor issues; and a commitment to know and achieve the level of CSR that is necessary to maintain the legitimacy of the organization. This is the scope of SIM that will be discussed throughout this book.

Chapter Goals

By the time you have completed this chapter, you should be able to define strategic issues management (SIM), understand how it grew out of a unique social and business environment following World War II, and see it as a vital part of the total management planning effort in organizations, as well as justify it as a process that fosters mutually beneficial relationships between organizations and involved publics. Your knowledge of SIM will include its role in planning and the way stakeholders and stakeseekers can affect the planning and operation of an organization, as well as what strengths it brings to the management table. All of this discussion culminates in a brief discussion of the balancing act between responsible advocacy, conflict negotiation, and collaborative decision making. As an ideal, normative process, SIM seeks to balance interests and achieve mutual benefit and support by fostering joint decision making and cooperation rather than opposition for the key organization’s planning and operations. Organizations are encouraged to position themselves so they work to balance their interests with those of others. They need effective planning, issue monitoring, appropriate standards of corporate responsibility, and willingness and ability to communicate through advocacy, dialogue, and collaborative decision making. The key to appreciating the value of issues management is to view it as more than a communication function.

SIM is a sturdy discipline that has matured over the years as reflective management has moved to respond to changing threats and opportunities in the economic and public policy arenas in which they operate. Although the precise role and measurable impact of SIM, public affairs, and public relations continue to be problematic in management theory, numerous managers and executives recognize the countless ways SIM adds value to their organizations and society. Academics from an eclectic range of disciplines and savvy issues management and public relations practitioners know that issue debates are a routine aspect of their business function of shaping public- and private-sector policies. Such debates can positively or negatively affect how organizations are managed and the missions that guide effective organizational planning. These debates are more than relationship management, although the quality of relationships can affect how issues are contested and translated into sound business and public policy. For reasons unique to the 21st century, organizational executives have worked with academics to better understand and refine this discipline. SIM’s proponents believe it has become essential communication and management theory for the effective running of businesses, nonprofits, nongovernmental organizations (NGOs), and government agencies.

Issues management as an applied discipline is an ancient business and communication practice. For centuries, government leaders as well as business managers have responded to, created, and managed issues as part of their routine activities. Nonprofits, especially NGOs, engage in issue planning and issue debate, which translate into policies that foster and constrain choices by the organizations in each society. Activists raise issues they believe can benefit society. They engage in situationally sensitive planning and communicate through advocacy, conflict negotiation, and collaborative decision making. Every kind of organization can benefit from SIM.

Despite the worries of some, large organizations cannot control how issues arise, are discussed and debated, and ultimately translated into public policy. Without doubt, they participate in the process, but how they participate and the nature of the issues proponents debate determine how those issues are resolved and to whose benefit. The private sector, for many reasons, is the focal point in the development, study, and practice of SIM, but it is not the exclusive purview of business. A case can be made that it arises from the confluence of power resource management and participative democracy.

Historical Evolution: Defining a Mass Consumption Society

As the foundation for defining issues management, a brief historical overview will help explain SIM’s origins, rationale, growth, and place in society (this overview will be expanded in Chapter 2). Here, in simple detail, we note that its origins are those of societal conflict, organization, and risk management. SIM can be found at work in all cultures, societies, and nations. It is inseparable from common law in Western tradition and is the basis for minor and massive changes in political economies around the world.

SIM’s iconic role in U.S. history is best embodied in the colonial revolutionaries’ claim against the British monarchy: no taxation without representation. It has been at work during the public policy and business battles in the United States since the second half of the 19th century. During the years of industrial growth in America, executives of increasingly large corporations turned strategically to government to seek favorable public policy to define, defend, and champion their business consolidation and mass production practices that helped to spawn the mass consumption society. These “robber barons” fashioned conglomerates almost overnight and often with the desire to dominate entire markets by bringing many small companies together under one organizational umbrella. Business enterprises, such as steel manufacturing and oil companies as well as telephone and electric utilities, struggled to establish state-of-the-art operating standards, including the legitimacy of regulated monopoly. It is not coincidental that SIM and the practice of public relations grew up during this era when executives employed communication specialists to advance their causes.

For the first time in the history of U.S. business, this new kind of boss cloistered themselves in luxurious offices rather than work side by side with laborers. Boards of directors and shareholders came to decide how workers’ efforts were directed, and corporate policy was formed and implemented based on industry-wide standards. People’s health and safety were often dramatically harmed by manufacturing and marketing practices and working conditions. Efficient processes and huge fortunes, especially for stockholders and senior management, were often the goal rather than excellent business practices, carefully crafted products and services, and wise government oversight of the public interest. Because of their business practices, executives were eventually challenged to respond to outbursts of protest. Activists and investigative reporters argued that business practices were corrupting the market enterprise system and working for the destruction of society.

Turbulent eras continued. The Great Depression of the 1930s challenged government and private-sector organizations to reformulate private-sector practices, and local, state, and federal programs were drafted and implemented to protect the public interest. Following this era of damaged relationships with the general public, World War II allowed corporations and government to link arms to produce a stunning global military and reconstruction victory that served as the hallmark for a period of prosperity. The war effort changed the structure of labor and management relations and led to a new prosperity through research and development efforts fueled by the need for new products and services. This industrial buildup created abundant new synthetic, chemical-based products and other goods that were affordable and available in ways that dramatically changed lifestyles.

Just as all seemed to be going well for industry and large government, the roof fell in. Entering the 1950s, the private sector felt smug. It had helped forge world peace and widespread prosperity. Confident executives were caught off guard by critics condemning a myriad of business activities that in the minds of the executives were profitable, efficient, and realistic. Sparked by antiwar and civil rights protests, penetrating voices, often full of idealism, reexamined the principles of representative democracy and the relationships between companies and labor, consumers, and the environment. Authority was indicted as being irresponsible. Environmentalism, consumerism, and dozens of other “isms” emerged as vocal interests opposed prevailing principles of business and government. Activists once more installed themselves in the political power base of the United States.

Sociopolitical dynamics and changes began in the 1960s, and entire industries and businesses lost much of their public policy clout as the result of four dramatic changes: (a) natural resources, found to be limited and defined as the property of the citizens of the nation, were to be managed in the collective interest; (b) society became sensitive to the increasing heterogeneity of values, attitudes, beliefs, interests, and cultures that destroyed the sense of policy consensus that prevailed at the start of the 1960s; (c) people lost confidence in large institutions, such as government, media, and business, and placed their confidence in activist groups to exert the collective power of individuals; and (d) standards of corporate responsibility and legitimacy changed (Pfeffer, 1981). This fertile ground fed the growth of issues management.

The term issues management was coined in the 1970s, but the concept is much older. Other terms, such as public relations and public affairs in the second half of the 20th century, seemed insufficient to define the scope and purpose of organizational act...

Table of contents

• Cover Page
• Title
• Copyright
• Contents
• Preface
• Chapter 1: A Foundation of Community 1
• Chapter 2: Historical Foundations
• Chapter 3: Scouting the Terrain
• Chapter 4: Corporate Social Responsibility (CSR)
• Chapter 5: Special Interest Activists as Foes or Allies
• Chapter 6: Issues Communication
• Chapter 7: Obligations and Constraints on Issues Communication
• Chapter 8: Issues Management and Crisis Communication
• Chapter 9: Issues Management and Risk Communication
• Chapter 10: Brand Equity and Organizational Reputation
• References
• Index
• About the Authors