By Tom Mullaney

For the past year, the business press increasingly has used terms such as “accountability,” “malfeasance,” “scandal” and “corporate governance” when covering high profile companies. Once high-flying CEOs and CFOs have done the “perp walk” into court and the corporate reputations of Tyco, Enron, Worldcom and Martha Stewart are in tatters while others, such as Citigroup and GE, are under attack.

Can good PR strategy help avert or ameliorate the situation? And, when companies suffer setbacks, why do they tend to go into denial and hope the news will just go away? Reputation and credibility are fragile commodities based on trust — two essential qualities of a successful business that can evaporate in a matter of months if they are not nurtured.

To address these concerns, the Publicity Club of Chicago on Nov. 6 convened its second Executive Roundtable at the exclusive 410 Club. Taking part in the discussion were three experienced experts in reputation management: Ron Bottrell of Dome Communications, Jonathan Dedmon of The Dilenschneider Group and Nick Kalm, principal of newly formed Reputation Partners and former EVP at Edelman Worldwide. Andrew Goldstein, an attorney with Freeborn and Peters and general counsel to the Publicity Club of Chicago, served as moderator.

Dedmon spoke first and immediately emphasized that business was in a new corporate climate of greater ethical responsibility. Practices once tolerated would now be increasingly questioned and greater transparency of financial information was the new mantra. He saw the era of pro forma balance sheets and non-expensed stock options as biting the dust. Also disappearing is the worship of imperial CEOs. Too many have been seen to have feet of clay, bringing their outsized compensation packages into sharp relief.

When Bottrell took the podium, he proposed that the role of the public relations insider was probably more difficult than outside PR counsel. Drawing upon more than a quarter-century of corporate experience, including twenty at Quaker Oats, he emphasized that, usually, the inside director has less power to affect change. Only if you work for an enlightened CEO who understands the value of good public relations can the job wield real clout. A savvy corporate communications chief will use an outside agency to provide “cover” for a policy that he or she favors and even have the consultant make and fight for the favored recommendation.

While it is difficult to navigate inside the corporation and its over-the-top egos, Bottrell stressed that one must be prepared to even risk one’s job if one’s credibility and integrity. As Kalm was corporate communications director at Enron or Tyco when they went down in flames.” Some of the blame will rub off on you and make future job searches much harder.

Bottrell’s final suggestion was that, to gain to, one should frame strategic recommendations in financial terms, based on costs incurred by other companies that endured a similar crisis.

Kalm began by noting that it has never been more difficult to be a CEO or VP of Corporate Communications. The media have put business on alert that they feel burned by the likes of Enron and the “irrational exuberance” of the dot.com bubble. He agreed that a sort of “feeding frenzy” has taken hold and many CEOs are going underground which sends exactly the wrong signal.

You have to keep up your usual presence and accessibility in normal times so that you will get a fair shake when the going gets rough. A company builds up “reputational equity” by being open —invaluable in a crisis.

Kalm provided a list of ways that corporate communications chiefs can make themselves valuable to management. First is to talk on a regular basis with your CEO about the external media environment and how the company is being perceived and portrayed. “Puff pieces” and gushing analyst reports are a thing of the past, Kalm noted. Today, balanced coverage is the best to be hoped for.

Next, keep an eye on Internet message boards and conduct some perception research on customers and other stakeholders in the company. Too many companies become very isolated from what their external constituents are thinking. In today’s highly vulnerable environment, cap” Kalm commanded. “Ask the tough questions so you can be prepared to handle those issues when they arise, rather than deal with them ‘on the fly’ If you have a corporate culture where senior management views PR as extensions of the press and that the PR staff is somehow culpable for unflattering stories, this is a good time to bring in outside counsel.

Having a respected, outside voice offering a more nuanced perspective is often enough to get top management to see the light and create more positive perceptions of the internal PR person.

As can be expected, the lively Q&A discussion turned to the PR mistakes committed at Arthur Andersen, Enron and Martha Stewart. The overflow crowd agreed that it is the “best of times and worst of times” for corporate public relations professionals.

 The next program in the series will be held on Thursday, February 27, 2003 when Dan Edelman will moderate a distinguished panel on the provocative topic: “PR versus the Lawyers.”