With the business PR practitioner most often in a smaller company, even though its securities are traded on an exchange, a majority do not become fully involved in the company reports. In the largest corporations it is not uncommon for PR to work year round on the annual report brochure; in smaller companies the tendency persists to confine reporting to the treasurer's communications facilities.
Corporate PR may be described as that directly related to the chief officer's level. In practice it invariably is responsible for the enhancement of the corporation's reputation, and for administering the approved steps in making the results of its operations public.
Each year smaller companies enlarge their merchandising, or exposure-base, for their official financial results. No matter how broad a company corporate PR activity base is, the financial reporting, almost entirely controlled by regulatory agencies, is the major end of corporate PR.
In smaller companies not having long histories of PR, the first consideration in forming a program is to gain an understanding with officers who have formerly handled functions such as reporting results. The chief financial officer and the company lawyer usually have become established in their roles. Often the past practice has been that when they have reviewed the figures with the chief executive, they asked the advertising and public relations manager to deliver them to the newspapers. The treasurer sends them to the proper government offices and exchanges.
Keeping Up with Regulations
The information that must be disclosed is neither extensive nor likely to reveal much to encourage competition unless it shows a loss. The items and destinations of corporate disclosures, as well as other attributes subject to disclosure under regulations, are subject to change. In fact, they do change from time to time. It is a part of PR's responsibility to keep abreast of all matters that fall within its scope, but the financial and chief officers are responsible to the authorities for meeting the terms of regulations. In practice, however, PR often keeps them from making-mistakes.
The business as usual sound of routine financial reports reflects their ordinary impact when they cover periods in which no dramatic events-such as acquisitions or unusual profits or losses-have taken place. When such events are imminent PR should get an early start on considerations as to how best to handle them.
Non-Governmental Publics Are a Major Concern
Versions of the statement that "PR is a function of top management in every well-managed corporation" are some- what misleading when applied to most companies. It is true that the chief officer is the real PR head of the company he is hired to manage. The shortcoming of the idea is that it tends to dilute the sense of need for every-day planning and programming to reach the several publics with an interest or equity in the company's results. In practice the employees in most businesses are the No. 1 public. They usually receive the largest share of its income. Once the foregoing array of down-to-earth comments is understood, we shall proceed to our look at Corporate PR in its commonest use as the spokesman, strategist, and good-will developer for that part of business concerned with its owners and the Government.
Apple Polishing Not Role of Corporate PR
In the corporate-functions end of concerns that tend to show operations separately-a group that includes owners of big stores, of multiple manufacturing divisions, and of erratically positioned diversified industries and their subsidiaries-the top PR officer is a vice president, and the title is not merely a facade.
Professional management has greatly changed the burdens of American business at a time when new technologies as well as world affairs caused important changes in its priorities. The largest corporations, those five hundred evaluated annually by Fortune magazine, have among their most conspicuous attributes a voracious appetite for working capital. With interminable expansion programs, they commonly distribute most of their earnings to owners and borrow funds far beyond operations needs. The PR aspect of that business technique pinpoints the highly crucial role of the craft in the most dominant economic enclave in the world.
Professional management brought great changes to the corporation through its capability for stationing decision centers at every profit point, then funneling their results to a few decision makers who work from balance sheets. To suggest that it is a bloodless approach is irrelevant. Management is measured entirely by results. It is not untrue to say that the banks evaluate management. In any event, blood is not involved but PR is: for the reasons sketched above.
PR Converts Corporate Positions into Human Terms
In a big store the management is highly concerned with pilferage, shoplifting, transportation strikes, the weather, and in general just about the same things that concern the candy store owner. But at the end of the year, if you ask the candy store owner how he fared, he may answer, "Who knows?" If you ask the big merchant he may say: "We were off 2.4%." From the viewpoint of corporate PR the top executive of a big store may not be a merchant. That, too, is irrelevant. He has some explaining to do to several publics. Let us take a look at what will most likely appear in a New York morning newspaper if a large corporation has no unusual aspects to report.
CHICAGO-Jackson Industries, Inc., diversified processor and manufacturer in the food field, had record sales and earnings in the fiscal year ending December 31, with the final quarter holding the year's gain rate, 3.1% on earnings on a sales increase of 15%, according to preliminary annual results announced at headquarters here yesterday.
Such a statement, in the form shown, is typical of how nationally read, financially oriented newspapers start their accounts of annual results by major companies when they are as expected. A Chicago morning paper of the same interests would probably edit its story to read:
Jackson Industries sales and earnings reached records for the 1970 fiscal year ending Dec. 31 with final quarter earnings of $10.3 million against $9.2 million a year earlier refining a 26% per share record profit. For the year earnings were $42.1 million up from $37.8 million the year before, on sales of $247 million from $235 million for the previous fiscal year, James C. Jackson, chairman, announced at the corporation headquarters here yesterday.
If the company had been in the sales bracket of less than SI00 million, it is doubtful that the New York paper would have carried a story. Instead, they would include it in their small-type "other company reports tabulations" deeply buried on a back page among the several devoted to business news. That tabulation might read:
The Chicago paper would use much of the same information it uses on large local companies, but the narrative would be included in a "round-up" or other story dealing with several companies. The material shown in the tabulation above is essentially what must be shown in keeping with the Federal Securities Exchange Commission (SEC) regulations. It may have been delivered to the leading" Chicago morning paper at the close of the business day, in accordance with regulations; it was also sent to the firm's security exchange and to the Securities Exchange Commission. All of the above regulatory practices may and do change from time to time.
Objectivity in Financial Reporting
In its role as helper for the financial and business writers, no matter how PR is organized within a company, its integrity and capability are soon fully evaluated by those experts. Whether a corporation's top PR executive is a vice president or an assistant to the advertising manager, he is expected to hew closely to the reported facts in corollary stories he may release concurrently-or immediately following-the annual results report to the agencies prescribed in the disclosure regulations.
Taking an example of the tabulation specimen on page 67 as complying with current disclosure regulations, when they are given to the proper newspaper they should be shown separately from the PR story and clearly labeled. None of the facts is omitted in the story aimed at supplying business background from the financial writer's viewpoint.
Chief executives generally have considerable experience in releasing company results: good, bad and indifferent. Whether the PR function is a single practitioner whose direct superior may be the marketing, personnel or advertising director, when the report figures are discussed, the PR specialist should know, at least broadly, the current regulations terms.
When unusual situations are involved for the period to be reported on, PR should arrange with the financial department in advance to be given an analysis of the effects of whatever non-routine subject matter is to be included. In such instances the financial executive may discuss the coming-report with PR several times before actual figures are used. In turn, PR will work up its corollary story that will go to the media (usually the nearest financially oriented newspaper, A.M. or P.M., depending on the time of day the figures are released).
Current regulations for annual figures reporting specify the time lapse permitted until report must be made. Normally, companies require a predictable time (usually 30 days) to prepare the figures. The financial department usually controls the release date.
Basic Steps Commonly Used in Reporting Results
Normally, the reporting regulations affect only the annual results. These must be released in keeping with regulations, or exceptions authorized in advance, under all conditions.
Larger companies report results quarterly. In most instances the company initiates that practice for its own reasons: it may have wanted to show its progress. The practice is so widespread that all companies with wide stock distribution now follow it. In fact, a great many corporations issue monthly reports. Whichever practice becomes established (by applications followed for two or more monthly or quarterly periods) must be adhered to unless specific notification is given of a need for a different time period. The basic information in quarterly reports coincides with the categories in the annual income figure. Also, once a period is established all unusual conditions during the period also must be shown, if they would be required in the annual statement.
The original disclosure and the annual-report brochure are only remotely related. Obviously, the figures do not change, but in keeping with business ethics and general practices, they may be embellished considerably, and given added glamour, in the brochure. It often becomes the "corporation catalog" for all in the financial community: investors, brokers, analysts and others, including the files of financial editors.
How Smaller Corporations Use Report Stories
The smaller corporations PR officer seldom gets top-news treatment for his report stories, as is given to the corporations, but he may go as far as he likes in circulating the stories that amplify the returns. His first market is his own local newspaper. In most cities publicly owned big stores and similar industrials are top news to employees, customers and share holders. The corporations invariably are interested in communicating with key people in banks and governmental offices nearby.
No type of business news is more subject to "interpretations," once the actual figures are given, than the results statement. Probably the No. 1 audience, from an operating-viewpoint, is the employee and community group. This has an almost unique type of interest where the local unit is an operating division or subsidiary company. In fact, local units of corporations should handle their parent reports similar to the practices of moderate-sized, locally based corporations. It should be understood that local corporations are fulfilling a legal obligation in reporting results; non-corporate subsidiaries may retain separate reporting which is similar to owner-corporation reports regarding regulations, but when figures from subsidiaries are consolidated into parent-company returns, whatever is "reported" by subsidiaries should coincide. But it should be kept in mind that the only official figures are the parent-company figures.
Non-listed units, regardless of legal descriptions, do not qualify as reporters. In many instances such units are the major operations part of a corporation and its operations are of interest well beyond the local community. As a rule, the corporation heads are aware of such situations and attempt to meet it in keeping with corporation policy. The plant division or subsidiary PR practitioner, affiliated with the corporate PR, may attend meetings at headquarters and plan the uses in the plant or other sub-divisions of the information released. He could be in trouble if he inadvertently or otherwise made any changes. How he describes the local participation in returns is largely a decision for parent management or PR.
Annual Report and Annual Meeting
These vital aspects of the reporting function are somewhat less vulnerable to regulations than the original disclosures of results. Before either the brochure is issued or the meeting date officially announced, the public has the official results. The brochure is largely a selling catalog, and its basic formulations often come from financial rather than from PR. The major function of annual meetings is to hold elections of membership to the board of directors, usually in compliance with the corporation's bylaws.
As public-relations opportunities big corporations have PR opportunities for some ingenious planning that is recognized as highly beneficial to the corporation. Smaller companies, whose stock is not widely held (either numerically or geographically), usually conduct undramatic meetings in their own offices and announce results as they would other business transactions.
The preparation of a brochure that is universal in large corporations is not often followed in small companies. Evaluated as a PR or promotion opportunity, the decision to produce such a brochure should be based on its usefulness as a promotional tool. The majority of small corporations and banks tend to prepare a simple folder giving the required figures. The regulations applying to banks are not the same as those applying to business or industry, but both may go to considerable lengths to enhance prestige and attention in preparing" the annual report.
The social side of the chief officer's annual exposure to shareholders often obscures the technical aspects of the annual meeting. Standard practice for larger corporations is that visitors be greeted, upon entering, with a display or other dramatization of the corporation's chosen field services or products. This may be highly impressive for the diversified corporation with showings of activities in various fields.
While the chief officer is the star of annual meetings, usually chairman and president in one, the technical head man is the secretary who moves the show along. The lawyer is ready and at the chairman's elbow, but if all goes well he does not have much to do.
After votes of those attending are added to those returned from absent shareholders, the make-up of the Board is announced. Meetings may involve 20, 30 minutes; or three hours.
Boards usually convene directors' meetings later to elect or re-elect the officers. The officers may then announce appointments of new executives and promotions of others.
Corporate PR in the Moderate-Size Company
Newcomers to PR in moderate-size companies and institutions often are under stress on corporate matters because they involve the same executives they work with on such programmed activities as community affairs and civic activities. Where the PR function is relatively new as a full time operation, the change from the top management viewpoint may be that PR takes over some duties formerly handled by financial and legal officers. It often happens that these officials, still responsible for their functions, do not willingly step aside. Even in some larger companies, lawyers and financial officers often are acquainted with the financial press and like to retain the relationship.
The reporting end of corporate PR is only a small part of the total corporate PR function. One of the most attractive aspects of the PR career is that as the practitioner's skills increase he finds more and more opportunities to put them to work in the institution's interest.
Just as in some companies the annual results are merchandised into the industry, the community, and to the dealers, while in others they go only to necessary parties, so it works out in almost every type of activity suited to PR. In some companies the children's Christmas party may be conducted as a personnel department chore, and in another the president or chairman may be at the door to shake the hands of employee's spouses and pat the heads of their tots. The community and corporate aspects of moderate-size companies are almost inseparable. PR must be watchful that it does not bruise department heads, but every company activity should be reviewed for possible inclusion in the corporate program.
Corporate PR is that related directly to the chief officers' level. It is responsible for the corporation's reputation. Financial reporting, controlled largely by regulatory agencies, is the major end of corporate PR.
Public relations convert the cold figures of corporate reports into human terms that can be understood by the various publics: employees, shareholders, and consumers or users.
How do you handle figures of annual reports in stories to local or national media?
What type of annual report is prepared for the big corporation? The small company? What type of brochure?