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drjohn11aDr. John Psarouthakis, Executive Editor of, Distinguished Visiting Fellow at the Institute of Advanced Studies in the Humanities, University of Edinburgh, Scotland, publisher of and Founder and former CEO, Industries, Inc., a Fortune 500 industrial corporation

Public relations is an organizational issue you must directly and continuously confront to assure your company’s success. This article explains more about what we mean by public relations and how to plan for it. Main Reference is the “Dynamic Management of Growing Firms”, University of Michigan Press,


Ask yourself and your managers the following question:

Question 12-1: Company image and reputation. How do you rate your firm’s public image and goodwill–your firm’s reputation?

[1] Very high: Top 2% of the industry

[2] High: Within top 10%

[3] Well above average: Top 25%

[4] Above average: Top one-third

[5] Average: About the middle

[6] Slightly below average: In the top two-thirds

[7] Well below average: Bottom one-third

In our study 47% of the CEOs rate their firm’s reputation among the top 2 percent of the industry!


Most start-up firms follow a common sequence.  Initially, the focus is on competitors, customers, and suppliers.  With growth comes a broadening of attention to government regulatory bodies, the media, stockholders (including family), and the public at large.  Relations with competitors and customer relations, for the most part, are an aspect of market strategy.  Relations with suppliers are an aspect of resource acquisition.  We lump the other categories together, as diverse as they are, because they are not a direct part of the buying-selling cycle.

Competitors warrant close scrutiny.  They are a source of information and skilled transferees, and they may occasionally provide capital for joint efforts.

Likewise, government regulatory bodies demand attention, because the scope of their involvement in management issues (hiring, environment, health and safety, etc.) increases relentlessly at federal, state, and local levels within the United States.

The immediate community rarely goes unaffected, and therefore must also be addressed.  Besides the possibility of profound effects on the immediate community, the growing firm must recognize the public as a resource, valuable for such things as recruits and information.

About half of our firms are family-owned, suggesting yet another primary factor to consider–family itself.  Interpersonal dynamics among invested and non-invested family subgroups can introduce stresses.  Books, journals, conferences, and institutes are being formed around the unique challenges of the family


A final consideration is the consumer-public.  Of primary importance is the firm’s reputation.  The long-term reputation of the firm is an obligation that knows little compromise.  The very fabric of the firm–future employees, customers, and investors–is on the line.


Based on our research, corporate image is a good predictor of effectiveness.  Although not linked to profitability, per se, firms with better corporate or public image tend, nevertheless, to have greater liquidity, steadier sales growth, smoother work flow, better acquisition of resources, more commonly shared values, and better morale.  Good public relations is also linked with more effective allocation of resources and better mastery of technology, including better technical skills, performance quality, and productivity.


Although in our research study we treated other issues in the Dynamic System Planning Model with more depth, we did find some links between general management practices and improved company image.

The CEO: Involved with Public Relations

As Table 12-1 shows, about two-thirds of the firms involve managers in public relations in general, and government relations, in particular.  When the top 28 firms are compared with remaining firms, top performers are somewhat more likely to centralize activities related to government and public relations.  Taken together, these findings suggest the importance of direct CEO involvement with these issues, whether or not other managers are involved.

Work-Flow Practices and Public Relations

Employees who are clear about jobs and understand company goals can provide better service, thus fueling a firm’s reputation.  This common sense notion is definitely supported by our interview data.  Coordination techniques that work well to promote work flow–such as the use of work standards, conversation, and chain of command–also promote a better image and reputation in the community.

Companies that monitor profits and costs, comparing actual performance to set standards, also have a better reputation.

Corporate Values Linked with Public Image

Firms whose CEOs share specific values with managers, whatever the value, tend to have a better public image.  Firms also tend to have better reputations where middle managers see quality as highly valued.


All these findings suggest that reputation is closely linked with successful management of throughput issues–especially work flow and human relations.  Employees are emissaries of goodwill…or bad blood–throughout the community.  Image suffers when the CEO shuns a leadership role in this area and when employees are unsure of management expectations regarding reputation and image.

In short, the management of the reputation of the firm is integral to the overall management of the firm.  It appears to be an outgrowth of effective work flow management and human relations and is associated with many aspects of performance.

Table 12-1: Who Handles the Public and Government Relations Issues

Managers      Involved %                             Involving  % Where CEO is directly

Public Relations                   50     66                       85         78

Government Relations       60      70                       73         60

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