Knowledge Centre:
News Digests

Stay abreast of what’s happening internationally with developments in corporate public affairs. Here is news that you may find useful and interesting:

United Airlines incident: What went wrong? ND


Joel Gunter, BBC News Washington, April 2017

United Airlines has found its corporate reputation sink to a level lower than refusing to allow teenage girls from travelling in leggings. The busy CEO Oscar Munoz came out to barely apologise to the man (who claimed to be a doctor) for being assaulted on a flight for which he had bought a ticket. While overbooking is a common practice for airlines which regularly factor in the amount of people who will miss the flight, which ultimately costs the airline money. On Sunday passengers were informed that four of them would be required to give up their seats for four United Airlines staff members. The passengers were initially offered $400, a hotel room for the night and a flight the next day, this was turned down, so the offer was increased to $800, this was also turned down. Due to the rejection, four passengers were selected (with priority given to frequent fliers and higher-fare-paying customers to continue on the flight). Three passengers accepted being selected and voluntarily left the plane, while the fourth who said he was a doctor refused as he had to see patients in the morning. Due to this, he refused to comply with the airline manager, resulting in him being manhandled off the plane. Of course, in 2017 all passengers on the aircraft had phones to video and photo the bloodied man being dragged off the plane by the Chicago Department of Aviation. Being onboard the aircraft increased the poignancy of the images taken by other travellers, if United Airlines needed to remove customers it should have never occurred inside an aeroplane, but at the gate. The man who was dragged off the plane was never offered the maximum possible $1,350 compensation or had his occupation as a doctor taken into account. Mr Leocha, the founder of the passenger advocacy group Travelers United, stated "The only lesson here for passengers is when security get on throw up your hands, because otherwise, you're going down the aisle with a fat lip”. This incident is now a globally shared advert for both United Airlines and the way the Department of Aviation handle disputes. For more information see: www.bbc.com

The ROI Communication Benchmark Report 2017 ND



The 2017 communication benchmark report incorporates ROI’s experience working with Fortune 500 companies over 15 years, with the report compiled from the responses of 115 leaders representing 4.5 million employees. The benchmark report uses a framework to evaluate the effectiveness of communication organisations. The benchmark model consists of three components, Leader and Manager Communication, Open Communication Culture and, Communication Infrastructure. Findings of the benchmarking project showed a changing, and challenging environment for executive leadership. ROI found that only 27% of participant organisations provide managers with communication training, which explains why the number of employees who perceived there ‘managers as credible sources’ went down from 81% in 2015 to 68% in 2017. The changing executive climate is mirrored by employment trends with participants in the ROI benchmark report having on average 3.8 full time employees per 10,000 employees. ROI Communications developed three recommendations from the data collected, 1. Develop and implement a manager communication strategy: With manager credibility progressively getting lower supporting and enabling managers to be strong communicators is essential. 2. Create a measurement strategy that supports your goals: Measurement has to be a priority to improve practices and to predict financial performance. 3. Make your content count: Quality and consistency is essential to gain views, capture the attention of your employees to actively communicate. The full report is available at: www.roico.com

How Pharma Can Fix Its Reputation and Its Business at the Same TimeND


Damiano de Felice, Harvard Business Review, February 2017.

Pharmaceutical companies are under steadily growing pressure. Drug discoveries are becoming less commonplace with investment in R&D becoming a less rewarding proposition. To counter this profit is being found through consistent price increases, with Credit Suisse discovering 20 leading global pharma companies gained 80% of their growth in net profits in 2014 from price hikes. Due to this, public perception of pharma companies is at an all-time low with US citizens holding no other industry in lower esteem (August 2016 Gallup Poll). The mix of low potential for growth and exceptionally low levels of reputation has placed pressure on management to move away from a price-focused strategy, to facilitating higher levels of access to products. With emerging markets predicted to contribute 50% to 75% of potential growth in the next four years working with governmental bodies to allow greater accessibility to these markets and ensure sustainability of demand appears to be a win-win opportunity. This plays strongly into the requirement for the industry to stamp out unethical or exploitative practices to gain and maintain access to markets in areas with higher levels of government control. To obtain access to these markets pharmacology companies will be required to enhance their corporate reputation in both the developed and developing world, and also gain access to the best talent and regain public trust. For more information see: www.hbr.org

Travis Kalanicks Uber-apology ND


The Economist, March 2017

Maintaining good corporate reputation is a challenge. From PWCs Oscar disaster to Kalanick’s swearing at an Uber driver, the maintaining of reputation is challenged in unforeseen and undermining ways. An accountancy giant failing to maintain organisation over two envelopes, and a CEO of a service designed to empower workers previously seen as being in servitude of unjust taxi companies swearing at an employee, is a bad week for both PWC and Ubers corporate reputation. Uber has experienced the perfect storm, from the #deleteUber, to growing reports of sexual harassment and Kalanicks un-ceremonial resignation from Trumps Business Advisory Council, consistently undermining Ubers reputation. Uber requires a good public face as it fights regulators throughout the world, and contemplates an IPO. A Chief Executive verbally dressing down an employee is not going to buy any favour. For more information see: www.economist.com

It's no wonder we view Coles as a faceless food factory that it's OK to rip off. ND


The Sydney Morning Herald, Holden, February 2017

The self-checkout machine has become a more and more common sight in supermarkets around the world as we march slowly towards a dystopian future. We have been slowly trained to scan our food and then use a loyalty card to save $.000000001 cent per $1,000 spent while simultaneously allowing our movements and purchase history to be traced by faceless corporations. You may have sensed, like the writer Holden, I am not a fan. The checkout line at a supermarket gives one if not two people employment who would potentially struggle to find it elsewhere, while also facilitating, a necessary, bare minimal amount of actual social contact. The act of implementing the self-checkout has predictably led to the theft of stock becoming entirely commonplace, and the unintended adversarial atmosphere between customers and supermarkets. Removing social interaction in traditional areas will affect both the people who worked these jobs, (traditionally individuals with lower levels of education working part time) and people living in cities who interact with others at a constantly diminishing rate. This trend is terrible business practice. Bring back supermarket cashiers. For more information see: www.smh.com

The world’s biggest gamblers ND


The Economist, February 2017

Gambling is one of the economy’s most innovative and fastest moving sectors. The average Australian is predicted to lose $990 per year (40% higher than Singapore), because of this it is also a lucrative industry. Due to Australia’s relatively small population of around 29 million losing $18.3 billion annually the level of loss is high by global standard. The vast majority of this money is lost through automated gambling machines which are relatively unregulated when compared to the rest of the world. The USA still suffers the largest losses, posting $116.9 billion USD in losses annually while China is not far behind with $62.4 billion USD lost annually. Both these nations lack the advancements of the Australian industry with US regulations around online gambling being strict and forcing sports betting into illegal channels. China similarly has clamped down on gambling due to extensive corruption crackdowns, essentially drying up the casinos of Macau with the nation's gambling dropping by 20% in 2015. The future of gambling it appears is yet to be exploited in Japan with casinos recently being allowed in the country, leading H2 Gambling Consultancy to believe that the Japanese market will swell by up to 50% within the first year. Good for operators, less so for the punters. For more information see www.economist.com

Why Sydney property is cheap compared with Shanghai.ND


Grigg & Murray, Financial Review, March 2017

Both Sydney and Melbourne have seen a surge in Chinese buyers purchasing apartments. This has led to the question, why? Australia appears relatively affordable compared to China's major cities. In China, median apartment prices in Beijing, Shanghai and Shenzhen are at least 15 percent higher than those in Sydney, and 50 percent higher than in Melbourne (albeit with poor quality public spaces, air quality and drinking water). For more see: www.afr.com.au

Is It OK for a Bunch of Men to Lead a “Women in the Workforce” Initiative? ND


Wittenberg-Cox, February 2017

Pinkwashing, the act of a company presenting itself as being supportive of female issues to promote its products or services is not new. While 75% of corporate CEOs currently put ‘gender’ and female representation on their agenda of top 10 issues, little appears to be adequately addressing the problem of women in leadership. This has occurred to the extent that men must actively invest time and effort to ensure higher levels of diversity on strategic roles. EY is regarded as one of the most progressive organisations, yet it still has only three women out of 17 in the most senior positions, who all occupy staff jobs (such as HR). Wittenberg-Cox breaks down companies into three categories of how they approach gender issues; the progressive who have a mix of genders in all roles, the pretending, those that claim but don’t do, and exploit the image of gender representation and the attitude that ‘anything is better than nothing’ and, the plodding, those that just refuse to engage. The current political environment in the US does little to enhance the case of gender disparity with Donald Trumps cabinet consisting of four women (out of 17), and Betsy DeVos being one of the four, a major Republican donator, and by far the least qualified. Issues like this are common with Audi’s recent Super Bowl advert about gender equality forgetting that people possess Google and could easily see that the Audi board is 100% male. With 55% of American university graduates being female, and Australian and UK University output being similar gender equality at the high level will be required to attract qualified graduates. Also, above all, the attitude and thinking of men is changing rapidly with knowledge of equality throughout society being unavoidable. For More Information see HBR.com

Thanks to Donald Trump, Corporate Social Responsibility Just Became Mainstream. ND


Triple Pundit, February 2017

President Donald Trump is a highly unlikely catalyst for the broad scale adoption of corporate social responsibility, but his attempted travel ban has forced businesses to protect their most vital assets, their employees. This move has forced companies to protect both their bottom line and their perception in greater society. This could be seen through Lyft and Google's immediate disapproval of the policy due to the cultural and religious implications, but also because it will profoundly impact the companies’ ability to operate. Active criticism of policies like the travel ban is going to become a requirement to ensure engagement and loyalty of employees and their wellbeing inside the business with ‘conscious capitalism’, embodied through Starbucks commitment to hire 10,000 refugees, becoming crucial to both perceptions from within and out of the company. With the attempted passing of the ban, Donald Trump may have helped those who he wished to ostracise immensely. A poorly planned policy has made CSR an essential part of corporate strategy, and made opposition to poor policy an integral part of everyday business practice. For More Information see TriplePundit.com

Taking it to the top: Engaging corporate leadership in public policy. ND


Foundation for Public Affairs, 2016

Public policy engagement is becoming a crucial part of a CEO or C-Suite executives skill set with policy creation rapidly becoming far more of a dialogue. Ultimately, if you are the CEO or in a position of responsibility stakeholders, shareholders and governments are not only interested but to an annually greater extent, require it. Using clear case studies the Foundation for Public Affairs creates a clear case for the positioning of the C-Suite, and when involvement is truly required. When ‘failing to engage can put approximately 30% of the value in any company at risk’ (McKinsey in Foundation for Public Affairs), knowledge surrounding public policy engagement is a necessity. Training C-Suite executives to actually interact, and handle the situation which requires public policy engagement is a complicated affair. The Centre for Corporate Public Affairs can assist in professional development to help in the incorporation of political, stakeholder and shareholder relationship thinking into everyday decision making.

Trump presidency begins with defense of false 'alternative facts'ND


Jon Swaine, Guardian, January 2017

Trumps presidency has undeniably had a rocky start with his inauguration met with ‘the nation’s biggest political demonstrations since the Vietnam War’. Yet, the first enemy of Trump is apparently false reporting and the ‘press’ with the ‘largest audience ever to witness an inauguration, period’ (Spicer, 2016) supporting Trump. While this claim has been passed off as ‘alternative facts’ by Kellyanne Conway, a senior White House aide, shows a trend of misinformation and media mistrust. The confidence to argue and dispute the size of a crowd as it is, accurately, reported in the press potentially shows a trend wherein negative reporting around anything to do with the new POTUS will be passed off as a lie, with an ‘alternative truth’ quickly provided. This could prove to be a difficult period for a corporate affairs practitioner. For more information see: www.theguardian.com

How to write emails with military precisionND


Kabir Seghal, Harvard Business Review, December 2016

Efficiency in emails has become a major issue in recent years with recent legislation in France showing the requirement to make communication more efficient, and less frequent. Seghal recommends using a keyword in the subject line, such as ACTION to show that action has to be taken immediately or SIGN showing a signature is required. This subject line categorising is combined with ‘BLUF’, bottom line up front which is a short sentence describing exactly who, what, where, when and why the email has been written. Military efficiency and being economical with words Seghal argues is essential to proper email practice. For more information see: www.hbr.com

Thanks to Public Relations, Trump, CalExit and anything is possible. ND


Robert Wynne, Forbes, December 2016

Wynne highlights that 2016 has been the year of the impossible, and the year of public relations, ‘the business of persuasion’. DiCaprio won an Oscar (for the Revenant, questionable at best), Trump won the election and Britain will leave the EU. The New York Times reported that Trump received $2 billion in free advertising through media coverage to bolster his campaign with the old rules of PR, such as not insulting almost everyone, becoming antiquated. While this creates an unpredictable time, after multiple events which were assumed to be completely unthinkable, it also arguably creates unprecedented positive or negative opportunities. The combination of Brexit and Trump will undoubtedly create a new trade, political and cultural environment for the Public Affairs professional to operate within. For more information see: www.forbes.com

American regulators accuse Fiat Chrysler of emissions cheatingND


The Economist, January 13th

Fiat Chrysler appears to be joining Volkswagen on the list of car manufacturers caught cheating emissions regulations. 104,000 vehicles have reportedly been fitted with engines that use illegal software to cheat the system, in almost exactly the same way as Volkswagen. VW is being fined (on criminal charges) for $4.3bn with the final bill for cheating the emissions standard regulation being predicted to be around $20bn. The discovery of the cheating software at Chrysler-Fiat caused an immediate 17% slump in share prices and with the recent arrest of VW exec Oliver Schmidt the US Environmental Protection Agency have sent a clear message that there will be accountability for breaking emission standards. For more information see: www.economist.com

Skills and Strategies: Fake News vs. Real News: Determining the Reliability of Sources ND


Katherine Schulten, The New York Times, October 2015

News literacy is a new field, rapidly becoming increasingly relevant in today’s media environment. The digitisation of news has facilitated an absolute flood of information which is not only accessible but forced onto people through Facebook, Twitter and other sources. If you doubt the danger of this relatively new development simply google ‘Pizzagate’ and learn of a 28-year-old firing an assault rifle in a Washington DC pizzeria due to a fake new story. While fake news has played a prominent role in the political sphere so far, it is only a matter of time before it becomes an influence on corporate reputation. Legitimate journalism has become in-effect polluted with misdirection and ‘trolling’ to the extent that even the 2016 US elections were arguably disrupted due to constant fake news stories. While misinformation and statistical manipulation is nothing new (The Children Overboard affair or the recent Boris Johnson NHS Brexit bus), it has never occurred on this scale. Katherine Schulten provides a quick litmus test, made available by The New Literacy Project, to determine the legitimacy of sources. She suggests if in doubt use FactCheck.org, Snopes.com and for Australia ABC Fact Check to determine legitimacy. For more information see: www.thenewsliteracyproject.org

Nokia’s Next Chapter ND


McKinsey Quarterly, December 2016

The only way a company survives according to Lou Gerstner, former IBM CEO, is by changing 4.5 or even 25 times over 100 years. Nokia embodies this survival spirit starting as a lumber mill in Southern Finland and transforming into one of the major producers of mobile phones in the 20th and early 21st century. Described as a ‘phoenix’ rising from the flames of the iPhone and cheaper handsets, Nokia’s survival is attributed to new CEO Risto Siilasmaa commitment to developing trust among the board and treating all employees with fairness and transparency. Nokia now aims to expand within China through licensing its name to established HMD for 10 years. The full interview with CEO Risto Siilasmaa is available at www.mckinsey.com

Why the French email law won’t restore work-life balance ND


Michael Mankins, Harvard Business Review, January 2017

The right to disconnect law was enacted on January the 1st in France, the law prevents companies (with more than 50 employees) from contacting staff after hours. When the average senior executive receives 200 or more emails per day and the average supervisor devotes 8 hours every week to email communication, a full business day. HBR estimate that 25% of the time is used to respond to emails they shouldn’t have to. Mankins argues that while the law is commendable, it fails to take into account that preventing emails at the weekend will simply force employees to work during the weekend due to the requirement to devote additional time to emails at work. The clear solution to this is to eliminate the 25% of emails which are irrelevant and prevent it from becoming a more disruptive issue through the removal of the ‘reply all’ function. Ultimately greater amounts of knowledge and leadership are required to enhance worker productivity and free time. For more information see: www.hbr.com

What so many strategists get wrong about digital disruption. ND


Frank Vermeulen, Harvard Business Review, January 2017

Vermeulen outlines the four top disruptors to industries through the insertion of the ‘digital world’. Firstly the issue with the concept that winner takes all, and that significant market presence equates to success. Seen through apps like Uber which have focused on having a strong presence, yet consistently have suffered losses as App loyalty doesn’t exist. Just because a taxi driver drives for Uber, doesn’t mean he doesn’t drive for Lyft. Markets are now vast and able to sustain multiple players. The second misconception is that the digital disruption will render old technology obsolete. New technology will act as a complement to existing technologies with strategy needing to be based around the idea that new developments will not rapidly, drastically change the way tasks are undertaken. The third wrong assumption is that enhanced digitisation will act to remove geographic distances, which it arguably has not done to as great an extent as expected. Human interaction, particularly for HR and consultancy, requires face-to-face meetings, it is unlikely technology can ever replace this. The fourth wrong move is the over-estimation of the speed in which change will occur. We are constantly told the world is rapidly changing and technology is constantly evolving, but is it, is it? The rate of change is arguably not increasing at all and organisations basing strategy on future opportunities, like INGs investment in the Second Life fad. Create a strategy based on the context you are in, don’t assume uniformity or overnight technology gold-rush opportunities. For more information see: www.hbr.org

New French Law Bars Work Email After HoursND


David Morris, 2nd January, Fortune.

France has always placed workers rights and wellbeing as a crucial part of the economy, with trade unions being a major political actor. The recent ‘right to disconnect’ law may appear to be a major win for workers throughout the nation yet, it's passing in May was also accompanied with measures to expedite the sacking of employees with the ultimate intention being to liberalise the French economy further. The law is designed to prevent burnout which is mutually beneficial for both the employee and the employer with Stanford University estimating the cost of stress costs the healthcare system between $125 and $195 billion a year in the US with $48 billion being directly attributed to stress. The large healthcare costs are usually passed directly onto employers with the removal of an important source of stress out of office hours being an effective way to prevent raising healthcare costs. For more information see: www.fortune.com

Deliveroo orders in lobbying helpND


David Singleton, 7th December 2016, Public Affairs News

Delivery giant Deliveroo (mopeds with the kangaroo) has fully utilised the growing ‘gig economy’ to create high levels of market presence in the UK and Australia. Currently, a case is being prepared by members of the British Parliament to investigate working conditions and pay in the growing informal economy. Deliveroo has stood out due to its decision to inform workers that they could not be recognised as staff members of the firm while a pay row is ongoing with its couriers. This court case will prove to be a crucial litmus test for both the UK and Australia who have similar sized informal economies and policies in place to protect workers. Investigations are occurring into working conditions at Asos and Sports Direct, and the treatment of couriers at Uber and Hermes. The inquiry will undoubtedly have knock-on effects that will influence a number of industries current staffing practices. For More information see: www.publicaffairsnews.com

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