issue management

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I’m working on a research & summaries writing question and need an explanation and answer to help me learn.

Question #1: 
Define issues management. Give an example of two issues facing an organization that you choose, e.g., automobile, computer, charitable aid, consulting.
Question #2: 
Outline the issues management process. Describe very briefly how you would organize the steps in an organization.•
The Handbook of Strategic Public Relations and Integrated
Communications, by Clarke L. Caywood, 2nd edition (2012), McGrawHill Education.
CHAPTER 21
ISSUES MANAGEMENT METHODS FOR REPUTATIONAL MANAGEMENT
James E. Arnold, APR, Fellow PRSA
Chief Executive Officer, Arnold Consulting Group
The environment in which all organizations exist, especially corporations, has changed
dramatically since Mr. Vanderbilt, the founder of New York Central Railroad, offered his oftquoted opinion about public opinion. Today most CEOs and leaders have learned to speak like
Mr. Page, the first vice president of public relations at AT&T—but many CEOs secretly agree
with the commodore. What changed in the intervening years between Vanderbilt and Page?
Public opinion became a force to be reckoned with in American society.
Ida Tarbell’s Rise of the Standard Oil Company (1904) depicted the rise of John D.
Rockefeller’s integrated oil producing, transporting, refining and marketing juggernaut.
Standard Oil became the world’s largest refiner, operated as a major company trust, and was
one of the first multinational corporations until it was broken up by the Supreme Court in 1911.
Rockefeller, the richest man in modern history, defended his company’s business strategies,
practices and tactics as “lawful” but he forced many smaller businesses out and became very
unpopular with the public—thanks in large part to Tarbell’s book, its serialization in McClure’s
magazine and the heyday of muckracking “yellow journalism” fostering a rising resentment
against robber-baron capitalism.
Even this early in the twentieth century with the rise of national newspaper chains, it was
not unusual for companies to employ “press agents” to tell their side of a story and rebut
criticism. In 1906 Ivy Lee, a former journalist, represented the coal mining bosses, who were
facing a big strike and enjoyed little support in the press because the unions had built good
relations with reporters in a previ ous strike. Lee saw the emerging mass media as a conduit for
his client’s point of view as well as that of critics. Unlike other press agents, he wanted to
organize ongoing campaigns of information on behalf of his clients, not just engage in tactical
skirmishes. He sent a steady stream of statements to newspapers, laying out the mining bosses’
case and responding to criticisms and allegations—earning his clients a fairer hearing going
forward.
Lee’s “Declaration of Principles” looked forward to the ideas Arthur Page would use to
counsel his colleagues at AT&T: “This is not an advertising agency… Our plan is frankly, and
openly, on behalf of business concerns and public institutions, to supply the press and public
of the United States prompt and accurate information concerning subjects which it is of value
and interest to the public to know about.”1
When Page offered his “public permission, public approval” guidance in 1947, he did so
with the full understanding of the importance of public opinion to the success of AT&T’s
enterprise. Since AT&T chose to be regulated as “a natural monopoly,” Page wisely understood
the downside of being “king of the mountain” and advised in favor of a business model called
“universal service” (emphasis on service), which would put a telephone in virtually every home,
making it a utility, and keeping the residential charge low with social-based pricing and raising
the charge on business accounts as a cross subsidy. In this way Page made the largest possible
number of people part of, and proud of, the Bell Network—the world’s finest telephone system.
From Page’s day until the present, the matter of dealing with public opinion has grown
increasingly difficult and complex for all corporations, organizations, institutions and even the
government. Our society is more multicultural, our interests more narrowly drawn and often
advanced at the expense of competing interests; we seem sometimes to lack a central narrative
that would help us find the grace to “disagree without being disagreeable.” You hear more win–
lose than win–win as outcomes of conflicts. There was a point when public relations would be
thought of simply as “telling the story of your organization in terms of the larger public interest,
thereby establishing its credibility and legitimacy.” But today, defining public interest is no
easy matter. One person’s sacred cow is another’s Big Mac.
For example, is it more in the public interest to protect inefficient producers in the United
States with government tariffs and trade quotas, thereby saving jobs and businesses at home
but penalizing consumers who have to buy more expensive goods (perhaps of lesser quality)
than would be necessary without protection of these markets? Or is it in the public interest to
allow the free flow of goods and services into reciprocating economies even though it means
losing jobs and businesses at home and creating ill will with some unions but benefiting
consumers who will have a greater range of choices and prices? Clearly, making public policy
choices in a pluralistic society requires the wisdom of Solomon and the karma of a
schizophrenic Zen master: “I am at two with the world.”
From within this attitude-intensive environment, hotly wired, rich with proliferating media,
driven by technology slicing-and-dicing audiences into ever smaller segments, searching for
common ground while spinning outward like a centrifuge on the globe of earth—here we begin
to explore issues management and how it has changed since Ray Ewing wrote his chapter
“Managing Trends through the Issues Life Cycle” in the 1997 original Handbook of Strategic
Public Relations & Integrated Communications.
Ray was intimately involved in the early beginnings of issues management, working closely
with Howard Chase and the Public Affairs Council (PAC). He was the first senior officer to
have issues management in his corporate title, and at Allstate Insurance Companies he worked
closely with the CEO Archie Boe, who was to be an early adopter of issues management,
especially as it could be partnered with strategic planning. Ray offered this quote from his boss:
“Issues management and strategic planning are both born of the dynamic tradition in American
business management that rejects the passive approach of hoping to know the future and merely
adjusting to it, for an affirmative posture of creating the future and fitting the corporate
enterprise into it.”2
From the very beginning, those who pioneered the development and definition of issues
management considered it to be a management process concerned with public policy foresight
and planning for an organization in the private sector. It is not the management of issues
through the public policy process in our democracy or the management of the public policy
process itself. Instead, it is the manage ment of an institution’s resources and efforts to
participate in the successful resolution of issues in the public policy process that will affect the
future viability and well being of the organization and its stakeholders.
The term issues management was formally and publicly coined by W. Howard Chase on
April 15, 1976. That is the date of volume 1, number 1, of his newsletter, Corporate Public
Issues and Their Management.
The newsletter, now usually called CPI, stated that its objectives were “To introduce and
validate a breakthrough in corporate management design and practice in order to manage
corporate public issues at least as well or better than the traditional management of profit-center
operations.”
Chase went on to say, “The thesis and impact of CPI inevitably led to fundamental revisions
of costly and divisive practices of traditional line-staff management. There can be today only
one management with one objective: survival and return on capital sufficient to maintain
productivity, whatever the economic and political climate.”
Chase was 66 years old when this newsletter came out in 1976, having retired the previous
year as public affairs vice president of American Can Company. In 1977, he and his associates,
Barry Jones and Teresa Yancey Crane (now the publisher of CPI), created the first issues
management process model, which involves five steps:
1. Issue identification
2. Issue analysis
3. Issue change strategy options
4. Issue action programming
5. Evaluation of results
Early full-time practitioners of issues management have always called Chase the “father” of
issues management. He has more than earned that title for coining the term, publishing the first
newsletter on the subject and creating the first issues management process model.
• Issues management as a new process management concept evolved from the public relations
and public affairs (PR/PA) professions after Chase coined the phrase in 1976.
• Chase did not “invent” issues management (although he created the name) because, from Ivy
Lee’s time to 1976, counselors of senior management had been “doing” issues management—
but on an ad hoc, hit-or-miss basis under various names. Chase moved the field to a foresight
and planning basis from the ad hoc practice.
• Chase’s basic concept of issues management (for senior management’s use in integrating
the management of public policy and profit matters) moved public relations/public affairs
professionals who could practice issues management to the center of corporate or
organizational management.
So long as PR was confined to media relations, practitioners were operating at the outer edge
of the organization. In the 1960s, when PR and government relations were combined to create
a public affairs function, they moved closer to the center of operations because senior
management became more involved in decision making. With the evolution of issues
management (public policy planning) as a companion to strategic planning (profit planning),
again they moved to the heart of the company where senior management focuses”
According to the Institute for the Study of Issues Management at the University of Houston,
over 240 scholarly and professional articles, scholarly books and PR textbooks dealing with
issues management have been published. This is proof to Professor Robert Heath, director of
the institute, that issues management is a new discipline that has emerged, not to replace public
relations but to strengthen it. Most professional practitioners agree, and formal courses in issues
management have appeared at universities teaching public relations as well as at some business
schools.
Many CEOs have seen the advantage of an issues management system since Chase first gave
it a name. By one count, over 200 issues-related titles could be identified in as many companies,
and more than 60 public relations and management consulting firms were offering issues
management services.
The earliest companies adopting the technique were mainly the regulated industries:
chemicals, petroleum, banking, insurance and so forth. That is, the earliest practitioners were
found in companies like Allstate, Bank of America, Chase, Dow Chemical, PPG, AT&T,
Rexnord, Sears, Monsanto, Union Carbide and various electrical utility companies. However,
over time, this management system spread to companies in all sectors.
Although Howard Chase argues that issues management is a new profession that transcends
the PR/PA profession, we consider issues management to be one of the major functions that
the PR professional can perform today. It is of equal or more importance than our other major
functions: media relations, marketing public relations, investor relations, public affairs,
employee communications, community relations and corporate philanthropy. The addition of
strategic planning and issues management to our duties in the past decades completed our
maturing into a modern profession.
THE RELATIONSHIP OF ISSUES MANAGEMENT TO BUSINESS SCHOOL
STRATEGIC PLANNING
Issues management and strategic planning together form the planning platform on which
CEOs and their senior management team can stand to strategically manage their organizations.
While issues management focuses on public policy research, foresight and planning for the
organization, strategic planning is concerned with business research, foresight and planning for
the organization. The first is concerned with policy planning; the second is concerned with
profit planning. This chart illustrates what each system is concerned with or can affect.
Under this construct, issues management is concerned with plans that groups outside the
corporation are making in the sociopolitical and economic environment (the public policy
process) that would influence the corporation’s future and viability. It is also concerned with
the outside plans it must make to counteract or support the plans of others as the corporation
seeks to participate in the public policy process where the issues will be resolved.
Strategic planning is primarily concerned with the corporation’s internal planning for its own
business future, as it seeks to meet and beat its competitors in the economic arena.
On the time frame, issues management is primarily concerned with issues that will be
resolved 12 months to 5 years in the future. (Of course, it monitors issues that will not be
resolved for many years into the future—and brings those into the system as they move toward
the five-year time frame.)
Because of the shorter time frame and the need to react quickly to public issues, issues
management is more concerned with adjusting current operations and operational plans to best
benefit its stakeholders.
Issues management’s first responsibility is to make sure the corporation is well defended
against whatever tactic or move the many organized actors in the public policy process choose
to execute. This is designed to meet the first planning and management goal of every CEO:
“No surprises!”
Issues management’s next goal is to search out inherent opportunities in issues others
generate or the company decides to generate in the public policy forums.
The primary duty of strategic planning, on the other hand, is to seek economic opportunities
and to find ways to exploit them with internally created business plans.
Thus, issues management is concerned with achieving the best resolution for its company’s
stakeholders in a contentious arena where bargains are struck. Strategic planning is concerned
with harvesting the benefits of marketing that its plans have created.
Both issues management and strategic planning are guided by the corporation’s mission
statement, which attempts to tell who the corporation is and what it hopes to become, and
makes commitments to its primary stakeholders—customers, employees, the general public
and shareholders. For issues managers, the company’s mission statement frames the issues they
must seek.
Issues managers scan for, monitor and seek resolution only of those issues that might have
significant impacts on their company’s stakeholders, and hence the company’s future.
The practice of issues management has always required an understanding of how the laws
and regulations get made at the local, state and federal level in the United States, and by
extension the processes in place in other countries around the world to accomplish the same
purposes.
The public policy process in a free society is the meeting ground of the public sector (federal,
state and local governmental units) and the private sector (citizens, corporations, organizations,
etc.). It is the process, facilitated by the media, where the public’s aspirations and
dissatisfactions work their way up through public issues debates into law and regulation, if they
are not voluntarily resolved in the private sector.
The social control of business is affected through this mechanism. It has only been in the
past three decades that business has come to realize that it is not only controlled by the
economic environment, but is in fact effectively controlled through the broader social and
political environments. This realization forced the development of issues management to give
corporations a rational way to manage their participation in the process.
The public policy process can best be understood through a simplified graphic model (Figure
21.2), developed by Ray Ewing from an earlier Yankelovich, Skelly and White description of
the process.
The base of the pyramid is where public dissatisfactions with the present emerge, prompted
by perceived injustices and exclusions, new aspirations, new concerns about the environment,
new ideas relating to “rights” and “entitlements” or other issues. But at this level, nothing
happens until it gets a name and visibility, when the media can take it up and talk about it,
broadcasting the issue of concern beyond those affected.
The media do not create issues unless there is an underlying reality, but they are essential in
issue development and its life cycle. However, nothing really happens to the issue until an
organized group takes it up and adds it to its action agenda.
Once an organized group decides to add it to its agenda, the pressure group—a public interest
group, Chamber of Commerce, trade association, religious institution, political party or other
group—seeks to mobilize social and political forces beyond its own membership. Because the
media become critical at this point, the pressure group holds demonstrations and public
meetings, making headline-grabbing charges. When this happens, the pressure group becomes
the issue champion and, in effect, co-opts the issue, defining it as it wishes.
Frequently, the pressure group approaches a leading company as representative of a targeted
industry, or some service organization, demanding a meeting to negotiate the issue, complete
with notices to the media. If the company or other organization in the private sector does not
respond, the pressure group moves on to the appropriate regulatory agency, demanding public
hearings. Again, this is accompanied by notices to the media.
The regulatory agency, because of the publicity and accompanying demands of the pressure
group, will take notice of the issue and consider holding public hearings to investigate the
charges. These actions generate more media attention. If the agency decides that new laws and
regulations are needed, it moves the issue to the elected legislative bodies—the U.S. Congress
or state legislatures.
Finally, the Congress or the state legislature, standing at the top of the public policy process,
considers the conflicting demands and the interests of key publics. The legislative body will
pass a new law if it thinks a law will resolve the problem the issue represents, and if it thinks
there is sufficient public consensus for a legislative solution. If the legislators do not think the
issue can be resolved or that there is not sufficient public consensus for any one solution, they
will not act. In effect, they kick the issue back down into the public arena, hoping the issue will
be privately resolved through voluntary actions in the private sector.
If the Congress or state legislature decides a law is needed, it passes one. This law and any
accompanying regulations come down like a straitjacket on the business community.
As many commentators have pointed out, the business community gets involved in the life
cycle of an issue far too late—at the regulatory or legislative phase when business is considered
the problem, not the solution. That is why business is famous for killing legislation, not
advancing broad solutions. This was true before the issues management system was developed.
Researchers have found that, at the federal level, it takes from 6 to 12 years for an issue to
emerge at the general public level before legislation is passed. (At the state level, legislation
can be passed in 1 to 2 years under certain conditions.)
Issues management is designed to take advantage of the time lag so that senior management
can develop policy positions and supporting action programs. It sets up systems to monitor all
stages of the public policy process stream to identify emerging and developing issues.
ISSUE MANAGEMENT TACTICS: 2011
Without question, the most fundamental aspect of issues management is summed up in the first
sentence of the book How to Grow Asparagus: “Dig a trench—three years ago.” Or as they say
in politics, “Don’t wait until you need a friend to make a friend.” Or as the lobbyists are famous
for saying: “You can’t just show up at the office of a government official, lawyers and experts
in tow, and expect to get a fair hearing on the ‘merits’ from your self-serving point of view.
First, you have to lay a little pipe into that office.”
The practice of issues management is usually described as a process over time that begins
with discovery and ends with a resolution at the most advantageous or possible level in the
issue cycle. Here is how Teresa Yancey Crane, a founder of the Issue Management Council
(IMC) and a team member with Howard Chase who developed the first issue management
process
model,
describes
the
process
in
January
2011
(issuemanagement.org/learnmore/origins-of-issue-management):
We have always emphasized that this model is not conclusive. It will vary according to
the specific needs of any user. The primary purpose in our exercise is to demonstrate
that a systems approach could apply to the strategic management of issues. At the heart
of each step in the model is the interaction among citizens, business and government,
the push and pull relationship that governs the core of our society, and serves as the
birth place… of all issues.
• Issue identification consists of three primary steps:
1. Consideration of trends in the social, political and economic realms; now we would add other
trend areas, such as technological
2. Comparison of those trends to your basic organizational goals, in other words, your business
plan
3. Identification of primary issues
• The major focus of the issue analysis step is to draw on past experience with the issue, as
reflected in quantitative and qualitative research on how people feel about the issue, what
actions have been taken, how the company is geared for dealing with it and, in general, how
the issue can impact the organization.
• Now, as for the circle with the odd name issue change strategy options. What does that mean?
Basically, each issue requires a carefully determined stance. It may be desirable to let others
take the lead, remaining in a reactive mode. Perhaps it is best to “go with the flow” and adapt
where necessary. Or, a dynamic posture may be taken. This whole step is designed to
incorporate an element of strategy into plans and actions.
• Issue action is the fourth step. The components of action include setting a goal, objectives,
strategies and tactics. Then one has to organize all resources at hand to achieve targets that are
set. We wanted to emphasize that all parts of the organization should be tapped and
synchronized. This was a radical approach in 1977.
• Finally, there is the emphasis on the evaluation of results. At times, we said, the issue
management cycle begins again, with new players, new results, new attitudes and so on.
Issues are resolved, not ever really solved and will often spring back to life, sometimes
without even a decent mourning period. This is the nature of a pluralistic society where the
legislative and/or regulatory processes force compromise to settle legitimate but competing
interests.
There are many models for the issues management process, each containing a number of
steps from 5 to 10, usually falling into three major categories:
1. Issue identification and analysis
2. Strategic decision making and action
3. Evaluation
Emphasis by practitioners and academic researchers has usually been on the first two
categories with little done on evaluation. I especially like Heath’s argument that issues
management is the proactive application of four strategic options:
1. Strategic business planning
2. Getting the house in order—corporate responsibility
3. Scouting the terrain—scanning, identification, monitoring, analysis and priority setting
4. Strong defense and smart offense—issues communication
Evaluation, a management function that looks at results in the outside environment and
makes a subjective cost/benefit analysis, is dependent on setting measurable objectives and
measurable results indicators at the outset for each issue as it enters the issues process. What
can be measured generally is the response capability of the company or organization, outlined
in Figure 21.3 on the next page: (1) issues correctly anticipated and issues avoided, (2)
timeliness of response and (3) appropriateness of response. These three dimensions of
capability can be quantified, and those measurements then form the basis of the qualitative
evaluation of the effectiveness of the response capability by the owners of the issues and the
clients of the issues management process inside the company.
Since publication of Ewing’s chapter in 1997, the Issues Management Council has identified
nine best practice indicators. The IMC Best Practices Project was led by Tony Jacques and
presented in full on the Council’s website. They are organized in three categories: structure,
implementation and integration. Here is a summary:
Structure
1. There is an established mechanism to identify current and future issues through environmental
scanning/issue analysis.
2. The organization has adopted a formal process to assign and manage issues.
3. Responsibility for stewardship of the issue management process is clearly assigned and
mechanisms are in place to build organizational expertise in the discipline.
Implementation
4. “Ownership” of each major issue is clearly assigned at an operational level with accountability
and results linked to performance reviews.
5. Progress against key issues is formally reviewed with organizational “owners” on a regular
basis and the status of each is monitored at the highest management level.
6. The executive committee or board of directors has fiduciary oversight of issue management,
has mechanisms in place to report progress to di rectors and/or external stakeholders and has
authority to intervene in the event of noncompliance or misalignment.
Integration
7. Formal channels exist for managers at all levels to identify and elevate potential issues for
possible integration into broader strategic planning, including external stakeholder
management.
8. Management of current and future issues is well embedded within the strategic planning and
implementation processes of organizational clients and owners.
9. Issues management is recognized and organizationally positioned as a core management
function that is not confined to a single function or department.
Much more detail, including reference points for each indicator, can be found at the Issues
Management Council website (issuemanagement.org/learnmore/best-practice-indicators).
AN ISSUES MANAGEMENT CASE STUDY
In 2006 the Issus Management Council presented its W. Howard Chase Award to Swiss Re for
the best Issues Management Case of the Year. Here is a summary of the winning case.
WHY IS THE ISSUE IMPORTANT TO SWISS RE?
Understanding and anticipating the developments that shape the risk landscape are essential
elements of Swiss Re’s business. As a leading global reinsurer, Swiss Re’s success is based on
high-quality risk assessment and industry recognition of its broad knowledge of risk transfer
and financing. Swiss Re established an issues management process called Top Topics in 2001
to help identify and tackle fundamental trends affecting the insurance industry, and to
ultimately shape the group’s business environment. In 2005, Swiss Re advanced its issue
management practices with the creation of the group issue management (GIM) process and
through the work of the Issue Steering Committee (ISC), aggregating further intelligence on
the changing expectations of stakeholders on the risk landscape and enhancing the group’s
communications agility. ISC members are senior professionals representing the broad range of
stakeholders’ views on topics. Long-term objectives of the ISC include the following:
1. Ensuring that topics are positioned vis-à-vis stakeholders in a consistent manner and that
communications activities are aligned with the group’s interests
2. Foster stakeholder dialogue
3. Support knowledge transfer into real business opportunities
4. Promote best practices in dealing with issues and topic management
The topics identified represent both opportunities and changing risks affecting various Swiss
Re’s units or functions, and therefore requiring coordination at the group level: these topics
involve either significant market and economic trends, regulatory changes or key scientific and
social developments that have or could have an impact on the group’s current and future book
of business. Currently 20 topics are monitored and analyzed and a large range of research and
external communications activities are conducted on these.
AT WHAT LEVELS DO MEMBERS OF THE ORGANIZATION PARTICIPATE IN
ADDRESSING THE ISSUE?
The GIM discipline is a global function at the corporate center benefiting from all levels of
seniority. Overall responsibility for decision making related to the issues lies with the ISC. The
chief risk officer and the head of communications and human resources are sponsors of GIM
and members of ISC. All stakeholder views are represented in the ISC. Swiss Re’s Centre for
Global Dialogue in Switzerland is the central platform to foster stakeholder dialogue. The ISC
provides regular updates on the Topics portfolio and makes recommendations on Top Topics.
The ISC meetings and GIM process are managed by a senior manager in the group
communications function. The head of issue management (senior position) ensures ongoing
monitoring and scanning of a broad range of potentially new topics. Experts for individual
topics are embedded in functional units such as risk management, product development and so
forth. Topic managers are supported by communications managers.
WHICH CONSTITUENT GROUPS ARE AFFECTED?
Existing and potential clients
Investors and financial analysts (including rating agencies)
Regulators and/or legislators
Employees
Industry associations
Media
Academic institutions
General public
HOW ARE CONSTITUENT CONCERNS CONSIDERED AND ACTED ON?
Feedback from the various constituent groups is fed into the regular evaluation process of
individual topics at the ISC level and the GIM process. The executive committee of ISC is
consulted twice a year to collect feedback and guidance on actions conducted and/or planned.
Concerns raised by various external constituencies are usually discussed with specific business
partners within the organization. For ex ample, clients will typically consult with their client
manager and regulators discuss issues with Swiss Re regulatory affairs. All stakeholders are
represented in the ISC and their feedback on Swiss Re positions is shared on a regular basis.
The group conducts regular surveys with stakeholder groups, and regular media benchmarking
of communication in the insurance industry reveals that Swiss Re’s voice is being heard and
compares well in comparison to industry peers.
WHAT IS THE KEY OBJECTIVE OF THE ISSUE MANAGEMENT PROGRAM?
The key objective of GIM is to enable Swiss Re to identify economic, regulatory and riskrelevant trends, and monitor their impact on the group’s strategy and/or earnings so that Swiss
Re can actively shape its business environment. In addition, the research and communications
activities generated on Topic as a result of GIM underpin Swiss Re’s reputation as a leading
knowledge company in the field of capital and risk management. Finally, as a global
organization of some 8,800 employees in more than 70 offices in over 30 countries, the GIM
supports Swiss Re’s objective to deliver consistent messages globally. The GIM’s mission
statement: “position Swiss Re as a knowledge company and industry leader on topics of
strategic relevance, representing market opportunities or potentially impacting Swiss Re’s
balance sheet and entrepreneurial freedom.”
DOES ISSUE MANAGEMENT MAKE A DIRECT CONTRIBUTION TO SWISS RE’S
PROFITABILITY? IF SO, HOW?
Yes, GIM contributes both to business growth as well as protecting the group’s balance sheet.
Identifying new business opportunities at an early stage allows Swiss Re to become market
leaders in its chosen fields (e.g., insurance-linked securities as innovative risk transfer solutions,
Solvency II in terms of adequate capital and disclosure requirements). On the other hand,
detecting potential new risks before they develop into serious issues enables the group to set
up appropriate mitigation procedures including underwriting guidelines, pricing
recommendations and capital allocation (e.g., nanotechnology- or obesity-related claims).
WHAT ARE THE RESULTS?
GIM is acknowledged as a contributor to Swiss Re’s strategic decision-making process as well
as an important factor in the group’s external positioning and communications. Greater
coordination has resulted when launching major communications initiatives. Increased
transparency in Swiss Re’s key messages and dissemination of these messages internally and
externally has been achieved. Business benefits are felt in many Top Topics where additional
communications resources have been allocated, particularly for climate change, insurancelinked securities and Solvency II.
THE FUTURE OF ISSUES MANAGEMENT
Given the three trends mentioned above, the importance of effective company responses to
emerging trends before they become well advanced in the issues process will be greatly
enhanced in the foreseeable future. Ideally, issues management strategists will find more
effective ways to create communities of interest among all a company’s stakeholders.
Technology will play a larger role in segmenting stakeholder groups and establishing personal
relationships with the key actors. As Peter Drucker noted, IT thus far has fulfilled the promise
only of the technology and not delivered on the information. As we become more proficient at
collecting data and interpreting it, databases can be mined to learn more about not only the
demographics of stakeholders but also values and psychographics.
This will make possible more effective use of messages and symbols because we can create
appeal for our point of view with more insight into the attitudes of those to be persuaded. Being
able to target our audiences by familiarity levels such as aware, informed, leaning toward or
against, committed for or against, ready to act for or against, advocates for or against will help
choose the right channel of communication and kind of conversation to have.
With the new social media we should be able to create platforms and viral trails for all our
advocates and other influencers as well as being able to track what others say about us and our
positions. In this new environment, getting the engagement of shareholders, customers or
clients, and especially employees will be critical to the success of a company’s response to
gaps between stakeholder expectations and actual performance. Not delivering on the brand
promise or living up to the reputation multiplied over hundreds of individual experiences can
be a daunting challenge to the issues management strategist. But be of good cheer: as Aristotle
said, “rhetoric is the ability to find, in any given situation, all available means of persuasion.”
Besides being the sentry, issues management must be a part of the response. There is an
advantage to putting issues on the team with public relations (public affairs is using public
relations strategies and tactics to influence the actions of government). In most companies, the
best media expertise and creative messaging comes from the public relations unit. And public
relations is usually in charge of leading the effort to optimize a company’s reputation as well
as defending and/or mitigating risks. With stakeholders creating context for actions (use
reputation), improving understanding (use reputation), shaping the opinion environment (use
reputation)—all fit like a glove with the mission of public relations.
At the intersection of shareholder and stakeholder relations sits the growing practice of
CSR—the second act of something once known as corporate citizenship. The original
foundation of CSR was based on com panies voluntarily doing good in order to do well. The
European Commission defines it as “a concept whereby companies decide voluntarily to
contribute to a better society and a cleaner environment.” It is related to sensitive issues—
environmental protection, human resources management, health and safety at work, relations
with local communities, relations with suppliers and consumers and so forth.
The shareholder view would be that corporate managers should serve the interests of
shareholders, using resources to increase the profits and wealth of the company. The
stakeholder view would posit that in addition to shareholders, other groups and constituencies
may be affected by the company’s actions or policies and those interests must be considered
by corporate managers as well. In the past five years, CSR has increasingly become an
important strategy for issues managers to solidify relations with stakeholders and make
alliances with related organizations who may not be central to the company’s economic story
but can have a direct impact on creating value and wealth inside the company. It seems a logical
evolution that, as a company decides to dedicate some resources to causes outside the
mainstream business purposes, those resources would necessarily be linked to influencing
opinions of stakeholders identified as key to achieving business goals.
In
a
wonderful
essay,
“The
Next
Information
Revolution”
(ASAP,
versaggi.net/ecommerce/articles/drucker inforevolt.html), Peter Drucker bemoans the failure
of computers to revolutionize the work of top management. It has paid off for operations, he
says, all internal, but nothing for “creation of value and wealth. This requires risk-taking
decisions: on the theory of the business, on business strategy, on abandoning the old and
innovating the new, on the balance between the short term and the long term, on the balance
between immediate profitability and market share. These decisions are the true top
management tasks.”
Drucker once told me (Arnold) over lunch that the failure of public relations to live up to the
promise of Arthur W. Page was its reluctance to bring the outside environment into the
organization, to overcome executive isolation, while concentrating on “getting the message out”
through publicity because it was “what management expected.” Drucker says managements,
especially in large corporations “focus inward on costs and efforts, rather than outward on
opportunities, changes and threats. This tendency is becoming increasingly dangerous
considering the globalization of economies and industries, the rapid changes in markets and in
consumer behavior, the crisscrossing of technologies across traditional industry lines, and the
increasing instability of currencies. The more inside information top management gets, the
more it will need to balance it with outside information—and that does not exist yet.”
Drucker would support the efforts of issues managers to bring to management’s attention
both the threats and the opportunities that can be discerned from survey research, trend analysis
and careful listening—something to be done more easily and quickly now with new digital
media in hand. In the Effective Executive, Drucker observed poignantly:
The truly important events on the outside are not the trends. They are the changes in
the trends. These determine ultimately success or failure of an organization and its
efforts. Such changes, however, have to be perceived; they cannot be counted, defined
or classified. The classifications still produce the expected figures—as they did for the
Edsel. But the figures no longer correspond to actual behaviore… The important events
on the outside cannot be reported in the kind of form a computer (or any other logic
system) could possibly handle. Man, however, while not particularly logical, is
perceptive—and that is his strength.5
It is now in vogue to treat a company’s reputation with much greater respect than the
mere lip service of saying “it’s very important to us and it’s one of the building blocks
of our strategy formulation process.” Most top management who talk this way have no
idea what the most important attributes of their reputation are; is the quality of
management ranked high by those who know the company? In the wake of the trust
crisis created post-Enron and now the financial crisis that has called into question the
ethics and competence of the leaders of many major financial institutions, “aren’t these
the guys who set up world class risk management practices, approved by the Audit
Committee of the BOD, blah, blah, blah”?
Interestingly enough, a McKinsey Quarterly classic, “Running with Risk,” recently reissued
in the wake of the global conversation now about risk management, cites financial institutions
as a model for emulation when it comes to being out-front about risks.6 In 2009 we find out
what good models they were: turns out the risks were all about threats to profits or cash flow
only, they were siloed, and the risk tolerance for compliance matters was zero percent while
tolerance for risky schemes to make money was quite high because it could always be hedged
against investments handled for clients. All the risk managers met once a week for happy hour
at a bar called “See No Evil, Hear No Evil, Say No Evil.”
One nice piece of man-bites-dog news did appear at the end of 2009 when Goldman Sachs
Group, America’s favorite “hate” company from the financial crisis, filed its Form 10-K
providing fascinating insights into management’s assessment of risks the business faces going
forward: “Item 1A: Risk Factors: We face a variety of risks that are substantial and inherent in
our businesses, including market liquidity, credit, operational, legal, regulatory and
reputational risks. The follow ing are some of the more important factors that could affect our
businesses:
• We may incur losses as a result of ineffective risk management processes and strategies.
• Our businesses may be adversely affected if we are unable to hire and retain qualified
employees.
• Our businesses and those of our clients are subject to extensive and pervasive regulation around
the world.
• We may be adversely affected by increased governmental and regulatory scrutiny or negative
publicity.
• Conflicts of interest are increasing and a failure to appropriately identify and deal with conflicts
of interest could adversely affect our businesses.
• Substantial legal liability or significant regulatory action against us could have material adverse
financial effects or cause us significant reputational harm, which in turn could seriously harm
our business prospects.”
Imagine: negative publicity is a risk for Goldman Sachs. Here is an example of a company
needing a massive dose of visionary issues management.
Now there is a clamor to make reputational risk an important part of the ERM. A Conference
Board report, “Managing Reputation Risk and Reward” (2009), found high percentages of
public affairs and corporate communications executives listed as primarily responsible for
reputation risk management, but the authors believe it is because reputation risk management
was heavily siloed into communications and/or public affairs and not integrated into enterprisewide risk management processes.
In 2010 the PAC study “Public Affairs and Enterprise Risk Management” showed survey
results surprisingly different: “Nearly 80 percent of companies participating in a PAC survey
had an enterprise risk management program. Of those, close to 80 percent involved public
affairs staff in ERM.” Of course, those who responded self-selected and that would probably
affect the results somewhat.
As to the future of issues management in this period of soul searching, transition and
realignment of corporate functions, it is safe to say issues management’s relevance and value
to top management and line operators alike is hardly going to decline. And the tools to do an
even better job of finding common ground with and persuading conflicted stakeholders and
stakeseekers alike are improving. The PAC is now offering a seminar on reputation
management to go along with its traditional issues management program.
The Committee for Economic Development study Restoring Trust in Corporate
Governance finds there has been a negative impact on the reputation of all businesses because
of the behavior of a significant number of institutions during the financial crisis: “And other
corporations in both the financial and industrial sectors, even those which are well-run, are not
immune from general reputational harm to business caused by almost two years of headlines
about corporate problems, excesses and failures.”7
Peter Drucker’s The Practice of Management (1954), the book that defined management as
a discipline and made it important to companies, concludes by mentioning the political satirist
and pamphleteer de Mandeville whose “Fable of the Bees” (subtitled “Private Vices, Public
Benefits”) espoused the theory “selfishness unwittingly turns into common good.”
Drucker counters in the final sentence: “But today it has become possible if not
commonplace in this country to assert the opposite principle: the business enterprise must be
so managed as to make the public good become the private good of the enterprise.”

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I’m working on a research & summaries writing question and need an explanation and answer to help me learn. Question #1:  Define issues management. Give an example of two issues facing an organization that you choose, e.g., automobile, computer, charitable aid, consulting. Question #2:  Outline the issues management process. Describe very briefly how you would organize the steps in an organization.• The Handbook of Strategic Public Relations and Integrated Communications, by Clarke L. Caywood, 2nd edition (2012), McGrawHill Education. CHAPTER 21 ISSUES MANAGEMENT METHODS FOR REPUTATIONAL MANAGEMENT James E. Arnold, APR, Fellow PRSA Chief Executive Officer, Arnold Consulting Group The environment in which all organizations exist, especially corporations, has changed dramatically since Mr. Vanderbilt, the founder of New York Central Railroad, offered his oftquoted opinion about public opinion. Today most CEOs and leaders have learned to speak like Mr. Page, the first vice president of public relations at AT&T—but many CEOs secretly agree with the commodore. What changed in the intervening years between Vanderbilt and Page? Public opinion became a force to be reckoned with in American society. Ida Tarbell’s Rise of the Standard Oil Company (1904) depicted the rise of John D. Rockefeller’s integrated oil producing, transporting, refining and marketing juggernaut. Standard Oil became the world’s largest refiner, operated as a major company trust, and was one of the first multinational corporations until it was broken up by the Supreme Court in 1911. Rockefeller, the richest man in modern history, defended his company’s business strategies, practices and tactics as “lawful” but he forced many smaller businesses out and became very unpopular with the public—thanks in large part to Tarbell’s book, its serialization in McClure’s magazine and the heyday of muckracking “yellow journalism” fostering a rising resentment against robber-baron capitalism. Even this early in the twentieth century with the rise of national newspaper chains, it was not unusual for companies to employ “press agents” to tell their side of a story and rebut criticism. In 1906 Ivy Lee, a former journalist, represented the coal mining bosses, who were facing a big strike and enjoyed little support in the press because the unions had built good relations with reporters in a previ ous strike. Lee saw the emerging mass media as a conduit for his client’s point of view as well as that of critics. Unlike other press agents, he wanted to organize ongoing campaigns of information on behalf of his clients, not just engage in tactical skirmishes. He sent a steady stream of statements to newspapers, laying out the mining bosses’ case and responding to criticisms and allegations—earning his clients a fairer hearing going forward. Lee’s “Declaration of Principles” looked forward to the ideas Arthur Page would use to counsel his colleagues at AT&T: “This is not an advertising agency… Our plan is frankly, and openly, on behalf of business concerns and public institutions, to supply the press and public of the United States prompt and accurate information concerning subjects which it is of value and interest to the public to know about.”1 When Page offered his “public permission, public approval” guidance in 1947, he did so with the full understanding of the importance of public opinion to the success of AT&T’s enterprise. Since AT&T chose to be regulated as “a natural monopoly,” Page wisely understood the downside of being “king of the mountain” and advised in favor of a business model called “universal service” (emphasis on service), which would put a telephone in virtually every home, making it a utility, and keeping the residential charge low with social-based pricing and raising the charge on business accounts as a cross subsidy. In this way Page made the largest possible number of people part of, and proud of, the Bell Network—the world’s finest telephone system. From Page’s day until the present, the matter of dealing with public opinion has grown increasingly difficult and complex for all corporations, organizations, institutions and even the government. Our society is more multicultural, our interests more narrowly drawn and often advanced at the expense of competing interests; we seem sometimes to lack a central narrative that would help us find the grace to “disagree without being disagreeable.” You hear more win– lose than win–win as outcomes of conflicts. There was a point when public relations would be thought of simply as “telling the story of your organization in terms of the larger public interest, thereby establishing its credibility and legitimacy.” But today, defining public interest is no easy matter. One person’s sacred cow is another’s Big Mac. For example, is it more in the public interest to protect inefficient producers in the United States with government tariffs and trade quotas, thereby saving jobs and businesses at home but penalizing consumers who have to buy more expensive goods (perhaps of lesser quality) than would be necessary without protection of these markets? Or is it in the public interest to allow the free flow of goods and services into reciprocating economies even though it means losing jobs and businesses at home and creating ill will with some unions but benefiting consumers who will have a greater range of choices and prices? Clearly, making public policy choices in a pluralistic society requires the wisdom of Solomon and the karma of a schizophrenic Zen master: “I am at two with the world.” From within this attitude-intensive environment, hotly wired, rich with proliferating media, driven by technology slicing-and-dicing audiences into ever smaller segments, searching for common ground while spinning outward like a centrifuge on the globe of earth—here we begin to explore issues management and how it has changed since Ray Ewing wrote his chapter “Managing Trends through the Issues Life Cycle” in the 1997 original Handbook of Strategic Public Relations & Integrated Communications. Ray was intimately involved in the early beginnings of issues management, working closely with Howard Chase and the Public Affairs Council (PAC). He was the first senior officer to have issues management in his corporate title, and at Allstate Insurance Companies he worked closely with the CEO Archie Boe, who was to be an early adopter of issues management, especially as it could be partnered with strategic planning. Ray offered this quote from his boss: “Issues management and strategic planning are both born of the dynamic tradition in American business management that rejects the passive approach of hoping to know the future and merely adjusting to it, for an affirmative posture of creating the future and fitting the corporate enterprise into it.”2 From the very beginning, those who pioneered the development and definition of issues management considered it to be a management process concerned with public policy foresight and planning for an organization in the private sector. It is not the management of issues through the public policy process in our democracy or the management of the public policy process itself. Instead, it is the manage ment of an institution’s resources and efforts to participate in the successful resolution of issues in the public policy process that will affect the future viability and well being of the organization and its stakeholders. The term issues management was formally and publicly coined by W. Howard Chase on April 15, 1976. That is the date of volume 1, number 1, of his newsletter, Corporate Public Issues and Their Management. The newsletter, now usually called CPI, stated that its objectives were “To introduce and validate a breakthrough in corporate management design and practice in order to manage corporate public issues at least as well or better than the traditional management of profit-center operations.” Chase went on to say, “The thesis and impact of CPI inevitably led to fundamental revisions of costly and divisive practices of traditional line-staff management. There can be today only one management with one objective: survival and return on capital sufficient to maintain productivity, whatever the economic and political climate.” Chase was 66 years old when this newsletter came out in 1976, having retired the previous year as public affairs vice president of American Can Company. In 1977, he and his associates, Barry Jones and Teresa Yancey Crane (now the publisher of CPI), created the first issues management process model, which involves five steps: 1. Issue identification 2. Issue analysis 3. Issue change strategy options 4. Issue action programming 5. Evaluation of results Early full-time practitioners of issues management have always called Chase the “father” of issues management. He has more than earned that title for coining the term, publishing the first newsletter on the subject and creating the first issues management process model. • Issues management as a new process management concept evolved from the public relations and public affairs (PR/PA) professions after Chase coined the phrase in 1976. • Chase did not “invent” issues management (although he created the name) because, from Ivy Lee’s time to 1976, counselors of senior management had been “doing” issues management— but on an ad hoc, hit-or-miss basis under various names. Chase moved the field to a foresight and planning basis from the ad hoc practice. • Chase’s basic concept of issues management (for senior management’s use in integrating the management of public policy and profit matters) moved public relations/public affairs professionals who could practice issues management to the center of corporate or organizational management. So long as PR was confined to media relations, practitioners were operating at the outer edge of the organization. In the 1960s, when PR and government relations were combined to create a public affairs function, they moved closer to the center of operations because senior management became more involved in decision making. With the evolution of issues management (public policy planning) as a companion to strategic planning (profit planning), again they moved to the heart of the company where senior management focuses” According to the Institute for the Study of Issues Management at the University of Houston, over 240 scholarly and professional articles, scholarly books and PR textbooks dealing with issues management have been published. This is proof to Professor Robert Heath, director of the institute, that issues management is a new discipline that has emerged, not to replace public relations but to strengthen it. Most professional practitioners agree, and formal courses in issues management have appeared at universities teaching public relations as well as at some business schools. Many CEOs have seen the advantage of an issues management system since Chase first gave it a name. By one count, over 200 issues-related titles could be identified in as many companies, and more than 60 public relations and management consulting firms were offering issues management services. The earliest companies adopting the technique were mainly the regulated industries: chemicals, petroleum, banking, insurance and so forth. That is, the earliest practitioners were found in companies like Allstate, Bank of America, Chase, Dow Chemical, PPG, AT&T, Rexnord, Sears, Monsanto, Union Carbide and various electrical utility companies. However, over time, this management system spread to companies in all sectors. Although Howard Chase argues that issues management is a new profession that transcends the PR/PA profession, we consider issues management to be one of the major functions that the PR professional can perform today. It is of equal or more importance than our other major functions: media relations, marketing public relations, investor relations, public affairs, employee communications, community relations and corporate philanthropy. The addition of strategic planning and issues management to our duties in the past decades completed our maturing into a modern profession. THE RELATIONSHIP OF ISSUES MANAGEMENT TO BUSINESS SCHOOL STRATEGIC PLANNING Issues management and strategic planning together form the planning platform on which CEOs and their senior management team can stand to strategically manage their organizations. While issues management focuses on public policy research, foresight and planning for the organization, strategic planning is concerned with business research, foresight and planning for the organization. The first is concerned with policy planning; the second is concerned with profit planning. This chart illustrates what each system is concerned with or can affect. Under this construct, issues management is concerned with plans that groups outside the corporation are making in the sociopolitical and economic environment (the public policy process) that would influence the corporation’s future and viability. It is also concerned with the outside plans it must make to counteract or support the plans of others as the corporation seeks to participate in the public policy process where the issues will be resolved. Strategic planning is primarily concerned with the corporation’s internal planning for its own business future, as it seeks to meet and beat its competitors in the economic arena. On the time frame, issues management is primarily concerned with issues that will be resolved 12 months to 5 years in the future. (Of course, it monitors issues that will not be resolved for many years into the future—and brings those into the system as they move toward the five-year time frame.) Because of the shorter time frame and the need to react quickly to public issues, issues management is more concerned with adjusting current operations and operational plans to best benefit its stakeholders. Issues management’s first responsibility is to make sure the corporation is well defended against whatever tactic or move the many organized actors in the public policy process choose to execute. This is designed to meet the first planning and management goal of every CEO: “No surprises!” Issues management’s next goal is to search out inherent opportunities in issues others generate or the company decides to generate in the public policy forums. The primary duty of strategic planning, on the other hand, is to seek economic opportunities and to find ways to exploit them with internally created business plans. Thus, issues management is concerned with achieving the best resolution for its company’s stakeholders in a contentious arena where bargains are struck. Strategic planning is concerned with harvesting the benefits of marketing that its plans have created. Both issues management and strategic planning are guided by the corporation’s mission statement, which attempts to tell who the corporation is and what it hopes to become, and makes commitments to its primary stakeholders—customers, employees, the general public and shareholders. For issues managers, the company’s mission statement frames the issues they must seek. Issues managers scan for, monitor and seek resolution only of those issues that might have significant impacts on their company’s stakeholders, and hence the company’s future. The practice of issues management has always required an understanding of how the laws and regulations get made at the local, state and federal level in the United States, and by extension the processes in place in other countries around the world to accomplish the same purposes. The public policy process in a free society is the meeting ground of the public sector (federal, state and local governmental units) and the private sector (citizens, corporations, organizations, etc.). It is the process, facilitated by the media, where the public’s aspirations and dissatisfactions work their way up through public issues debates into law and regulation, if they are not voluntarily resolved in the private sector. The social control of business is affected through this mechanism. It has only been in the past three decades that business has come to realize that it is not only controlled by the economic environment, but is in fact effectively controlled through the broader social and political environments. This realization forced the development of issues management to give corporations a rational way to manage their participation in the process. The public policy process can best be understood through a simplified graphic model (Figure 21.2), developed by Ray Ewing from an earlier Yankelovich, Skelly and White description of the process. The base of the pyramid is where public dissatisfactions with the present emerge, prompted by perceived injustices and exclusions, new aspirations, new concerns about the environment, new ideas relating to “rights” and “entitlements” or other issues. But at this level, nothing happens until it gets a name and visibility, when the media can take it up and talk about it, broadcasting the issue of concern beyond those affected. The media do not create issues unless there is an underlying reality, but they are essential in issue development and its life cycle. However, nothing really happens to the issue until an organized group takes it up and adds it to its action agenda. Once an organized group decides to add it to its agenda, the pressure group—a public interest group, Chamber of Commerce, trade association, religious institution, political party or other group—seeks to mobilize social and political forces beyond its own membership. Because the media become critical at this point, the pressure group holds demonstrations and public meetings, making headline-grabbing charges. When this happens, the pressure group becomes the issue champion and, in effect, co-opts the issue, defining it as it wishes. Frequently, the pressure group approaches a leading company as representative of a targeted industry, or some service organization, demanding a meeting to negotiate the issue, complete with notices to the media. If the company or other organization in the private sector does not respond, the pressure group moves on to the appropriate regulatory agency, demanding public hearings. Again, this is accompanied by notices to the media. The regulatory agency, because of the publicity and accompanying demands of the pressure group, will take notice of the issue and consider holding public hearings to investigate the charges. These actions generate more media attention. If the agency decides that new laws and regulations are needed, it moves the issue to the elected legislative bodies—the U.S. Congress or state legislatures. Finally, the Congress or the state legislature, standing at the top of the public policy process, considers the conflicting demands and the interests of key publics. The legislative body will pass a new law if it thinks a law will resolve the problem the issue represents, and if it thinks there is sufficient public consensus for a legislative solution. If the legislators do not think the issue can be resolved or that there is not sufficient public consensus for any one solution, they will not act. In effect, they kick the issue back down into the public arena, hoping the issue will be privately resolved through voluntary actions in the private sector. If the Congress or state legislature decides a law is needed, it passes one. This law and any accompanying regulations come down like a straitjacket on the business community. As many commentators have pointed out, the business community gets involved in the life cycle of an issue far too late—at the regulatory or legislative phase when business is considered the problem, not the solution. That is why business is famous for killing legislation, not advancing broad solutions. This was true before the issues management system was developed. Researchers have found that, at the federal level, it takes from 6 to 12 years for an issue to emerge at the general public level before legislation is passed. (At the state level, legislation can be passed in 1 to 2 years under certain conditions.) Issues management is designed to take advantage of the time lag so that senior management can develop policy positions and supporting action programs. It sets up systems to monitor all stages of the public policy process stream to identify emerging and developing issues. ISSUE MANAGEMENT TACTICS: 2011 Without question, the most fundamental aspect of issues management is summed up in the first sentence of the book How to Grow Asparagus: “Dig a trench—three years ago.” Or as they say in politics, “Don’t wait until you need a friend to make a friend.” Or as the lobbyists are famous for saying: “You can’t just show up at the office of a government official, lawyers and experts in tow, and expect to get a fair hearing on the ‘merits’ from your self-serving point of view. First, you have to lay a little pipe into that office.” The practice of issues management is usually described as a process over time that begins with discovery and ends with a resolution at the most advantageous or possible level in the issue cycle. Here is how Teresa Yancey Crane, a founder of the Issue Management Council (IMC) and a team member with Howard Chase who developed the first issue management process model, describes the process in January 2011 (issuemanagement.org/learnmore/origins-of-issue-management): We have always emphasized that this model is not conclusive. It will vary according to the specific needs of any user. The primary purpose in our exercise is to demonstrate that a systems approach could apply to the strategic management of issues. At the heart of each step in the model is the interaction among citizens, business and government, the push and pull relationship that governs the core of our society, and serves as the birth place… of all issues. • Issue identification consists of three primary steps: 1. Consideration of trends in the social, political and economic realms; now we would add other trend areas, such as technological 2. Comparison of those trends to your basic organizational goals, in other words, your business plan 3. Identification of primary issues • The major focus of the issue analysis step is to draw on past experience with the issue, as reflected in quantitative and qualitative research on how people feel about the issue, what actions have been taken, how the company is geared for dealing with it and, in general, how the issue can impact the organization. • Now, as for the circle with the odd name issue change strategy options. What does that mean? Basically, each issue requires a carefully determined stance. It may be desirable to let others take the lead, remaining in a reactive mode. Perhaps it is best to “go with the flow” and adapt where necessary. Or, a dynamic posture may be taken. This whole step is designed to incorporate an element of strategy into plans and actions. • Issue action is the fourth step. The components of action include setting a goal, objectives, strategies and tactics. Then one has to organize all resources at hand to achieve targets that are set. We wanted to emphasize that all parts of the organization should be tapped and synchronized. This was a radical approach in 1977. • Finally, there is the emphasis on the evaluation of results. At times, we said, the issue management cycle begins again, with new players, new results, new attitudes and so on. Issues are resolved, not ever really solved and will often spring back to life, sometimes without even a decent mourning period. This is the nature of a pluralistic society where the legislative and/or regulatory processes force compromise to settle legitimate but competing interests. There are many models for the issues management process, each containing a number of steps from 5 to 10, usually falling into three major categories: 1. Issue identification and analysis 2. Strategic decision making and action 3. Evaluation Emphasis by practitioners and academic researchers has usually been on the first two categories with little done on evaluation. I especially like Heath’s argument that issues management is the proactive application of four strategic options: 1. Strategic business planning 2. Getting the house in order—corporate responsibility 3. Scouting the terrain—scanning, identification, monitoring, analysis and priority setting 4. Strong defense and smart offense—issues communication Evaluation, a management function that looks at results in the outside environment and makes a subjective cost/benefit analysis, is dependent on setting measurable objectives and measurable results indicators at the outset for each issue as it enters the issues process. What can be measured generally is the response capability of the company or organization, outlined in Figure 21.3 on the next page: (1) issues correctly anticipated and issues avoided, (2) timeliness of response and (3) appropriateness of response. These three dimensions of capability can be quantified, and those measurements then form the basis of the qualitative evaluation of the effectiveness of the response capability by the owners of the issues and the clients of the issues management process inside the company. Since publication of Ewing’s chapter in 1997, the Issues Management Council has identified nine best practice indicators. The IMC Best Practices Project was led by Tony Jacques and presented in full on the Council’s website. They are organized in three categories: structure, implementation and integration. Here is a summary: Structure 1. There is an established mechanism to identify current and future issues through environmental scanning/issue analysis. 2. The organization has adopted a formal process to assign and manage issues. 3. Responsibility for stewardship of the issue management process is clearly assigned and mechanisms are in place to build organizational expertise in the discipline. Implementation 4. “Ownership” of each major issue is clearly assigned at an operational level with accountability and results linked to performance reviews. 5. Progress against key issues is formally reviewed with organizational “owners” on a regular basis and the status of each is monitored at the highest management level. 6. The executive committee or board of directors has fiduciary oversight of issue management, has mechanisms in place to report progress to di rectors and/or external stakeholders and has authority to intervene in the event of noncompliance or misalignment. Integration 7. Formal channels exist for managers at all levels to identify and elevate potential issues for possible integration into broader strategic planning, including external stakeholder management. 8. Management of current and future issues is well embedded within the strategic planning and implementation processes of organizational clients and owners. 9. Issues management is recognized and organizationally positioned as a core management function that is not confined to a single function or department. Much more detail, including reference points for each indicator, can be found at the Issues Management Council website (issuemanagement.org/learnmore/best-practice-indicators). AN ISSUES MANAGEMENT CASE STUDY In 2006 the Issus Management Council presented its W. Howard Chase Award to Swiss Re for the best Issues Management Case of the Year. Here is a summary of the winning case. WHY IS THE ISSUE IMPORTANT TO SWISS RE? Understanding and anticipating the developments that shape the risk landscape are essential elements of Swiss Re’s business. As a leading global reinsurer, Swiss Re’s success is based on high-quality risk assessment and industry recognition of its broad knowledge of risk transfer and financing. Swiss Re established an issues management process called Top Topics in 2001 to help identify and tackle fundamental trends affecting the insurance industry, and to ultimately shape the group’s business environment. In 2005, Swiss Re advanced its issue management practices with the creation of the group issue management (GIM) process and through the work of the Issue Steering Committee (ISC), aggregating further intelligence on the changing expectations of stakeholders on the risk landscape and enhancing the group’s communications agility. ISC members are senior professionals representing the broad range of stakeholders’ views on topics. Long-term objectives of the ISC include the following: 1. Ensuring that topics are positioned vis-à-vis stakeholders in a consistent manner and that communications activities are aligned with the group’s interests 2. Foster stakeholder dialogue 3. Support knowledge transfer into real business opportunities 4. Promote best practices in dealing with issues and topic management The topics identified represent both opportunities and changing risks affecting various Swiss Re’s units or functions, and therefore requiring coordination at the group level: these topics involve either significant market and economic trends, regulatory changes or key scientific and social developments that have or could have an impact on the group’s current and future book of business. Currently 20 topics are monitored and analyzed and a large range of research and external communications activities are conducted on these. AT WHAT LEVELS DO MEMBERS OF THE ORGANIZATION PARTICIPATE IN ADDRESSING THE ISSUE? The GIM discipline is a global function at the corporate center benefiting from all levels of seniority. Overall responsibility for decision making related to the issues lies with the ISC. The chief risk officer and the head of communications and human resources are sponsors of GIM and members of ISC. All stakeholder views are represented in the ISC. Swiss Re’s Centre for Global Dialogue in Switzerland is the central platform to foster stakeholder dialogue. The ISC provides regular updates on the Topics portfolio and makes recommendations on Top Topics. The ISC meetings and GIM process are managed by a senior manager in the group communications function. The head of issue management (senior position) ensures ongoing monitoring and scanning of a broad range of potentially new topics. Experts for individual topics are embedded in functional units such as risk management, product development and so forth. Topic managers are supported by communications managers. WHICH CONSTITUENT GROUPS ARE AFFECTED? Existing and potential clients Investors and financial analysts (including rating agencies) Regulators and/or legislators Employees Industry associations Media Academic institutions General public HOW ARE CONSTITUENT CONCERNS CONSIDERED AND ACTED ON? Feedback from the various constituent groups is fed into the regular evaluation process of individual topics at the ISC level and the GIM process. The executive committee of ISC is consulted twice a year to collect feedback and guidance on actions conducted and/or planned. Concerns raised by various external constituencies are usually discussed with specific business partners within the organization. For ex ample, clients will typically consult with their client manager and regulators discuss issues with Swiss Re regulatory affairs. All stakeholders are represented in the ISC and their feedback on Swiss Re positions is shared on a regular basis. The group conducts regular surveys with stakeholder groups, and regular media benchmarking of communication in the insurance industry reveals that Swiss Re’s voice is being heard and compares well in comparison to industry peers. WHAT IS THE KEY OBJECTIVE OF THE ISSUE MANAGEMENT PROGRAM? The key objective of GIM is to enable Swiss Re to identify economic, regulatory and riskrelevant trends, and monitor their impact on the group’s strategy and/or earnings so that Swiss Re can actively shape its business environment. In addition, the research and communications activities generated on Topic as a result of GIM underpin Swiss Re’s reputation as a leading knowledge company in the field of capital and risk management. Finally, as a global organization of some 8,800 employees in more than 70 offices in over 30 countries, the GIM supports Swiss Re’s objective to deliver consistent messages globally. The GIM’s mission statement: “position Swiss Re as a knowledge company and industry leader on topics of strategic relevance, representing market opportunities or potentially impacting Swiss Re’s balance sheet and entrepreneurial freedom.” DOES ISSUE MANAGEMENT MAKE A DIRECT CONTRIBUTION TO SWISS RE’S PROFITABILITY? IF SO, HOW? Yes, GIM contributes both to business growth as well as protecting the group’s balance sheet. Identifying new business opportunities at an early stage allows Swiss Re to become market leaders in its chosen fields (e.g., insurance-linked securities as innovative risk transfer solutions, Solvency II in terms of adequate capital and disclosure requirements). On the other hand, detecting potential new risks before they develop into serious issues enables the group to set up appropriate mitigation procedures including underwriting guidelines, pricing recommendations and capital allocation (e.g., nanotechnology- or obesity-related claims). WHAT ARE THE RESULTS? GIM is acknowledged as a contributor to Swiss Re’s strategic decision-making process as well as an important factor in the group’s external positioning and communications. Greater coordination has resulted when launching major communications initiatives. Increased transparency in Swiss Re’s key messages and dissemination of these messages internally and externally has been achieved. Business benefits are felt in many Top Topics where additional communications resources have been allocated, particularly for climate change, insurancelinked securities and Solvency II. THE FUTURE OF ISSUES MANAGEMENT Given the three trends mentioned above, the importance of effective company responses to emerging trends before they become well advanced in the issues process will be greatly enhanced in the foreseeable future. Ideally, issues management strategists will find more effective ways to create communities of interest among all a company’s stakeholders. Technology will play a larger role in segmenting stakeholder groups and establishing personal relationships with the key actors. As Peter Drucker noted, IT thus far has fulfilled the promise only of the technology and not delivered on the information. As we become more proficient at collecting data and interpreting it, databases can be mined to learn more about not only the demographics of stakeholders but also values and psychographics. This will make possible more effective use of messages and symbols because we can create appeal for our point of view with more insight into the attitudes of those to be persuaded. Being able to target our audiences by familiarity levels such as aware, informed, leaning toward or against, committed for or against, ready to act for or against, advocates for or against will help choose the right channel of communication and kind of conversation to have. With the new social media we should be able to create platforms and viral trails for all our advocates and other influencers as well as being able to track what others say about us and our positions. In this new environment, getting the engagement of shareholders, customers or clients, and especially employees will be critical to the success of a company’s response to gaps between stakeholder expectations and actual performance. Not delivering on the brand promise or living up to the reputation multiplied over hundreds of individual experiences can be a daunting challenge to the issues management strategist. But be of good cheer: as Aristotle said, “rhetoric is the ability to find, in any given situation, all available means of persuasion.” Besides being the sentry, issues management must be a part of the response. There is an advantage to putting issues on the team with public relations (public affairs is using public relations strategies and tactics to influence the actions of government). In most companies, the best media expertise and creative messaging comes from the public relations unit. And public relations is usually in charge of leading the effort to optimize a company’s reputation as well as defending and/or mitigating risks. With stakeholders creating context for actions (use reputation), improving understanding (use reputation), shaping the opinion environment (use reputation)—all fit like a glove with the mission of public relations. At the intersection of shareholder and stakeholder relations sits the growing practice of CSR—the second act of something once known as corporate citizenship. The original foundation of CSR was based on com panies voluntarily doing good in order to do well. The European Commission defines it as “a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment.” It is related to sensitive issues— environmental protection, human resources management, health and safety at work, relations with local communities, relations with suppliers and consumers and so forth. The shareholder view would be that corporate managers should serve the interests of shareholders, using resources to increase the profits and wealth of the company. The stakeholder view would posit that in addition to shareholders, other groups and constituencies may be affected by the company’s actions or policies and those interests must be considered by corporate managers as well. In the past five years, CSR has increasingly become an important strategy for issues managers to solidify relations with stakeholders and make alliances with related organizations who may not be central to the company’s economic story but can have a direct impact on creating value and wealth inside the company. It seems a logical evolution that, as a company decides to dedicate some resources to causes outside the mainstream business purposes, those resources would necessarily be linked to influencing opinions of stakeholders identified as key to achieving business goals. In a wonderful essay, “The Next Information Revolution” (ASAP, versaggi.net/ecommerce/articles/drucker inforevolt.html), Peter Drucker bemoans the failure of computers to revolutionize the work of top management. It has paid off for operations, he says, all internal, but nothing for “creation of value and wealth. This requires risk-taking decisions: on the theory of the business, on business strategy, on abandoning the old and innovating the new, on the balance between the short term and the long term, on the balance between immediate profitability and market share. These decisions are the true top management tasks.” Drucker once told me (Arnold) over lunch that the failure of public relations to live up to the promise of Arthur W. Page was its reluctance to bring the outside environment into the organization, to overcome executive isolation, while concentrating on “getting the message out” through publicity because it was “what management expected.” Drucker says managements, especially in large corporations “focus inward on costs and efforts, rather than outward on opportunities, changes and threats. This tendency is becoming increasingly dangerous considering the globalization of economies and industries, the rapid changes in markets and in consumer behavior, the crisscrossing of technologies across traditional industry lines, and the increasing instability of currencies. The more inside information top management gets, the more it will need to balance it with outside information—and that does not exist yet.” Drucker would support the efforts of issues managers to bring to management’s attention both the threats and the opportunities that can be discerned from survey research, trend analysis and careful listening—something to be done more easily and quickly now with new digital media in hand. In the Effective Executive, Drucker observed poignantly: The truly important events on the outside are not the trends. They are the changes in the trends. These determine ultimately success or failure of an organization and its efforts. Such changes, however, have to be perceived; they cannot be counted, defined or classified. The classifications still produce the expected figures—as they did for the Edsel. But the figures no longer correspond to actual behaviore… The important events on the outside cannot be reported in the kind of form a computer (or any other logic system) could possibly handle. Man, however, while not particularly logical, is perceptive—and that is his strength.5 It is now in vogue to treat a company’s reputation with much greater respect than the mere lip service of saying “it’s very important to us and it’s one of the building blocks of our strategy formulation process.” Most top management who talk this way have no idea what the most important attributes of their reputation are; is the quality of management ranked high by those who know the company? In the wake of the trust crisis created post-Enron and now the financial crisis that has called into question the ethics and competence of the leaders of many major financial institutions, “aren’t these the guys who set up world class risk management practices, approved by the Audit Committee of the BOD, blah, blah, blah”? Interestingly enough, a McKinsey Quarterly classic, “Running with Risk,” recently reissued in the wake of the global conversation now about risk management, cites financial institutions as a model for emulation when it comes to being out-front about risks.6 In 2009 we find out what good models they were: turns out the risks were all about threats to profits or cash flow only, they were siloed, and the risk tolerance for compliance matters was zero percent while tolerance for risky schemes to make money was quite high because it could always be hedged against investments handled for clients. All the risk managers met once a week for happy hour at a bar called “See No Evil, Hear No Evil, Say No Evil.” One nice piece of man-bites-dog news did appear at the end of 2009 when Goldman Sachs Group, America’s favorite “hate” company from the financial crisis, filed its Form 10-K providing fascinating insights into management’s assessment of risks the business faces going forward: “Item 1A: Risk Factors: We face a variety of risks that are substantial and inherent in our businesses, including market liquidity, credit, operational, legal, regulatory and reputational risks. The follow ing are some of the more important factors that could affect our businesses: • We may incur losses as a result of ineffective risk management processes and strategies. • Our businesses may be adversely affected if we are unable to hire and retain qualified employees. • Our businesses and those of our clients are subject to extensive and pervasive regulation around the world. • We may be adversely affected by increased governmental and regulatory scrutiny or negative publicity. • Conflicts of interest are increasing and a failure to appropriately identify and deal with conflicts of interest could adversely affect our businesses. • Substantial legal liability or significant regulatory action against us could have material adverse financial effects or cause us significant reputational harm, which in turn could seriously harm our business prospects.” Imagine: negative publicity is a risk for Goldman Sachs. Here is an example of a company needing a massive dose of visionary issues management. Now there is a clamor to make reputational risk an important part of the ERM. A Conference Board report, “Managing Reputation Risk and Reward” (2009), found high percentages of public affairs and corporate communications executives listed as primarily responsible for reputation risk management, but the authors believe it is because reputation risk management was heavily siloed into communications and/or public affairs and not integrated into enterprisewide risk management processes. In 2010 the PAC study “Public Affairs and Enterprise Risk Management” showed survey results surprisingly different: “Nearly 80 percent of companies participating in a PAC survey had an enterprise risk management program. Of those, close to 80 percent involved public affairs staff in ERM.” Of course, those who responded self-selected and that would probably affect the results somewhat. As to the future of issues management in this period of soul searching, transition and realignment of corporate functions, it is safe to say issues management’s relevance and value to top management and line operators alike is hardly going to decline. And the tools to do an even better job of finding common ground with and persuading conflicted stakeholders and stakeseekers alike are improving. The PAC is now offering a seminar on reputation management to go along with its traditional issues management program. The Committee for Economic Development study Restoring Trust in Corporate Governance finds there has been a negative impact on the reputation of all businesses because of the behavior of a significant number of institutions during the financial crisis: “And other corporations in both the financial and industrial sectors, even those which are well-run, are not immune from general reputational harm to business caused by almost two years of headlines about corporate problems, excesses and failures.”7 Peter Drucker’s The Practice of Management (1954), the book that defined management as a discipline and made it important to companies, concludes by mentioning the political satirist and pamphleteer de Mandeville whose “Fable of the Bees” (subtitled “Private Vices, Public Benefits”) espoused the theory “selfishness unwittingly turns into common good.” Drucker counters in the final sentence: “But today it has become possible if not commonplace in this country to assert the opposite principle: the business enterprise must be so managed as to make the public good become the private good of the enterprise.” Purchase answer to see full attachment

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