Chapter III
professionals’ organizations. A number of them were more concerned about public relations personalities. Nothing was written about public relations firms, other than the claim that their services could be availed of. Questions from the public like:
How do public relations men and their agencies operate? Do they cater more to publicity and press agentry? Are they engaged in gimmickry? How ethical are their managements in clients service? remained unanswered.
Public Relations in the US
In the United States (US), the Internet PRGuide Staff found out in a survey October, 2001 (public relations recruiting and career site Workinpr.com) of more than 1,600 public relations professionals and journalists that “Majority of public relations professionals believe the hardest part of their job is the strategic direction of their business, as compared to client management, tactical work or managing interval staff.” It was undertaken to ascertain the current state of the “public relations industry” and relationship between the media and public relations professionals. According to Renee Dunn, president of Workinpr.com: “Thesurvey data reinforces that despite growing signs of stability, the process of drastically ramping up for new business, then severely cutting back, then slowly building the business up again has left scars on our industry. As a result, now public relations leaders need help with strategic planning, allocation and new business development.”
Compared to their counterparts in the US and more industrially-advanced countries where public relations billings have reached an annual average of
US$200-million (Caywood, 1997), local ones loomed cash-strapped in gross revenue, as observed by Public Relations Counsellor Melvyn S. Martin, who for several years, has been managing Martin & Associates, Inc., his public relations firm. In terms of manpower and staff complement, foreign public relations firms have on the average, about 2,000 personnel, (Seitel, 1998) while it is of common knowledge in the industry that local ones maintain only an average of less than ten people at any given time. The comparison between foreign and local public relations firms have relegated the latter to the tail end, especially on the latest know- how in information communication technology.
The Council of Public Relations Firms (CPRF) based in the United States, in its Year 2000 report ranking the world’s top public relations firms by earnings saw revenues at the top 50 have more than doubled in just over three years. In 1997, revenues for the 50 firms approached $2-billion. In 2000, their revenues were near $4-billion. In 1990, the top 50 public relations firms ranked in about $1- billion. Looking at the 2000 revenues, an increase of almost 400 percent was reached. A total of 316 firms are covered in the CPRF 2000 Report. The top 25 public relations firms (with a total of 27,632 employees), based on annual worldwide earnings (in US $) are:
Firm Worldwide Total % Change Employee U.S. Revenues
1. Fleishman-Hillard $342,840,620 + 60.2 2,620 $266,831,000
2. Weber Shandwick Worldwide 334,960,755 + 26.7 2,672 219,184,449
3. Hill and Knowlton 306,264,000 + 25.9 2,389 177,858,000
4. Burson-Marsteller 303,860,000 + 11.6 1,955 182,259,000
5. Incepta (Citigate) 243,938,000 + 97.1 1,847 79,272,000
6. Edelman PR Worldwide 238,044,792 + 27.9 2,319 168,430,065
7. Porter Novelli Int;l 208,157,000 + 22.6 1,812 135,888,000
8. BSMG Worldwide 192,194,536 + 32.3 1,245 147,380,253
9. Ogilvy PR Worldwide 169,453,900 + 36.4 1,534 129,063,800
10. Ketchum 168,247,000 + 17.3 1,299 143,779,000
11. GCI Group/APCO Assocs. 150,661,643 + 33.6 1,324 87,520,051
12. Golin/Harris 136,993,000 + 35.1 913 107,905,495
13. Manning, Selvage & Lee 118,843,522 + 24.6 955 80,390,676
14. Euro RSCG 107,959,000 + 54.0 859 -
15. Brodeur Worldwide 84,200,000 + 20.1 750 53,500.000
16. Ruder Finn 84,125,000 + 41.6 627 75,574,000
17. Cordiant Comms. Group 79,810,000 + 26.4 - -
18. Cohn & Wolfe 64,409,000 + 36.2 455 41,945,000
19. Waggener Edstrom 57,905,085 + 14.6 456 56,163,310
20. Rowland Comms 45,391,000 - 8.7 284 26,033,000
21. The MWW Group 37,723,000 + 38.1 218 37,723,000
22. Text 100 33,681,553 + 65.5 445 13,003.773
23. Schwartz Comms 33,185,571 + 57.7 239 33.185.571
24. Publicis Dialog 32,646,000 + 38.9 234 32,646.373
25. Magnet Comms 26,652,000 +173.7 181 6,652,000
From the 1950s to date, nothing similar to this public relations firms’
identification and rankings has ever been made in the Philippines. Known professional public relations groups have never ventured to provide empirical data on this matter.
Public Relations Counsellor Ernesto E. Evasco, head of the FS Roman &
Associates, an advertising-related public relations agency, noted that even the large and globally oriented public relations firms have moved to acquire smaller ones, to expand their international networks all in the name of “globalization.” Burson- Marsteller, a US advertising agency-related public relations company, including
Shandwick, the large British-based public relations independent agency, have aggressively tapped local small ones, either through outright purchase or tieups.
(Cutlip, 2000) According to Baskin (1997) “With the mergers and acquisitions of the 1980s and early 1990s, public relations counseling firms have changed drastically. Many smaller firms were bought by larger firms who were themselves acquired by other major organizations, advertising agencies, and others. In addition to changes in the structure of counseling firms, the practice of public relations also changed.
(Baskin, 1997)
Mintzberg’s (1989) term for “Adhocracy” follows an organizational birth much like that of local public relations firms where they are informal; structure is created, implemented, or changed as needed and often in response to rapid growth and expansion… The structure that is present tends to be highly organic.
Leadership and control are vested in the owner-entrepreneur…” But, “The critical task that organizations face in this first stage of development is survival.” More importantly, he pointed out that:
“Although statistics on new business failures vary widely, a majority—between 60 percent and 75 percent—of new business ventures fail within the first six years. They fail for many reasons: Lack of adequate capital, inexperience, poorly conceived ideas, and hostile environments are just a few. The term liability of newness has been used to described the nearly overwhelming odds against success for new business.” (Hodge, 1996).
De Geus (1997), cited in a Dutch survey of companies in Japan and Europe, found out that their average life expectancy is “12.5 years.” The endemic failure was attributed to the “focus of managers on profits and the bottom line rather than
the human community that makes up their organization.” (Crainer, 2000) As Mintzberg (1989) had observed, “Ours has become, for better and for worse, a society of organizations. We are born in organizations and are educated in organizations so that we can later work in organizations. At the same time, organizations supply us and entertain us, they govern us and harass us (sometimes concurrently). Finally, we are buried by organizations.”
Local public relations firms’ management in general are more oriented to the concept of a family business concern. These firms primarily provide consultancy services, although updates indicate that they have shifted to offer other related services. But their management have from inception the ultimate goal of becoming profitable. Batalla (2001) in his study, said that “The traditional family firm is a single-business enterprise whose top management is dominated by family members. It can be a sole proprietorship, a partnership, or a corporation exclusively owned by family members.” The case of local public relations firms’ management is likened to Mintzberg’s view that “As entrepreneur, the manager seeks to improve his or her writ, to adopt it to changing conditions in the environment.”
According to Lee-Chua (1997), family corporations today account for a significant volume of industry in the US, with 98 percent identified as family firms.
The general conclusion reached: “Health and competence ratings coincide with the family’s level of individuation, use of power, nuclear alliances, and to some extent, extended relationships. The presence of professionals is often linked with company expansion.” The general observation in this regard however, was summed up in the
statements, “A healthy family is, more often than not, the secret of a successful business,” and that, “family and business cannot be kept separate.”
Entrepreneurial Orientation
PAPRC members, in individual interviews, observed that public relations firms’ managements tend to be more entrepreneurial-oriented like the overseas Chinese (Limlingan, 1994) whose ownership and management, especially those under sole proprietorships are usually passed on to the immediate members of their families. This trend is akin to the adoption of an entrepreneurial organization, the opportunistic orientation of which is appropriate in a developing country. For Limlingan (1994), “The focus is on the role of the chief executive, the training of family members in entrepreneurship and the selection of future successors on the basis of entrepreneurial qualities.”
Chandler, however, described personal enterprise to be composed of all directors who are owners, with no difference between inside and outside directors and no hierarchy. The onset of the family enterprise brought about the trend wherein inside directors are full time and are managers; outside directors are part time and represent the family. (Kobayashi, 1986 ) Their management create their environments. The dynamics of management and external environment led Lawrence and Lorsch (1977), to probe into the characteristics organizations must have to effectively meet different demands through their “Contingency Theory of Organization.” Their basic assumption is that organizational variables are in complex interrelationship with one another and with conditions in the environment.
“Contingency Theory” recognizes the systematic nature of organization and threshes out that: “The effective organization has integrating devices consistent with the diversity of the environment.”
A rejoinder from Clegg and Hardy (1999) pointed out, “There is no single organizational structure that is highly effective for all organizations. It sees the structure that is optimal as varying according to certain factors such as organizational strategy or size. Thus the optimal structure is contingent upon these factors which are termed as the contingency factors. To be effective, the organization needs to fit its structure to the contingency factors of the organization and thus to the environment. Hence the organization is seen as adapting to its environment.… Innovation becomes a major underlying contingency factor of the task uncertainty contingency.” They summed up the theory in this manner: “The core assumption of structural contingency theory is that low uncertainty tasks are most effectively performed by centralized hierarchy since this is simple, quick and allows close coordination cheaply.”
There is correlation between organizational adaptation and contingency theory, (Miles & Snow, 1978) but the alignment process called for adjustments. Top management is changed with the dual responsibility of aligning the organization with its environment and of managing the internal interdependencies thereby created. “Organizational survival may be said to rest on the quality of the ‘fit’
which management achieves among such major variables as the organization’s product- market domain, its technology for serving that domain, and the
organizational structures and processes developed to coordinate and control the technology. Maintaining and improving this co-alignment of environmental and organizational variables is obviously a difficult task, primarily because each set of variables changes according to its own dynamics, and each change places new or different demands on the administrative group”
The propriety to use adaptation to boost stability and predictability should be considered as a logical consequence. To Hodge (1996), adaptation means
“accountable for helping the organization change to meet new opportunities and threats in environment. Includes research and development, engineering, market research, and other departments responsible for innovation and change.” This prescriptive theory extends to the contingency theory which “has provided a coherent paradigm for theanalysis of the structure of organizations.” (Clegg, 1999).
Local public relations firms operate to acquire clients from the private and public sectors of society. These clients ultimately serve as the “umbilical cord” and
“life sustaining mechanism” to the firms’ existence. In their company profiles, they stated that clients could come from the different professions, organizations, or individuals. Their goal is profitability, regardless of the nature of assignments and conduct of operations. Generally, as they gain profits, their competitive advantages are strengthened. Complacency weakens to bring about their downfall. For the management of these firms, survival dictates existence, but the quest for longer
company lives are better left to chance. As a result, their shortened company lives compromise sustainability, dispel survival, and negate institutionalization.
Management Systems
Overseas Chinese have adopted the family business as the kind of organization in their “vigorous entrepreneurial pursuit of wealth.” Chen (1996), observed that these organizations are commonly dominated by one owner and tend to have simple structures and limited capacities. They thrive in relatively non- complex industries… where they have successfully carved their niche. Their competitive edge lies in their ability to forge a sophisticated network and maintain a high degree of flexibility, which allows them to transcend the limits of small size.”
As Marcus (1992) had emphasized, the size of the public relations firms is no measure of their ability to serve effectively. He explained that:
“Public relations agencies come in all sizes and forms. They range from the one-person firm to major international firms with offices in many cities throughout the country and the world…A small, well-run public relations firm that has imagination, skill, and energy can often accomplish more for even the largest professional service firm than can a giant public relations firm that has, as its most effective department, accounts receivable. Size, in public relations, is not of the essence ––
skill, and the imaginative and energetic dedication to using that skill in behalf of the client –– is.”
According to Lovell (1982), agencies are in business to “serve their clients and to make money in the process. They accomplish both these goals by providing advice to clients that is not available elsewhere. In the best firms, this advice is similar to counsel given by attorneys.” This rationale dovetails with the findings of Sperber and Lerbinger Sperber (1982):
“Situations exists when an organization requires outside public relations counseling services. First, small organizations may have no internal public relations staff. A counseling firm serves as a part-time staff to them.
These clients benefit by having a far broader range of talents available to them than they would be hiring a part-time employee. Second, all organizations encounter situations when the knowledge, skills, and contacts of their own staff can benefit by being supplemented with outside counselors.”
Seitel (1995) pointed out that the biggest difference between an external agency and an internal department is perspective. “The former is outside looking in; the latter is inside looking out (often literally for itself). Sometimes the use of an agency is necessary to escape the tunnel- vision syndrome that afflicts some firms, in which a detached viewpoint is desperately needed. An agency unfettered by internal corporate politics might be better trusted to present management with an objective reading of the concerns of its publics.”
The enigma that is the public relations firms in the Philippines has always been shrouded with “mystic spells,” under the cloak of covert (strictly confidential akin to the manner in which journalists protect their news sources) projects operations. Even in its overt (open) and routine activities, the public could easily observe how a firm’s protective shield is built to ward off destructive forces.
Through the decades, the stature of the firms has been transformed. Cutlip, Center and Broom found out that:
“Beginning in the 1980s, many ‘public relations agencies’ changed their titles to ‘public relations firms.’ The change reflects an increased emphasis on counseling and strategic planning services, viewed as more professional than the communication tactics produced by press agents and publicity agencies. Another reason for the switch is to position the firm as something different from advertising agencies and other vendors of services working on commissions. Although some still refer to ‘agencies’ in unguarded moments, most in the field prefer to be seen as similar to law firms, management consulting firms, certified public accounting firms, architectural firms, and consulting engineering firms.”
Public relations firms’ greater concern for billings, obsession for profits, and sweeping malpractices, are anathema to their existence and survival. They belong not only to the so-called public relations industry, but the service industry.
Corollary to this, Chandler (1962) maintained that in organizations, “structure tends to follow strategy.” This position was supported by Howel, a contemporary strategist: “Chandler’s point was that new challenges give rise to new structures.
The challenges of size and complexity, coupled with advances in communications and techniques of management control, produced divisionalization and decentralization."
Public Relations Counsellor Melencio B. Dayao, who runs MBDayao PR (his public relations firm), however, lamented that “insufficient or total absence of data on public relations firms in the Philippines, have seriously affected the sought- after public awareness and logical consequential patronage of prospective clients.”
What should be the strategy for public relations practitioners-entrepreneurs? For Chandler (1962), strategy is “The determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.” “Structure” for him is “the
design of organization through which the enterprise is administered” and that,
“strategy imposes stability on an organization. No stability means no strategy (no course to the future, no pattern from the past)… managing strategy is mostly managing stability, not change.” (Mintzberg, 1987). According to him, strategy represents the “mediating force” between a dynamic environment and a stable operating system. Strategy is the organization’s ‘conception’ of how to deal with its environment for a time.”
Mintzberg’s (1991) entrepreneurial strategy lies in the intentions which exist as the personal, unarticulated vision of a single leader and so are adaptable to new opportunities; “the organization is under the personal control of the leader and located in a protected niche in its environments; these strategies are relatively deliberate but can emerge too.” But for Miles and Snow (1978) “Effective organizations carve out and maintain a viable market for their goods or services.
Ineffective organizations fail at this market alignment task… For most organizations, the dynamic process of adjusting to environment change and uncertainty—of maintaining an effective alignment with the environment while efficiently managing internal interdependencies—is enormously complex, encompassing myriad decisions and behavior at several organization levels.”
Focus group discussions with some owners of public relations agencies in the PAPRC unanimously agreed to the conclusion that updated editions of foreign books on public relations, predominantly from the United States and Europe,
“generally tended to be redundant, since time and again, they prefer to re-echo
more the basics and fundamentals of public relations. Only a handful of them touched on the subject of public relations firms. For those who are familiar with their workings, the value and importance of engaging their services can not easily be taken for granted or ignored.” As explained by Baskin, Craig and Lattimore (1997), “Basically, an organization may decide to retain the services of a counseling firm because of special needs that it cannot meet internally. Inaddition to supplementing their own talent, organizations frequently employ outside public relations consultants to provide a third-party opinion.”
Benn (1982) sought to further state that an agency can handle intermittent workloads economically, while other advantages offered include “objectivity, specialized talents, wider and more frequent media contacts, greater freedom to counsel management frankly, acts as a buffer, can be fired more easily.” Caywood (1997) to this end, amplified that since public relations is by nature a long-term activity, “awareness, attitudes, and behaviors are rarely changed quickly.” An agency that has built an institutional memory on the client’s public relations – and overall business –– “challenges and achievements come out of the gate running on subsequent challenges.”
For his part, Harris (1991) justified the acquisition of public relations firms by advertising agencies, but observed that the thrust has however, “seriously affected” their operations and threatened the existence of public relations firms.
Among the reasons for the acquisition of public relations firms by advertising agencies are: “the perceived need for a full array of services matching competitive