Quantifying the Value of a Public Affairs Department

1
Quantifying the Value of aPublic Affairs
Department

• Brian Hawkinson
• Director, Center for Public Affairs Management
• American Gas Associations
• Fall Public Relations Strategic Marketing
  Meeting
• September 16, 2005 Washington, D.C.

2
Quantification v. Value

• Quantification Measurement
• Value Return on Investment
• Resist the temptation (and pressure) to quantify
  performance before you define Public Affairs
  value in terms of its role in the success of the
  business.

3
Managing Perception of Value

• Internal customers challenge performance of
  Public Affairs in measurement terms
• Help internal customers think strategically
  conceptually about Public Affairs in terms of
  value.

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How Public Affairs Creates Value
Opportunities
Business Impact
Risks
Probability of occurrence
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Strategic Public Affairs Management

• Strategic
• Define the role of Public Affairs in the business
• Tactical
• Decide how Public Affairs will do its job
• Measurement
• Document impacts
• Determine customer satisfaction
• Identify opportunities to improve performance

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Strategic Challenge
Business Plan
Broad Public Affairs Strategy
Value Proposition

• Business situation
• Goals strategy
• Strengths weaknesses

• Types of
• Issues
• Forums
• Objectives
• Specific to the organization

Define the role of Public Affairs in
the organization

• Policy-making process
• Public perception
• Threats opportunities

Environmental Scan
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Strategic Challenge Value Proposition

• What does Public Affairs do for the business?
• How does Public Affairs impact the organizations
  ability to compete?
• Freedom to operate
• Cost avoidance
• Market opportunity/advantage
• Brand image/reputation
• Speed
• Productivity

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Public Affairs Strategic Role - Examples of
Corporate Value Propositions

• EDS Shape public policy in order to create
  market advantage for business units worldwide.
• MeadWestvaco Recognize emerging threats Shape
  public policy Focus skill, networks resources
  on specific company issues.
• Dow Chemical Co. Manage public policy to
  impact Dows license to operate and sell,
  financial position or public perception.

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Tactical Challenge
Define role of Public Affairs in the organization
Prioritize Issues
Develop action plan
Implement
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Tactical Challenge

• How Public Affairs gets its job done
• Issue prioritization
• Action planning
• Resource requirements/allocation
• Execution

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Issue Prioritization (Motorola)
Issue Critical to Motorola (increased profits or
reduced costs)
No
Yes
Other Electronic Companies and/or Industries
Impacted
Unique to Motorola
No Action
No Leadership Provided by Others
Moderately Effective Leadership Provided by Others
Highly Effective Leadership by Other
Companies and/or Assns.
Priority 1
Priority 1
Priority 2
Priority 3
Compelling external (PR) or other reason to
get involved Priority 1
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Issue Prioritization (PG)
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Action Planning Stakeholders that Affect
Business Success
Legislators Regulators
Ability to Achieve Business Goals
Customers
Shareholders
Media
Communities
Managers Employees
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Action Planning Public Affairs Activities that
Influence Actors
Legislators Regulators
Government Affairs
Ability to Achieve Business Goals
Customers
External Communications
Shareholders
Investor Relations
Media
PR / Media Relations
Communities
Community Relations
Managers Employees
Internal Communications
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Measurement Challenge
Business plan
Environmental scan
Implement
Produce business impacts
Measure Public Affairs performance
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Producing Business Impacts Public Affairs
Impacts on Business Success
Government Affairs
Legislators Regulators
Freedom to Operate
Ability to Achieve Business Goals
Customers
Cost Avoidance
External Communications
Market Opportunity
Investor Relations
Investors
PR / Media Relations
Brand, Image Reputation
Media
Community Relations
Communities
Speed
Internal Communications
Managers Employees
Productivity Culture Shaping
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Strategic Public Affairs ManagementA Public
Affairs Management Cycle
Business Plan Environmental Scan
Broad PA Strategy
Value Proposition

• Internal
• Business situation
• Strategic objectives

• Types of
• Issues
• Forums
• Objectives
• Specific to the organization

Define the role of Public Affairs in the
organization
Strategic Challenge

• External
• Policy-making process
• Threats opportunities

Prioritize issues
Develop action plan
Implement
Tactical Challenge
Produce business impacts
Measure Public Affairs performance
Measurement Challenge
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Measuring Performance Guidelines

• Establish performance standards
• Aligned w/ organizations strategy goals
• Based on Value Proposition
• Consistent w/customer requirements
• Compare actual performance to standards
• Document impacts
• Identify performance gaps
• Evaluate opportunities to improve

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Top 5 Measurement Tools/Techniques

• 2005 State of Corporate Public
  Affairs Survey

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1. Objectives Achieved

• Annual agreement
• Negotiate with customer(s)
• linked to organizations strategy goals
• based on your Value Proposition
• Prioritize issues projects
• Establish performance standards
• Provide for periodic review

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2. Internal Customer Satisfaction

• What
• Key performance indicators
• Meet requirements?
• Opportunities to improve
• How
• Internal surveys
• Executive interviews

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2 Internal Customer Satisfaction Survey (Texaco)
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3. Legislative Wins Losses

• What
• Pass/increase benefit of helpful bills
• Defeat/decrease impact of harmful bills
• How
• Define success
• Articulate your role
• Manage expectations

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4. Quantitative Impact

• What
• Bottom line impact on key projects/issues
• How
• Based on goal alignment
• Utilize customer values measures
• Computes
• Increased revenues
• Reduced costs
• ROI Value Created/Cost

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4. Value Analysis Model (EDS)
Image
Repair
Enhance
Value Created
Market Share
Revenues
Financial
Public Affairs Project
Customer Goal
Profits
Human Resources
Internal

Other
Costs Incurred
Public Relations
External
Consulting
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4a. Financial Contribution Model (Weyerhaeuser
Co.)

• Key elements
• Based on integrated strategic planning
• Focused on key issues/projects
• Measures financial impact
• Recognizes outcomes from joint projects

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4a. Financial Contribution Model (Weyerhaeuser
Co.)

• Calculation
• 100 Impact Company works alone
• 10 Impact Work w/Trade Assn.
• 1 Impact Work w/Business Assn.

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5. External Customer Perception

• How to Measure Causal Relationship?

Public Affairs Work
Specific Outcomes
Improved Brand, Image or Reputation
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Tools to Gauge Corporate Reputation

• Fortune/Roper Corporate Reputation Index
• Reputation Quotient (Harris Interactive)
• Brand Asset Valuator (Young Rubicam)
• Image Power (Landor Associates)
• BrandVision (Market Facts, Inc.)
• BrandPerceptions CORPerceptions
• The Reputation Report (Walker Information)

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Key Findings

• No Silver Bullet

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Key Findings (contd)

• Common Attributes of Reputation
• Financial performance
• Product quality/innovation
• Quality of management
• Vision and leadership
• Community involvement/social responsibility
• Credibility/effective communications
• Crisis response
• Ability to attract, develop, retain quality
  employees
• Global business acumen

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Public Affairs Impacts onCommon Attributes of
Reputation

• Financial performance
• Vision and leadership
• Credibility
• Community involvement/social responsibility
• Crisis response

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Communicate Value Created

• What
• Quantitative qualitative impacts
• Based on PAs Value Proposition
• Target information to recipient (CEO, head of
  business unit, etc.)
• How
• Customer reviews (project, annual, etc.)
• Newsletters, issue briefs, publications

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So What?

• Was effort to Quantify the Value of Public
  Affairs worth it?
• Is there a better understanding of PAs role in
  organizations success?
• Are PA managers better able to prioritize issues,
  plan
• allocate resources?
• Are PA managers better able to document
  bottom-line impacts?
• Are PA managers better able to identify
  opportunities to improve performance?

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Review

• Quantification v. Value
• Strategic Public Affairs Management
• Public Affairs Value Proposition
• Performance Measurement
• Communicating Value
• So What?

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References

• Assessing, Managing Maximizing Public Affairs
  Performance, Public Affairs Council.
• Public Affairs Management Report, Considerations
  for Measuring Public Affairs Value, Public
  Affairs Council.
• 2005 State of Corporate Public Affairs Survey,
  Foundation for Public Affairs.

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Quantifying the Value of aPublic Affairs
Department

• Brian Hawkinson
• Director, Center for Public Affairs Management
• ? 202-721-0904 ? bhawkinson_at_pac.org