Amongst some commentators there is a worrying trend to see anything that creates a profit in the private sector as bad. As a progressive in business, I tend to see anything that operates within the private sector that doesn’t make a profit as bad. Why? A business not making a profit means staff layoffs, pay freezes or public sector bailouts.
Yet in an increasingly complex and global economy, it is not enough for a business just to be profit-making. It is also vitally important for a business to demonstrate and communicate to its customers, regulators and the wider public that it can address three basic points:
As a communications professional, I believe it is critical that our clients understand the need to tackle these issues and, through increased transparency and good communications, they inform their audiences what it is they are doing and why. Hiding away - either behind a legal department or a wall of secrecy - is only ever a short-term solution.
Many markets do not provide perfect competition, and monopolies or oligopolies need effective and firm regulation to ensure that the companies operating in these markets make ‘normal’ profits (a fair return on investment, or through innovative efficiencies). Companies that operate in markets which due to the absence of perfect competition are regulated need strong but fair regulation.
It is also important that profits are made by organisations that meet all their costs, and do not create external costs which are passed directly to the taxpayer, without the business making a contribution. Public concern about companies making profits but not meeting their obligations has grown, and the recent uproar about recycling instigated by Sir David Attenborough and the problems that waste materials are causing to wildlife have brought these issues to the fore. If companies cannot tackle these issues at source - for example by reducing waste - then they have to make and be seen to make payments into the national purse to allow the public sector to address the costs. This means paying their fair share of tax, without moving their profits from the country of origin to offshore tax havens or low tax territories. PR professionals need to ensure their clients and employers are aware that issues of this nature are now not just accounting issues, but reputational issues as well.
Finally there is the concern about ensuring that the rewards of success are properly shared. Very few people begrudge an entrepreneur making money by creating a popular product or risking their all in starting out alone, and believe that they should receive a reward for taking such a risk. But questions will continue to be asked about why corporate leaders consistently outperform their companies in their pay increases and rewards, or why there is an acceleration in pay for those at the top of public services when those at the bottom are seeing their wages cut or frozen. Now more than ever, the boardroom has to be a transparent place, occupied by both men and women on merit whose rewards are performance-based and closely linked to that of their companies. In the good times rewards should be shared fairly but equally so must the pain in the bad times. PR as a profession has a duty to challenge existing practice when it will not stand up to scrutiny and ensure that corporates get their house in order, before they face external pressure from regulators, legislators or the fourth estate.
