The center of attention: Business writer William Holstein discusses the tense relationship between CEOs and the media, and the dangers of stonewalling

August 1, 2008

Copyright © 2008 PRSA. All rights reserved.

By John Elsasser

The following article appears in the summer issue of The Strategist

Today’s CEOs have a PR problem: They’re getting shellacked by the media. And this is costing companies more than lost reputations — it’s making a dent on the bottom line. At least that’s the opinion of veteran business reporter William Holstein in “Manage the Media (Don’t Let the Media Manage You),” a book released in April by Harvard Business School Press.

Holstein writes for The New York Times, Fortune, BusinessWeek, Corporate Board Member, Dealmaker and Strategy + Business. During his 34-year career, he has also been editor in chief of Chief Executive magazine.

Here, Holstein explains how CEOs can strengthen ties to the press, the dangers of a company going on the offensive and why PR professionals need better business acumen.

Based on your experience interviewing top CEOs, did you see a need for a book like this? Did you often think during an interview, “I can’t believe so-and-so just said that”?

William Holstein: It has always mystified me that companies are not better at communicating. Every journalist wonders: Why is the company so defensive? Why is the company so ham-handed? Why is the company and the top management so seemingly out of touch with what we feel is the pulse of the American debate? They seemed cut off somehow.

That’s a recognition [I gained] as a journalist, but the other recognition was while I was editor in chief of Chief Executive magazine and then editor in chief of Directorship magazine.

The sophisticated coalitions of labor, environmental, religion and a variety of different activists are extremely skilled at framing their issues and communicating to the media. They were clearly winning. For that matter, they are still winning. And it’s not that I’m on either side — I think there ought to be a healthier debate rather than a one-sided debate.

It seems as if CEOs were caught off-guard by these shareholder activist groups and the continued explosion of online channels.

Holstein: They were. These two phenomena have exploded in just the last two years. The vast majority of CEOs made their careers and earned their shops many years before that happened. This caught senior management by complete surprise.

CEOs have never really liked to deal with the media because of their skill sets. Out of the Fortune 500 companies, none of the CEOs have had significant media experience other than, perhaps, Don Graham at The Washington Post and Peter Kahn at Dow Jones — who’s no longer even there. Almost none of them have had exposure to working in public relations or the media. They don’t understand the game. The top jobs are pressure cookers, so most of the CEOs I’ve known rely on instinct — a surprising amount of instinct. They react on the basis of their training and of what they know.  Because public relations and communications are not something that they know, they’d much rather have someone else deal with it.
Because of these changes in technology and the structure of the shareholder movement, they recognize that if they don’t come out and engage [the media], it’s going to have a crippling effect on their own jobs and on the ability of the companies to operate. It could even affect the ability of the companies to make money.

What are some of the dangers of a company going on the offensive?

Holstein: One classic case was Bill Ford at Ford Motor Company. He tried to go on a green offensive to demonstrate that he cared. At the same time, he didn’t have any products that demonstrated his commitment to becoming a greener manufacturer. So he was largely criticized as being a hypocrite because he didn’t walk the walk.

A company that has a communication strategy that is fundamentally at odds with business realities is in great danger of being ridiculed and attacked for hypocrisy. Companies need to match their communication strategies with their core business strategy. This is one of the revelations [I’ve gathered in] my research for [my] book. Your communication strategy has got to be baked into your business strategy. They can’t be different. When you sit down and decide you are going to make a product or expand into certain markets, you need to have somebody at the table who understands the communications implications and can advise management [of potential problems]. The communications people have to be much more trained and steeped in the business so they will be able to engage CEOs about the direction of the core business. A lot of PR people have not been able to do that.

Are you seeing a trend toward corporations taking this communications role more seriously?

Holstein: I’d say it’s still the minority. Maybe only 10 or 15 percent of the companies really get this. Jeff Immelt [General Electric chairman and CEO] had an earnings disappointment earlier this year, and he did not hide. He took the beating in public and gave interviews to reporters such as CNBC’s Maria Bartiromo. He knew that he had to engage the public eye, which he did. Other CEOs might have hidden and stayed away from the public debate about their performance. Boards might lose confidence in those who can’t stand up and articulate what happened.
Immelt is one CEO who understands the nature of all the different constituencies that he must deal with, and he has a gift for being candid and direct in those communications. His communication skills may be so significant that it has helped him keep his job. A lot of other CEOs in the country would be out on their keisters if that happened to them.

In your book you call stonewalling a critical mistake. It seems like often we only hear from someone when something awful happens. Are you still seeing this?

Holstein: Yes. The majority of companies haven’t been able to carve out a message. The current environment demands that companies have a mission that they can explain. If a company can find a mission and articulate it proactively and engage with the different constituencies about what they’re trying to do and how they’re trying to do it — that’s a winning strategy. Then you help shape the debate about your company, and you do more than just talk about your earnings.
I still think a handful of companies are able to do that effectively. In most cases, the PR staffs are basically in the bunkers, hiding from media and top management. They’re caught in a difficult crossfire. Management expects them to be able to sway media impact in ways that just can’t happen. You’ve got to have senior management involved.

The media expect PR people to be able to produce clearer argumentation from the right people about what they’re doing. Many times PR people just can’t do that. They want to protect their own jobs by not exposing their people to the media. I’d say the majority of PR shops are not happy places. They’re hiding. They’re scared.

What would you say to empower someone?

Holstein: So many PR people have not chosen to develop a deep expertise about business. They like the comfortable space of understanding how the media work, writing press releases and giving presentations, but they have not made the commitment to developing a deep understanding of the business. That’s what companies really need. They need PR people in their shops who are able to sit down at the table with CEOs, CFOs and chief operating officers and [talk] about the future of the business and be taken seriously. That means they’ve got to come out of their comfort zone a little bit — or maybe a lot — and become deeply conversant about the business challenge. That would also help them with the media. I can’t tell you how many times PR people have called me up and suggested I write about something, and when I ask just a few simple questions, they don’t have the answers. That undermines their credibility big-time.

Going back to the media for a minute, how has traditional media coverage of corporate America changed?

Holstein: The quality of the coverage continues to deteriorate as business media increasingly move toward pop [culture]. The New York Times, Portfolio and Fortune have done it; they are writing about business sort of as an outgrowth of entertainment, games, music or popular culture. They’re not really writing about the core issues that the business world is facing.

There’s been a clear deterioration in that respect. I know every company that I talk to has been frustrated by the experience base of the people assigned to cover them. I mean Coca-Cola in Atlanta is frustrated that it gets covered by the No. 2 or No. 3 people in the Atlanta bureaus of large news organizations and they don’t have a straight shot to the people making the decisions in New York. Caterpillar in Peoria, Ill., also has no idea how to get to the key media decision-makers in New York. The news media in general are not really interested in the core issues that these people face and are assigning relatively junior people to cover the companies. It’s just a recipe for frustration.

Do you think CEOs still have the celebrity cachet they once did?

Holstein: I don’t know. There was a time while I was active in writing when CEOs were on the covers of all the magazines, when everybody was getting rich during the Internet bubble and the media were very boisterous about the guy who built Oracle — the Larry Ellisons of the world. Then Enron hit and CEOs were vilified. They were the villains, and they’ve been at the heart of what’s gone wrong with American capitalism. Now it feels like the pendulum is moving again. I would say it’s in the middle someplace, that we’re not seeing CEOs being lionized and held up as celebrities, but they’re not being vilified quite as much as they were three or four years ago. If CEOs are smart, now would be a time to take advantage of that and make their case about why what they do is so important and why they need to earn the money that they earn. This is a good time to be coming out and explaining why what your company does is important to the American economy and the American way of life.

CEO compensation seems to be an issue no one knows how to frame.

Holstein: Boards and CEOs are at a loss trying to get a grip on it. The key buzz phrase is “pay for performance” and if people perform, I don’t think anyone would say that they shouldn’t get paid well. If they’re creating a billion dollars in shareholder wealth and they’re getting $10 million, everybody agrees that that’s fair. But when the performance of the company is going down and compensation of the CEO goes up, that’s a problem.

I’d say the No. 1 communications and PR challenge that CEOs face is how to explain how much money they’re making. It’s an issue that is hot with lots of different people. There has been a failure to get a grip not only on the fundamental underlying reality but also on the explanation of it.

Would you want to be a CEO today?

Holstein: Well, it’s a fascinating job. I like the intellectual challenge of it. It’s fantastically complicated, but, at this stage of my life, I don’t think I’m willing to give 16 hours a day, seven days a week to it, so I’d say you probably should look someplace else.

John Elsasser is the editor in chief of The Strategist. He joined PRSA in 1994. E-mail: john.elsasser@prsa.org.

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