Driving public relations: Chrysler moves PR under the HR umbrella, spurs debate about where PR reports

August 18, 2008

Copyright © 2008 PRSA. All rights reserved.

By Chris Cobb

The following article appears in the summer issue of The Strategist.

When the newly private Chrysler Corporation slid the firm’s PR function under its human resources umbrella late last year, it brought a shower of negative reaction from the PR community and auto industry press.

Chrysler’s PR-into-HR move is seen by critics as the relegation of public relations into a relatively slow, inward-looking environment where there is little understanding of how public relations can shape a company’s public image. Some suggest it was a tacit statement that, as a private company, Chrysler will now be limiting its information flow simply because it can.

Chrysler’s action has sparked debate over where the PR function should fit on a company’s organizational chart.

In some companies, public relations reports to the legal or marketing department, which critics say seems like a better fit than it actually is. The only effective place for the senior PR executive, they say, is sitting with the CEO and other decision-makers developing company policy.

“You almost have to be the CEO’s alter ego,” says Jason Vines, Chrysler’s former vice president of corporate communications, whose departure from Chrysler last December preceded the company’s controversial switch. “Once the relationship is developed, you can almost replace one another because you’re thinking along the same lines all the time. There has to be an incredibly high level of trust between the two so that a CEO making hundreds of thousands or millions of dollars trusts a guy making far less. You have to have the guts to tell the CEO when he’s naked and to be able to say it without fear of retribution. I was able to do that at Chrysler.

“Public relations is a service for the entire organization and has to be its voice,” he tells The Strategist. “That’s why public relations should have unfiltered access to the CEO.”

Vines, now a senior vice president with the Detroit-based high-tech firm Compuware, won’t discuss why he left Chrysler other than to say there was a clash of styles with Chairman and CEO Robert Nardelli, who went outside the company to hire Robert Marston and Associates to handle the company’s media relations.

“I couldn’t do my job in that environment,” he says. “And I wanted a change.”

Before he left Chrysler, Vines says he heard that the company was contemplating diverting public relations into human resources, “But I don’t know why they did it,” he says.

“It was no surprise”
Chrysler’s human resources chief, Nancy Rae, a 30-year veteran of the company through its many corporate manifestations, says after Vines left it was no surprise that Nardelli aligned public relations with human resources.

It was, she says, part of the culture transformation — and the search for “synergies and efficiencies” — that Chrysler began in August 2007 after Cerberus Capital Management bought 80 percent of Chrysler from its German parent, then known as Daimler-Chrysler.

“It was very clear early on that Bob was going to rely on human resources and communications as two strategic organizations to drive this culture transformation,” she says. “I have always worked closely with communications, especially internally, during such events as acquisitions and mergers.”

Rae says that in the relatively short time she has been the PR boss, she has developed a new respect for public relations, especially the external aspect. However, she rejects the notion that she is from the wrong business culture to do the job well.

“I was initially puzzled [as to] why the reaction was so negative, because I was sitting in all the meetings, and I am a director who reports to the CEO,” she says. “I am just wearing two hats now.”

(On July 1, Rae was named executive vice president of human resources and communications, and will lead the integration of the company’s HR, employee relations and PR departments. The new role gives her additional oversight of employee relations. The role of senior vice president of employee relations will be eliminated, the company said.)

To Vines’ point that all large companies need a PR executive guiding the CEO through the communications pros and cons of policy, Rae says she is well able to manage that task.

“You don’t spend 30 years in the Detroit auto industry without some sensitivity about how a specific policy action will be taken from an external or government or retiree standpoint,” she says.

Monday is senior executive meeting day at Chrysler, and Tuesday Rae meets with her communications staff. If advice is needed, that’s typically when she seeks it.

“They’re the ones who have the gut instinct and the connections,” she says. “Like any head of a function, I don’t do it alone and won’t do it alone. We have wonderfully talented people. But I’m not the boss who sits with her feet up on the desk and says, ‘Give me a report on Friday.’ I’m a very hands-on boss.”

“Private is not being silent”
In May, Vines’ replacement and Chrysler’s main spokesperson, David Barnas, suddenly quit. Although Barnas insisted that he parted on good terms for a better opportunity, one insider interpreted the move as having “voluntarily gone from the majors to the minors to do a job he could do before nine o’clock,” which implies that not all is hunky-dory among Chrysler’s 30-member PR team.

“It’s a terrible time to do this,”says John Guiniven, APR, Fellow PRSA, and Chrysler’s former director of corporate public relations. “Human resources is a reflective discipline. Can it react quickly enough to crises? Can public relations under human resources support lobbying efforts? Can it deal with activists on things such as environmental matters?”

Guiniven, who writes the “Ask the Professor” column for PR Tactics, PRSA’s monthly newspaper, dismisses the notion that private firms can relegate their PR functions.

“It’s a private company dealing with public issues, and it’s the external environment that dictates how you operate,” says Guiniven, now an associate professor of corporate communications at James Madison University. “The external environment is such that you need a sharp PR department ready to deal quickly with many issues. HR is not the place to do that. The two cultures are very different.”

Rae has heard criticism since she took over responsibility for public relations at Chrysler but says the company has been in top gear since privatization and is moving faster to re-establish itself than at any other time in her career. Her newly inherited PR staff, she insists, is key to the transformation and as sharp as ever.

“The staff here is working 24/7 whether it’s a crisis or not,” she says. “We have a very talented team here, many with 20 years or more of experience in the business. They haven’t missed a beat.”

She rejects the accusation that privacy equals lack of communication and, for evidence, points to the high-profile media exposure her PR pros have generated for Chrysler since the beginning of the year, community events in and around Detroit, and other appearances for company products.

“Clearly, being private is not being silent, and I think our track record from December has shown that we’re anything but that,” she says. “We have been everywhere. It’s been nonstop.”

“Not just a mouth”
Edward Lapham, Automotive News editor and columnist, says industry reporters don’t rely exclusively on company PR people for information.

“But it’s very important for me as a reporter and editor to find out what’s really going on when I make a call,” he says. “PR people are most effective when they report directly to the CEO because they are plugged in. Most of the time, they can speak for the company without having to run to someone else to find out what’s going on. Effective PR people are not just a mouth, they are also eyes and ears. They pay attention to what’s going on.”

Lapham says he has seen numerous experiments in the auto sector over the years.

“Years ago the Chrysler PR person reported through a vice chairman, not the CEO,” he says. “GM had public relations reporting through a lawyer. They were not good days dealing with General Motors. At Ford they just changed CEOs, and the public relations goes through marketing, which isn’t much better. It gives the appearance that the company doesn’t value that line of communications.”

There has clearly been a change at Chrysler, he adds.

“Our reporters are a little frustrated because there is no transparency,” Lapham says. “When [Chrysler] was a public company, it needed to file and disclose some things. It was translucent. Now it can be as opaque as it wants to be. It’s partly attributable to Chrysler being privately owned and partly a change in attitude that says we no longer need to put as many resources into public relations.”

“They don’t know what PR is”
The Chrysler reporting model can work, but a company serious about using public relations to its full potential has to bring the ranking PR executive into the decision-making circle, says consultant Gary Rich, former head of human resources at Reader’s Digest and a PR professional earlier in his career.

“For PR people to be effective, they need to be at the table in real time and know what the issues are,” he says. “Show me an organization that has PR reporting into HR and I’ll show you an organization where the CEO has not seen the value in what PR can deliver.”

At Reader’s Digest, Rich says he brought his PR chief with him to key meetings with the top brass and after more routine meetings would brief the PR staff immediately.

“I didn’t think I could add value to a PR pro,” he says. “I had people who had been doing it their entire careers. I had been doing it for five minutes. So I gave them an enormous amount of latitude and positioned myself as an internal support and advocate of my PR people. When things got tough, I stepped out of the way and let the PR head deal directly with the CEO.”

Janine Turner, a veteran recruiter who leads the PR and corporate communications sector for Mandrake Executive Search Consultants in Toronto, says she has counseled numerous companies against lodging public relations under human resources, marketing departments or elsewhere.

“It isn’t a smart move, and it’s a mistake too many companies are making,” she says. “When you’re asking your PR team to be the voice of the company or you’re trying to control the brand through public relations and marketing, you must have one voice. HR might be [full of] wonderful people who know a little about a lot in their organization, but they don’t know what public relations is and don’t have the capacity to cope with crisis situations.”

If public relations is to control a company’s external communications effectively, reasons Turner, it must be in a position to caution and advise the decision-makers.

“They know what slings and arrows are being fired at the company, and they know that because they monitor blogs, newspapers and other news media,” she says. “This is all part of reputation management, and neither human resources nor marketing can control a company’s external reputation.”

Turner says she recently launched a search for a senior manager of communications for a major retail corporation and was told partway through the process that the new hire would report to human resources and not the CEO, which was what she was telling candidates.

“I strongly counseled that this would not be a good idea,” Turner says. “Thankfully, they took my advice. As a side note, the HR manager shared that she herself was not always kept in the loop with regard to the strategic vision of the company.”

“An equal partner”
According to the Strategic Public Relations Center of the USC Annenberg School for Communication, the naysayers might be right. The school’s fifth Generally Accepted Practices survey of public relations, released May 23, suggests that it isn’t just information that flows better when the senior PR executive sits with the CEO. “Communications organizations that report directly to the C-suite — either the chairperson of the organization, the chief executive or the chief operating officer — consistently enjoy higher budgets relative to organizational gross revenues and greater control of the enterprise’s broader communication activities,” concluded the survey. “When an organization’s PR teams do not report to the C-suite, the results, almost uniformly, are diminished overall budgets and reduced cognizance of reputation considerations.” The study also indicates that Chrysler’s move does not represent a trend.

Public relations is often seen as being a relatively easy function by too many people who know little or nothing about it, says Rich.

“If you took 100 HR people and said, ‘I want you to take responsibility for public relations,’ my guess is that you’d get a high percentage saying ‘yes,’” he says. “If you said, ‘I’d like you to take over the controller or research and development function,’ my guess is that you would get the opposite reaction. But there is something about PR where most people  around the company think, ‘I can do that.’ It’s a mistake.”

Both Vines and Guiniven say PR professionals — and the profession itself — must take a share of the blame.

“When the headhunter calls and tells you the position reports to the chief marketing officer or human resources you should say, ‘No, thank you,’” advises Vines. “If enough good people do that, the headhunter will go back to the company and say, ‘Hey, I’m not getting the best here because they want to report to the CEO.’ There’s got to be push back.”

Guiniven agrees.

“PR people take umbrage at being pushed aside, but quite often they get what they deserve because too many of them are too willing to go into a job with a ‘Tell me what to say and I’ll write it for you’ attitude. They should be saying, ‘I’m an equal partner here and I can contribute to your strategy.’ Go in without making that clear and you get what you deserve — a job writing press releases. So the message is, go fight for your rights.”

Author and journalist Chris Cobb is a senior writer at the Ottawa Citizen newspaper in Canada’s capital where he specializes in reporting on media and government communication. He is a frequent contributor to PR Tactics.

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