Public Relations Case Study

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communication doesn’t take place if a message doesn’t reach the intended receivers and exert the desired effect on those receivers. Even if a communication is understood clearly, there is no guarantee that the motivated action will be the desired one. In fact, a message may trigger several different effects.

1. It may change attitudes. This result, however, is difficult to achieve and rarely happens. 2. It may crystallize attitudes. This outcome is much more common. Often a message will influence receivers to take actions they might already have been thinking about taking but needed an extra push to accomplish. 3. It may create a wedge of doubt. Communication can sometimes force receivers to modify their points of view. A persuasive message on cable TV can cause viewers to question their original thinking on an issue. 4. It may do nothing. At times, the best laid communication plans result in no action at all.

Whether the objectives of a communication have been met can often be assessed by such things as the amount of sales, number of followers, viewers, or votes obtained. If individuals take no action after receiving a communication, feedback must still be sought. In certain cases, although receivers have taken no discernible action, they may have understood and even passed on the message to other individuals.

Last Word Knowledge of how and when and to whom to communicate is the primary skill of the public relations practitioner. Above all else, public relations professionals are professional communicators. That means they must not only be knowledgeable about the various Web-based techniques and tactics available to communicators in the 21st century but also understand the theoretical underpinnings of what constitutes a credible message and how to deliver it. The early years of the 21st century indicate that effective communication has never been more important. With the emergence of worldwide terrorism; the Arab Spring; the deepening cultural chasm between West and East, rich and poor, and haves and have-nots; along with economic challenges from the soaring cost of energy to the threat of global recession, to the emergence of China and India as economic super powers—the need for honest, straightforward, and credible communication is critical. There is no trick to effective communication. In addition to mastery of techniques, it is knowledge, experience, hard work, and common sense that are the basic guiding principles. Naturally, communication must follow action; organizations must back up what they say with what they do. Omnipresent advertising, a winning Website and social media presence, slick brochures, engaging speeches, intelligent articles, and good press may help capture the public’s attention, but in the final analysis the only way to obtain continued public support is through proper performance.

Discussion Starters 1. Why is it important that public relations professionals understand communication? 2. What are some principal goals of communication, and what are some contemporary examples? 3. Why do words such as liberal, conservative, profits, and consumer activist spark semantic skyrockets? 4. What is the role of a public relations professional in the S-E-M-D-R communications process? 5. What is the difference between the symmetric and asymmetric models of communication? 6. What is meant by constructivism and coordinated management of meaning? 7. What is meant by the media as agenda setter? 8. Why is feedback critical to the communications process? 9. What common mistakes do people make when they communicate?

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PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. 10. What are some contemporary examples of the changing meanings of words over time?

Pick of the Literature The Power of Communication Helio Fred Garcia, Upper Saddle River, NJ: Pearson Education, 2012 One of the brightest lights in the communication profession, Professor Garcia draws on first-hand experience to detail how communication is as powerful as any factor in the 21st century. The book draws heavily on current examples to link leadership and communication. From Bill Gates to John McCain, David Letterman to Steve Jobs to the CEOs of Hewlett-Packard and Netflix, Garcia applies sensible lessons to contemporary cases. Through his experience as a teacher and practitioner and especially as counselor to leaders in the military, Garcia offers a valuable text for any public relations practitioner. As the author puts it, “Words matter. Words shape world views.” And as one contributor adds, “If you can’t communicate, you can’t lead.”

Case Study Walmart’s Bribery Shutdown For the Sunday New York Times, the story was unprecedented. On April 22, 2012, the world’s most respected daily newspaper published a lead story on its front page that extended to three additional full pages inside the paper. The story concerned a multiyear investigation by the Times into bribery allegations at the largest foreign subsidiary at the largest retailer in the world. Walmart de Mexico, the story said, was responsible for orchestrating a campaign of bribery to win market dominance. In its rush to build stores, “the company had paid bribes to obtain permits in virtually every corner of the country,” according to the Times. The dispatching of bribes to government officials was not only unethical, it was illegal—a violation of Mexican laws and Foreign Corrupt Practices Act, a federal law that makes it a crime for American corporations and their subsidiaries to bribe foreign officials. And that was only part of it. Further, the Times alleged, Walmart was fully aware of the bribery accusations against it; but rather than proceeding with a full-scale investigation to reach conclusions, it chose to shut down its internal investigation.

Internal Tug of War By most accounts, Walmart, the world’s largest retailer, was also among the world’s most beleaguered companies. Walmart Stores, Inc., founded by the legendary Sam Walton in bucolic Bentonville, Arkansas, is the world’s largest private employer, serving an astounding 138 million customers per week in 8,500 stores in 15 countries under 55 different names. It makes $419 billion in annual sales—or about $35 billion a month—and controls about 20% of the retail grocery and consumables business in the United States. Walmart is also the world’s largest private employer, with 2.1 million worldwide employees, or, as the company puts it, “associates.” In Mexico, Walmart employs 209,000 people, making it the country’s largest private employer.

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Over the years, Walmart has been a lightning rod for controversy. It has been charged with everything from being anti-union to anti-female to anti-community. Through it all, Walmart has adopted a commitment to the highest moral and ethical standards. It has worked to improve its public relations, becoming a more open and transparent company. So when a former executive in the company’s Mexican subsidiary notified Walmart management of the alleged bribery scandal in 2005, it set off, according to the Times, “a prolonged struggle at the highest levels of Walmart” between those eager to uphold the public standards the company had embraced and others intent on downplaying any allegations that might interrupt Walmart’s relentless pursuit of growth. Indeed, although Walmart’s investigation of the alleged Mexico bribery allegations extended to the highest reaches of the company, the company failed to report the existence of its internal investigation to the U.S. Justice Department until December of 2011—seven years after the first reports of problems—and right after it learned that The New York Times was snooping around in Mexico.

El Lobo Guarding the Hen House In its exhaustive four-page story, the Times suggested that its investigation, which included reviewing thousands of government documents and extensive interviews including 15 hours with the former Walmart executive who originally blew the whistle, showed “credible evidence that bribery played a persistent and significant role in Walmart’s rapid growth in Mexico.” According to its accusers, Walmart’s strategy was to build stores so fast in Mexico that its competitors would have little time to react. To accomplish this rapid expansion, according to the Times, required bribes, bribes, and more bribes to change zoning maps, reduce environmental objections, and otherwise expedite ordinarily lengthy permit processes. To deliver bribes to officials at every level of the Mexican bureaucracy, the company hired “gestores,” a fixture in Mexican society, who are paid as “fixers” to do everything from lobby officials to stand in line for individuals at motor vehicle offices to grease the skids for building permits. The Times reported that of all people, Walmart’s attorneys led the charge to get management to focus on the bribery allegations and stop those responsible. The lawyers’ entreaties, according to the Times, were met with delay and skepticism by senior management. While outside lawyers recommended a major top-to-bottom analysis of what was going on, Walmart’s top management rejected this suggestion in favor of a more limited analysis. Walmart’s ethics policy, meanwhile, clearly stated, “Never cover up or ignore an ethics problem.” Nonetheless, at a meeting in early 2006, reported by the Times, in the office of Walmart CEO H. Lee Scott Jr., it was decided to adopt a new, “modified protocol” for internal investigations. And in the case of the continuing Mexican investigation, it was decided to transfer control of the bribery inquiry to the office of a top executive in Mexico, a man who was one of the earliest targets of the bribery allegations. Incredibly, just a few months after the assignment, the Mexican executive concluded in his final report to management that “no evidence” of bribes was found in Walmart de Mexico. The report further recommended against any “criminal pursuit” of any Walmart executive and with that, the case was closed—until the Times reopened it several years later.

Righteous, if Reluctant, Indignation Walmart’s reaction to the Times’s expose was one of righteous indignation. As a spokesperson told the Times, “If these allegations are true, it is not a reflection of who we are or what we stand for. We are deeply concerned by these allegations and are working aggressively to determine what happened.”

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Specifically, Walmart said it was taking steps in Mexico to strengthen compliance with the Foreign Corrupt Practices Act. One “step” Walmart would not take was to allow the Times to speak with Mr. Scott or other executives involved in the scandal. The immediate reaction to the Times’s story was most felt in the stock market, where Walmart shares on the Monday following the weekend revelation sunk like a stone, accounting for about one-fifth of the losses in the Dow Jones industrial average. Predictably, politicians from Washington to Mexico City called for outside investigations into Walmart’s conduct. In Mexico, President Felipe Calderon said he was “indignant” about the company’s behavior. Perhaps most damaging to the company, Walmart building permits from Boston to New York City to Los Angeles were reportedly undergoing increased scrutiny, in the aftermath of the bribery allegations. Over the years, Walmart had worked assiduously to polish its image as it intensified efforts to move from its rural routes into big—and historically hostile—cities. The cries by local merchants that “Walmart will put us out of business” seemed to gain credibility in the wake of the bribery charges. One venue where fireworks were expected but never materialized was the Walmart Annual Meeting, held a month after the Times’s story in Fayetteville, Arkansas. With Chairperson Rob Walton presiding over the 50th anniversary of the company his father founded and with a star-studded cast of marquee entertainers—Justin Timberlake, Taylor Swift, Lionel Richie, Celine Dion, Aerosmith, and Cheap Trick—the 14,000 employees and shareholders in attendance were positively buoyant (Figure 3-6). One reason that shareholders seemed oblivious to the bribery problems was that by the annual meeting, the company’s stock had recovered, reaching a 12-year high. Lest shareholders were concerned about the problems the Times’s story had raised, Walmart CEO Michael T. Duke assured them, “Let me be clear: Walmart is committed to compliance and integrity everywhere we operate.”*

Questions 1. Had you been public relations advisor to CEO Scott at the time of the bribery allegations, what would you have counseled him to do? 2. How would you characterize Walmart’s internal and external response to the bribery charges? 3. How significantly do you think the bribery allegations impacted the company’s reputation? 4. What should Walmart’s public relations posture be going forward, relative to the bribery charges?

*For further information, see David Barston, “Vast Mexico Bribery Case Hushed Up by WalMart After Top Level Struggle,” The New York Times, April 22, 2012, pp.1, 8–10; Stephanie Clifford, “Wal-Mart Stock Falls Nearly 5%,” The New York Times, April 23, 2012; Stephanie Clifford, “The Annual Shareholders’ Meeting for Wal-Mart, Like Its Stock, Is Buoyant,” The New York Times, June 1, 2012; and Stephanie Clifford and Steven Greenhouse, “WalMart’s U.S. Expansion Plans Complicated by Bribery Scandal,” The New York Times, April 28, 2012.

FIGURE 3-6 A big tent.

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Chairperson Rob Walton, eldest son of the founder, welcomes 14,000 Walmart shareholders to the company’s 2012 annual meeting extravaganza to celebrate its 50th anniversary. (Photo: Richie Miller/Cal Sport Media/Newscom)

From the Top An Interview with Edward L. Bernays

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(Photo: Bettmann/CORBIS) Edward L. Bernays, who died in 1995 at the age of 103, was a public relations patriarch. A nephew of Sigmund Freud, Bernays pioneered the application of the social sciences to public relations. In partnership with his late wife, he advised presidents of the United States, industrial leaders, and legendary figures from Enrico Caruso to Eleanor Roosevelt. This interview was conducted with the legendary counselor in his 98th year. When you taught the first public relations class, did you ever envision the field growing to its present stature? I gave the first course in public relations after Crystallizing Public Opinion was published in 1923. I decided that one way to give the term “counsel on public relations” status was to lecture at a university on the principles, practices, and ethics of the new vocation. New York University was willing to accept my offer to do so. But I never envisioned at that time that the vocation would spread throughout the United States and then throughout the free world.

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