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B.A.T Industrie * Public Aff-i
Present situation and recommendations for action
Introduction
This paper considers B.A.T Industries' current
reputation with its
Ludiences and the way it is orgLaised to deal with
external issues.
In reviewing the present situation and oonsJdering
bow performace could
be inproved, we bave therefore addressed ourselves
to the following:
a) the Group's current reputation;
b) measures necessary to enhance Lod to make more
accurate
the outsider's understanding of the Group's
policies
and achievements;
c) how best the Group can arganise itself to
respond to
external pressures;
d) the role of Group Public Affairs (GPA) within
Group
Headquarters and its relationship with its
opposite
numbers in Operating Groups (OGs).
The paper takes into accciunt that, in common with
other Group
Departments, GPA reflects in its work the twin
nature of B.A.T
Industries:
a) as a public company, with a personality and
reputation as a vehicle for investment;
b) as the parent oompany of a diversified and
internationally orgLnised group which hLs reserved
to itself certain strategic tasks.
In practica.1 terms, this means that GPA performs
the following
functions:
B.A.T Industries
a) marshalling of information about the Group's
activities and its m-1-tion to B.A.T Industries'
key audiences;
b) advice and support to other G9Q departments in
their
communications activities;
c) assistance to the CbLirT-,, and Board in the
determination of policies relating to the
company's
reputation.
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Group-wide
a) Provision Of an Rdv3-sOrY resource, available
on request,
to OGs in the organisation of the public affairs
function;
b) coordination of public affairs to ensure that
OG practice
is in consonance with the needs of the Group as a
whole.
The paper is therefore divided into four parts:
a) Part I reviews current practice and makes
reix-dations for action in relation to B.A.T
Industries I J -i ted;
b) Psrt II e=mines the B.A.T Industries Group as a
large multinational company and the role of GPA in
assisting in the protection and promotion of the
Group's interests in the external relations field;
c) Part III summ&rises the internal and external
resources
in public affairs available to GHQ;
d) Part IV consists of a summary of
rxrk-m-dsitioas.
PART I: B.A.T INDUSTRIES LIM=
A. Relations with key institutions and groups
i) The City:
Surveys of City attitudes towards the Company were
carried out in
late 1979/early 1980. A summary of conclusions is
attwl3ed (as Appendix
A) - Briefly, the City regards B.A.T Industries as
a conservative,
unc"Lmic, tobacco-orientated group. Awareness of
diversification
activities and geographical spread is imprecise.
More positvely, the
overall image is of a stable, large,
internationally-arganised
corporation.
Conclusion: There is a need for a more systematic
and developed
programme to o-.1M cate the character and
achievements of the Group to
City audiences. Proposals for such a programme are
currently being
developed for consideration by the CPC.
ii) Government:
The Company has good practical working
relationships with relevRnt
Ministers and their Departments. We have the
benefit of the advice of
Lord Greenhill and Mr. Kershaw on policy questions
and there is an
active programme of contacts at Board level with
Ministers and senior
civil servants. NJ
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iii) Westminster: N)
CZ)
It is likely that NPs equate B.A.T Industries with
BAT. Our N.)
involvement in the work of the Industry and
Parliament Trust will in 00
Put correct that misconception. The mhane.*A
fline-4al -Ymmications
programme, when implemented, will also help to
clarify the parent CO
company's status in the -intiq of tboee UPs who
follow City affairs. The
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acknowledgment of their parentage by Operating
Groups in their dealings
with constituency MPs vould further assist this
process, as would the
development of a more structured programme of
Parliamentary contacts by
B.A.T Industries itself.
iv) The European rXvrminity:
As well as regulating and controlling specific
industrial
activities, the European 0-"inity is showing an
increasing interest in
company law and commercial practice, in ptrticular
as hLr as
multinational compardes are concerned. Thus, B.A.T
Industries needs to
be aware at the eaxliest pomdble stage of
rk-mminity developments in
this field and geared to respond in the defence of
its interests.
Dr. Heynig (who is retained by BAT) represents an
important
resource in information terms, but relations with
the Oommissica and the
European Parliament are not cuvrad by his service.
Conclusions for (ii), (Iii), amd (iv): In view of
the Company's
developing presence within the united Kingdom and
substantial stake in
other West European countries, there is a need to
further develcp mutual
underst-Mrv between B.A.T Industries and British
and r--Ity
governmental institutions. (The work undertaken by
the CSI, BIAC, the
ICC and other voluntaxy trade organizations is
valuable. However, ve
believe that the Company requires enhanced
resources in this ar- if ve
are to be as effective as possible in the defence
of our specific
interests.)
Dr, -1-ci ons are currently going on between GPA
and their Operating
Group counterparts on the ooordiratiou and
improvement of the
information flow and relationships of the Group
with Westminster
Whitehall and European 0-nity institutions.
v) International orgaaisations:
The prime relationship with the United Nations and
its Agencies (as
vell as with the OEM) is H1101s. Bodies such as
the CBI and trade
-stc-'ations monitor their activities. There is,
however, a need for
;
.A.T Industries itself to be alert to those issues
which could
specifically affect its commercial interests and
to ensure that its aLse
is made effectively - both through ENG and, when
appropriate, direct.
Conclusion: GPA could provide an information
resource and perform a
coordinating role ca matters of general
significance to the Group, as a
complement to the activity already undertaken on
industry-specific
topics at the Operating Group level.
vi) Managers in the Operating Groups:
The Group's training programmes stress the
importance of effective NJ
om-nication in the development of i-sgow-t
cohesion. While this CD
policy is successful in line-vm-gm-t terms, we
believe there is a NJ
lack of awareness at the Operating Group
managerial level of the overall C)
character, policies and achievements of the Group.
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Conclusion: It is reorr-neied that GPA should
investigate, with Group
Personnel and the Operating Groups, bow awareness
can be iuwo~wd.
(There are various means by which this could be
done. Ck-aidpration
could, for exa le, be given to a corporate :Eilm,
tape/slide
presentations, a management newsletter and the
provisice of articles of
general interest for syndicated use in Operating
Group and s7k=idiary
company eMloyee -p-nes.)
B. Corporate Identity
It is central to the Group tradition that
individual Operating Groups
and their subsidUries should develop and maintain
their separate
identities.
It is unfortunate in our view that B.A.T
Industries itself "sbaxes" with
external audiences an identity with BAT. There is
a natural historical
reason for this. However, the use of the intitials
"B.A.T" ( and the
names "B.A.T Stores Soldings", "BATUS", and
'Tritish-Ameri
Cosmetics") contribute to the prolongation of the
confusion.
Since the move to Windsor House, B.A.T Industries
has ceased to use the
three-leaf BAT symbol. Work is currently in
Vz,*L-a6 on the design of a
new "house style" and symbol for u on -.-r-ny
stationery and for other
applications.
Conclusion: The identity of B.A.T Industries as
the parent company of a
widely-diversified, international group of
rx-T-nies (rather than as a
tobacco coqxny with interests in other sectors)
would be enhnnced by
a) a change of name;
b) the adoption of a new house style and cm-porate
symbol;
c) reference,wbere and when apy.,,ylate, by the
non-tobacco
Operating Groups to the relationship they have
with
their parent company.
C. Soaial Responsibility
B.A.T Industries bas a substantial charities
budget (currently running
at about L160,000 a year) and has dm-Jj* the past
two yeaxs begun to
support the arts in a relatively modest way,
through the provision of
finance for concerts at St. John's, Smith Sq=re
and the Royal Festival
Hall. In addition, a E35,000 contribution over sum
years is also
being made to the Royal Opera House rebAlding
programme. Anotber
project - in collaboration with the Glyndebourne
Touring opera - is
currently being orpnl-,A, whereby B.A.T Industries
is supporting the
presentation of three operas in Southampton and
Coventry this autumn. r1J
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Conclusion: In view of ecc-1c constraints and the
limited management NJ
resources available, we believe that the level of
activity described 4=
above is right for the CA-T-ny at the present
time. We suggest however rQ
that the matter sbould be kept under review in the
context of our Co
corWrate rMatation progmme aM of e~-neng social
attitudes towards 1.0
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PART II: THE B.A.T iNwbrj.-xIES GROUP
A. General Cc-irk-rations
Group-wide policies in the public affairs field
should clearly be in
can-koe with the Group practice of delegated
authority.
Nevertheless, the increasing pressures both on
B.A.T Industries as the
Group parent company and an the Operating Groups
and their subsidiaries
require that local action should be exercised
within the framework of a
group-wide public affairs policy.
In zwk-in our ren-ndations, we have endeavoured to
reflect the
conclusions of delegates to SMP7 last year who, in
their discussica of
"Public Issues", recog-i-eH the need to develop
active public affairs
policies in defence of our interests, while at the
same time asserting
the importance of protecting the ability of the
local company to respond
to local conditions with Y--i-- flexibility.
Part II of the paper therefore deals with three
topics:
a) Group operating philosopby and its relationship
to public affairs aspects of i--gp-nt;
b) the organisation of public affairs activities
at
the OG level and below;
c) the role of GPA in relation to (a.) and (b)
above.
B. Group Operating Philosophy
The Group has an unwritten operating philosophy.
It is our view
that the time may bave come to follow the e 1e of
some other large
companies in formulating a written statement of
the Group's pbilosopby.
We see such a written statement as a means of both
guaranteeing a basic
standard of good corporate behaviour worldwide and
of giving OGs and
sibmdiary i-IL nies EL framework within which
their own local public
affairs policies can be formulated.
Such a statement would also be a useful resource
to B.A.T Industries
itself in dealing with its own publics.
C. Public Affairs at the Operating Group level
A clear distinction can be made between the wider
public issues, which
have an impact an the Group as a whole and
"industry-spocific" and
"territary-specific" issues, which have an impe ca
particular
Operating Groups - subsidiary caqpanies.
The specific issues referred to above are managed
at the OG or local
coapany level. However, given the r-q-on-ibility
of the B.A.T
Industries Board to protect the interests of
shareholders, it is
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impm-tant that GHQ should exercise a =nitoring
role, since there is a N)
potential impact of such policies an the Group as
a whole. co
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One of the clear messages from SMP7 was that
public affairs was not
a subject which could be compartmentalised and
delegated solely to
"specialists". This is a view with which we are in
wholehearted
agreement. We therefore believe that, while public
affairs is already
an important topic for most Chelmood programmes,
there is a ca for an
even greater enT-1---is.
The public affairs or public relation manager in
any Group company has
a vital coordinating and o-clinications role to
perform, both internally
and externally, and we see value in the
possibility being investigated
of the development of a Chelwood programme
specifically tailored to the
needs of such managers.
D. GPA's coordinating role
The reputation of B.A.T Industries, with the City
and its other key
publics, depends very m1cb on the performance of
its (-rq-n-t parts and
perception of that performance by exterma
audiences. There is thus a
good case for there to be effective mean for the
coordination and
monitoring of activities on a groupwide buds.
This process should have as itsobjectives:
a) the provision of positive information about
Operating
Group activities which could be of value in the
tion of the Group's reputation with key audiences;
b) the establishment of an "early warning system"
to
ensure that the B.A.T Industries Board and
relevant
GG Board are advised of local developments which
could have a negative impact on the Group's
interests
and which may require action to be taken by GEIQ
or at
OG level;
c) the auditing by the Board of delegated
authority
in the public affairs area.
There is already some informal activity along
these lines but we feel
that more could be done.
Given our wish to be sensitive to the local needs
of operating
conT-lies, we believe that there is a good case
for or-Mmire at a
relatively early date a public affairs conference
to which
-,,.v--,&-=tat:Lves of operating groups and lead'
subsidiaries would be
invited in order to discuss both the coordination
question and other
public affairs-related zmLtters, with a view to
formulating proposals for
the Board's consideration.
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PART III: GPA ESTABLISHMOU AND EXTEMal, RESCURCES
A. GPA Establisbment
The establisbmen of GPA is currently:
Head of Department
Senior Executive
Read of Information
Assistant
Secretarial statf
- R. Haddon
- J. G. B. WeLit
- Miss S. J. Fisher
- Mrs. J. Scher
- Four
In addition, Miss W. Black and Mrs. C. Freeman am
attached to the
Department, working principally on the B.A.T
Industries social
programme-
Approval has been given for the appointment of a
junior executive and
interviews to fill this post are currently in
train.
We believe that the above establishment represents
an adequate resource
in combinatiou with the selective use of outside
consultants
section B below).
E. External Resources
GPA, on bebalf of GHQ, supervises the work done in
the public affairs
field by various external consultants. These
--l-nies and the nature
of the work they undertake is listed below:
i) Neilson McCarthy:
Advises the Chairman on general public relations
questions.
Olec-,- of the reduced demand for Neilson
McCarthy's
services, there has been a substantial downward
adjustment
in the retainer paid.)
ii) St. James's Advertising Company:
Responsible for the pl.9-t of B.A.T Industries'
financial
advertis3mg. While the cost of such advertisin is
not a
charge on GPA, the Department is reessp-aible for
supervising
advertisement content and media. selection.
iii) Charles Barker Corporate Design and
OX-1nication:
Currently being used principally in the design of
cupu.,-te
literature (especlally the new edition of the
B.A.T
Industries brochure for new shareholders) and for
the plo,-e-t
of charity advertising. Coordinated recent City
attitude
surveys. Work on new corporate symbol.
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vi) John Schell, New York:
A,-~xxi-ted with Neilsoa McCarthy; he provides
public relation
counsel in -jew--L of the United States. There is
IL possibility
that retention of bis services will be
discontinued if the new
PR consultants to BAMS Inc. can provide a
satisfactory
alternative resource.
v) Marketing and the Arts:
currently acting as advisers cc the Glyndebourne
Touring Opera
project. Used ad boe to evaluate arts sponsorship
opportunities.
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PART IV: SUIKAM OF RWXIWFKDATIONS
1. Implementation of a planned programne of
rx-rnlcatiOn with City
audiences about the Group's activities.
2. Provision of an information resource to GHQ and
OGs in relation
to political and governmental developments in the
United Kingdom
and at the European level.
3. Provision of a similar service in respect of
international
organisations.
4. Investigation with 03s of mean of improving
awareness among
OG and subsidiary company managers of the overall
claracter,
policies and achievements of the Group.
5. Action to clarify the separate identity of
B.A.T Industries
from BAT.
6. Continuance of cbaritable donations and arts
sponsorship at their
current levels.
7. Codification in written form of the Group
operating philosopby.
8. Fostering of greater sensitivity to public
affsti issues in
line management, particularly through Chelwood
courses.
9. Establisbment of a public affairs course at
Chelwood.
10. Following a Group Public Affairs Conference,
formLLIation of
proposals for Board con-mideration on the mean by
which the
coordination of the management of public affairs
issues might
be improved.
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