Danny Rogers on PR: A perceptive move by Starbucks to regain trust

 

To condemn Starbucks' belated decision to pay more UK tax as a “PR stunt” – as many have been doing – is to misunderstand how companies think.

Certainly the coffee chain's move last week to make a £20m tax donation is a PR-related move, but only in the sense that PR should be defined as enlightened-reputation management.

It was this writer who revealed Starbucks had called in the advice of a top PR consultancy two weeks ago, after it had been hauled in front of Parliament's Public Accounts Committee. Starbucks turned to RLM Finsbury for help, an agency run by the well-known Roland Rudd.

He told Starbucks that it had no choice but to pay more tax, despite fellow multinationals Google and Amazon continuing to insist their payment of minuscule corporation tax "complied with the tax rules of the UK".

Rudd understands that one must sometimes ignore what the law says and tackle crucial public perceptions head-on. With high levels of public mistrust in corporations and our increasingly aggressive media, it is no longer good enough for firms to hide behind legal processes or try to "spin" difficult stories to their favour.

If various stakeholders – customers, staff, politicians – have got it into their heads that a corporation is not making a sufficient contribution to society, it has become a major reputational issue for that firm. If the company is to retain an essential licence to operate, it must become more ethical.

Many commentators have said Starbucks should have complied with the rules in the first place. But international tax "rules" are complex and finance directors are given incentives to minimise all costs. The important thing is that Starbucks has responded to reputational pressure. You can call that public relations or you can call it stakeholder democracy flexing its muscle.

How long will it take for Google et al – who have started to believe their own hype – to wake up and smell the same coffee?

Danny Rogers is editor of PR Week

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