Public relations builds and sustains the relationships we need to keep our licence to operate - but what is a 'licence to operate' and why should your organisation care? This three minute video and three minute read gives you the reasons why your licence to operate should be at the forefront of your thinking - and why you need public relations to help you keep it.
Unlike a statutory licence, granted by an authority - for example, government, association, academic institution - a 'social' licence to operate is the ongoing acceptance of an activity undertaken by an organisation by the community in which it operates. It is the permission we give to others to do something, make something, sell something or run something. Communities consist of many stakeholders - for example, employees, customers and suppliers in a commercial organisation -or voters, ratepayers, politicians and service providers in a public sector organisation. How the community and the organisation relate to each other will dictate the strength of the licence to operate.
Imagine a manufacturer of goods. Customers want to know workers are not exploited, conditions are good and pay is fair. Should exploitation take place, customers will not buy the product. No sales means the licence to operate is withdrawn - not because of quality or price but because of organisational behaviour. The manufacturer would not be considered trustworthy, customers would be unsatisfied with the behaviour and any loyalty eroded. Add to that consequential reputational damage and the ability to conduct business becomes impossible.
Next, imagine a government. Over years, promises and policies put forward at the time of election remain unfulfilled. Voters have suffered economic and social hardship as a result. Jobs are few, houses are scarce, health care is negligible and everyone is disillusioned. Come the election, the sitting government is voted out, no longer legitimate and licence to operate withdrawn. Again, erosion of trust, satisfaction - even the loyalty and commitment of long established supporters - results in a relationship breakdown and no renewal of licence.
Without a good relationship between an organisation and its communities the licence to operate is eroded and eventually withdrawn. Sometimes by the community itself - for example no purchases or a withdrawal of labour - and sometimes by legislative default - for example the UK's recent sugar tax or today's announcement in New Zealand of plain packaging on cigarettes.
A licence to operate is nothing new or revolutionary. With its roots in the Ancient Greek concept of moral legitimacy, to the social contract theory of the 17th century philosopher Thomas Hobbes, last century saw further development of the principle in political, social and environmental thinking. The notion that we all do what we do only by the permission of others has gained further ground with the advent of mass digital engagement. Available technologies give voice to communities and empower them to force change, taking back those 'licences' should organisations fail to perform.
The New Zealand Sustainable Business Council produced an excellent paper on the 'Social Licence to Operate' which makes very interesting reading and one extract illustrates the concept well:
"Society’s confidence in business has been shaken. The global financial crisis, which saw whole economies teetering on the bridge of bankruptcy, a massive destruction of personal wealth and unemployment at historically high levels called into question the right of business to operate in such an apparently uncontrolled and unregulated manner. This loss in confidence in business gave rise to a number of public uprisings, the most prominent of these being the ‘occupy movement’. This movement gained momentum using social media to organise protests and communicate their view that large corporations and the global nancial system control the world in a way that disproportionately bene ts a minority (hence the slogan ‘we are the 99%’), undermines democracy and is inherently unstable. While this movement is seen by many as a radical movement, increasingly connected, informed and financially comfortable parts of our global society are now demanding to see greater ethics, accountability and transparency from the business community. The context in which business is operating in is also changing. Global consumers have greater expectations for the role companies should play in giving back to society."
So why do you need public relations to help you sort all this out? Because our business is organisational relationships. We identify the communities and stakeholders, assess expectations and perspectives, investigate organisational values, culture and behaviour and then develop and implement strategies that will help build and sustain the relationships in question. That involves communication, behaviour and understanding - and courage on our part to challenge that rambunctious CEO or council leader and tell them the culture has to change or the behaviour has to stop. It also means us scrutinising your data, poking about in the corners of your reputation to see where cracks in the relationships are forming, alerting you and providing you with a means to repair the damage. It also means that we will be involved with reporting on the organisation's community impact, its sustainability and contribution to society - and if you are skeptical on that score, I'd suggest a visit to the International Integrated Reporting Council (IIRC) to become familiar with what's ahead.
So if you were wondering why you might need public relations, now you know. You need to keep your licence to operate and we can help you build and sustain the relationships you need to do just that.