ASSESSING THE ROI FOR PUBLIC AFFAIRS ACTIVITIES

Public Affairs is an organisation's efforts to monitor and manage its business environment. To actively manage its environment, the organisation must identify all of the stakeholder groups that can have an impact on the organisation in some way; establish positive relationships with each of these groups; and work continuously to extend and deepen those relationships through direct and indirect efforts.

The desired effect of Public Affairs is a strong and positive perception among each group of stakeholders. For upper management to see the value of Public Affairs, Public Affairs must be presented in terms of business value, and not in terms of function. The key value drivers of Public Affairs are:

1. Freedom to operate: Preventing restrictions on the company's ability to act. These restrictions could come from regulators, legislators, unions, or public opinion.
2. Cost avoidance: Preventing future taxes, rate increases, permits, or other business costs.
3. Market opportunity or advantage: Establishing a competitive advantage, such as favourably shaping the business climate to the benefit of the organisation.
4. Brand image or reputation: Increasing the company's brand equity (or the brand equity of its products and services) among its stakeholders.
5. Speed: Moving quickly to capture opportunities, respond to threats, or alter the business in an advantageous way.
6. Productivity: Increasing the quantity and quality of products and services offered. Of course, the case for business value must be tailored to the business baed on how it operates and how it positions itself within the market place.

These tailored strategic drivers should be presented within a simple conceptual framework, specifically, how the business can leverage them to maximize the frequency and size of opportunities and minimize the frequency and size of risks.

The basic question behind Public Affairs return on investment (ROI) calculations is whether organisations can recover investment costs in Public Affairs and achieve measurable benefits for the function. The equation for calculating Public Affairs return on investment is deceptively simple and is as follows: ROI percent= [Value of benefits generated by PA-Cost of PA] /Cost of PA x 100 percent. Despite the need for this clarity ROI calculations in Public Affairs are not commonly conducted. The most common reasons for not conducting formal ROI analysis of Public Afafirs include:

1. The cost of tracking and measuring the costs and benefits of Public Affairs may not be worth the effort, especially because Public Affairs is carried out in an ongoing and episodic (i.e. projet-based) manner.
2. While Public Affairs costs are known up front, both before and during PA interventions, benefits may not appear immediately and often accrue over extended time periods.
3. The benefits of PA interventions are often viewed to be soft or intangible difficult to quantify and convert accurately into euros.
4. The benefits generated by Publuc Affairs are usually not solely due to Public Affairs's efforts nor can they be evenly or objectively allocated across the organisation.
5. Adverse findings in an ROI calculation could be damaging to the PA function and its practitioners and result in less resources and support from top management.

Most Public Affairs officers recognize that return on investment isn't the panacea they seek despite the recognition that it is important develop an ROI mindset. Other factors are also critical in business decisions, including that risks must be assessed against rewards. PA undertakings must be congruent with the organisation's strategy, short term goals needs to be clearly balanced against long-term ones, and that scarce resources are invariably affected by internal politics. Last but not least, most PA officers continue to question how to develop ROI measures on non events, whereby their actions prevented certain activities from occuring (e.g. lobbying that resulted in legislation that ostensibly prevented a competitor from entering the competitive marketplace). Any good calculation of PA ROI mustaccount for some reasonable levels of conditional probabiity and risk.

Once practitioners have established a common understanding of strategic value among all decision-makers, measurement can and should serve a vital role in the Public Affairs function.Specifically, measurement can be used to determine where the company stands according to key metrics (decided upon with top maangers) and then to measure progress in critical areas. If there is an agreement on the link between planned activity and shared strategic goals, and if the data sets that managers will want to see after programme implementation are identified, PA efforts can confidently move forward. (This does not eliminate the need for ongoing education efforts, which must be maintained to reinforce the value of the PA function.

Developing campaigns to reach intangible objectives is not an exact science. To build an effective programme, practitioners should validate the causal link between activities and outcomes, and ensure that their measurement tools are the right ones for the job. Practitioners should build the following steps into their programme and measurement models:

1. Develop a causal model: Propose relationships between activities and outcomes. This will demonstrate the anticipated link between activities and intended outcomes, chosen according to strategic priorities.
2. Gather data: Establish a set of measures for all aspects of the model and gather data during implementation.
3. Turn data into information: Use established quantitative and qualitative methods to test assumptions using the captured data.
4. Continually refine the model: Continue to refine measurement techniques and regularly review assumptions. Maesurement needs change as the programme changes, and programme parameters can be altered through market changes.
5. Assess outcomes: Through a 'post-audit' determine whether efforts produced the desired results and decide how to alter future activities to better link the two.