Eager to capitalize on benefits offered by favorable public reputations, large Ukrainian corporations are employing sophisticated PR concepts to boost their image abroad
Long gone are the days when the Western term “public relations” was a novelty for Ukrainian companies. Eager to clean up their often murky images in order to capitalize on the benefits offered by favorable public reputations, large Ukrainian corporations are today employing sophisticated PR concepts in order to boost their image abroad.
Last summer, some of the world’s major business publications and TV channels carried ads for one of Ukraine’s largest business groups, System Capital Management (SCM), owned by one of the country’s wealthiest tycoons, Rinat Akhmetov. It was arguably the biggest informational campaign connected with Ukraine.
“We are a big corporation, we are successful and we care about our people,” was the main message conveyed by the SCM ads, which mostly featured images of the corporation’s employees.
Months before the massive ad campaign, SCM launched new qualified press center teams at the various companies under its control in order to better inform the public about the group’s activities – previously off-limits to outsiders.
Later, in November 2005, the press center of SCM-controlled Azovstal, one of the country’s largest metallurgical plants, announced the introduction of a preferential mortgage loan program for employees. It was the first massive program of its kind launched for public display by a major Ukrainian business group.
The industry term for SCM’s efforts is corporate social responsibility (CSR), a relative novelty in Ukraine.
“The program is directed towards the improvement of the employees’ housing within a framework of the company’s socially-oriented development strategy,” the press release said.
Azovstal’s press-secretary Oleksiy Fedorov said that while the company had always been implementing similar projects, the CSR initiatives were stepped up significantly once SCM became Azovstal’s main stakeholder in 2002.
It was only last year, though, that the accent on the social image of SCM was communicated on a large scale to the public.
British native Jock Mendoza-Wilson, who has consulted SCM on its image-making strategy since last February and was hired as the company’s corporate communications director last October, said a wide information campaign had been part of management’s efforts to promote SCM as a “transparent company with good corporate governance.”
The group’s reputation had earlier resembled more of a secretive business holding controlled by a well-connected tycoon. For journalists, getting comments from Akhmetov himself or his companies was a challenge at best. Now his companies flood journalists with informative press releases and are more receptive to inquiries.
“There was a perceived lack of understanding of SCM activities [both in Ukraine and in the West] that we had to overcome,” Mendoza-Wilson said, adding that “its reputation is one of the company’s most important assets.”
“I believe this is the first time in Ukraine that the corporate advertising campaign went beyond trying to reach its customers to explain the company’s core values, which make the foundation for the corporate social responsibility of SCM group,” he added, referring to SCM’s international public relations campaign from last summer.
The campaign was successful, says Mendoza-Wilson, in that it raised awareness of SCM’s “contribution to the Ukrainian and European markets” among Ukrainian decision makers.
Experts say that a social element had been skillfully used to achieve this, adding that other Ukrainian tycoons have lately employed similar tactics.
Interpipe Corporation, an industrial group owned by Ukrainian tycoon and parliament deputy Viktor Pinchuk, has attempted to demonstrate its dedication to social responsibility through various initiatives, as well. Examples include the group’s attempt to establish a museum of contemporary art in Kyiv at the end of 2004 and the concurrent establishment of the Contemporary Art Charity Fund, intended to financially support contemporary Ukrainian artists.
Last summer, another major business conglomerate, the Donbass Industrial Union, donated $2 million for the reconstruction of the so-called Baturyn ruins – the historical hometown of Ukraine’s famed Hetman Bohdan Khmelnytsky, who led a Ukrainian liberation war in the 17th century. Informed sources said that the donation was made following a personal request from President Viktor Yushchenko, a known aficionado of Ukraine’s historical past.
Face-lifts
Volodymyr Granovski, owner of AHT Consulting in Kyiv and a co-founder of the London-based Asquith & Granovski consultancy firm, says that last year’s splash of socially responsible activities by large Ukrainian businesses is not surprising.
He cites the government’s reverse privatization policy and the political ambitions of some of the big businessmen as the major reasons for a surge in activity that increases public awareness about previously secretive companies.
Ukraine’s large businesses are increasingly seeking support from the population these days – something that they, unlike international companies, had never needed before.
“For multinationals, demonstrating their good deeds in a foreign country has long been an essential part of their everyday business,” Granovski said.
“They always need to show they are not so much interested in making money, but rather in contributing to society,” he said.
“Our home-grown businesses, on the other hand, had not until now felt the need to be socially responsible, as long as they were on good terms with the authorities,” said Granovski. “What corporate responsibility could there have been?”
Granovski said many large business groups boosted efforts last year to gain public support and trust to counter government privatization reviews of shadowy acquisitions from the past.
Treating employees better seems to have helped Pinchuk muster support from the working collective at the Nikopol Ferroalloy Plant. They, in turn, stood by Pinchuk’s side, opposing government-sponsored court litigation to reverse a controversial 2003 privatization tender.
Mendoza-Wilson denied a connection between the privatization review processes and the launch of SCM’s advertising campaign. The campaign was designed to popularize SCM ahead of a planned listing of company stock on foreign exchanges, he said.
SCM owner Akhmetov seems to have other reasons to seek public support. He is currently running for parliament as part of Viktor Yanukovych’s Party of Regions. Akhmetov’s factories and businesses employ tens of thousands of Ukrainians, a significant share of the local electorate across Ukraine.
The public relations facelifts are also essential to improving the attractiveness of Ukrainian businesses as they dive into world markets in search of capital investments.
Granovski said that Western exchanges require a company to have a line in the budget for social spending before they’ll host that company’s IPO.
Maryna Starodubska, business development manager of MarketingMix, an Internet portal devoted to marketing and PR, said strong public relations can help add value to companies in the eyes of investors.
Growing pains
And Ukraine’s business elites re trying hard to improve their collective image. Pinchuk’s public relations expert stayed up until midnight on Jan. 24 ahead of a flight to the World Economic Forum in Davos, Switzerland, to prepare potential interview responses.
In an e-mail interview, Pinchuk explained his growing interest in charity work and corporate responsibility, saying, “As most Ukrainians, I am very patriotic and very much concerned with the development of Ukraine.
“What country will we leave our children in 20 years? The higher your position in a society, the more responsibilities towards your country and your fellow citizens you have,” he wrote.
Ukraine’s business may finally be recognizing the benefits of corporate responsibility campaigns, but they aren’t yet masters of this art. Many corporate responsibility campaigns underway at Ukrainian companies are inconsistent, frequently motivated by short-term publicity rather than a long-term PR strategy, says Maryna Galybarnyk, a CSR specialist at The Willard Group, a Kyiv-based public relations firm.
“Most sponsorship money is wasted, because a decision to support an event is often based on what the boss likes, and there is no strategic reasoning behind it,” Galyabarnyk said.
Starodubska agrees, adding that a logical link between the company’s strategy and its CSR initiatives are necessary for the campaign to be really effective.
“For example, it is logical for a company that produces food to support initiatives aimed at promoting a healthy life style, or for a bank to invest in high-class cultural events, such as exhibitions or classical music concerts,” said Starodubska.
Granovski said most Ukrainian companies that have well-known brands in the mobile telephony services industry, banks, food companies and tobacco producers have CSR experts on board. Yet few of them are focusing on the long-term public image of their company, opting instead to spend money on social projects in critical situations.
Pinchuk seemed open about such shortcomings.
“Some companies have done a lot in terms of philanthropy, but we suffer from a lack of professionalism and experience,” he said.
One of the problems that further weaken poorly planned PR strategies, Granovski says, is that many Ukrainian companies have yet to separate their public relations operations from their marketing departments.
“This is a big mistake,” Granovski said.“Marketing is intended to help to sell a product or service, while corporate PR is a technology intended to prevent all possible conflicts.”
