Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Makena Bauss
Bronte’ Bringhurst
Comms 336
INTRODUCTION
individual or a group”.
Success in public relations is entirely dependent on the ethical behavior of its practitioners. One
wrong decision on their part (whether it is illegal or simply immoral) can determine the amount
of success they experience for the rest of their career. The public relations sector seeks to create
and maintain mutually beneficial relationships between organizations and their key publics. This
process should always be conducted using proper moral principles. However, several factors
such as time constraints, greed, or desperation can create ‘gray areas’ and bring a shift to one’s
moral compass.
The Los Angeles Department of Water and Power (LADWP) was established in 1902 and
provided service for 3.9 million residents in 2011 with an annual budget of $4 billion. The
monopoly supplied approximately 22 million megawatt hours of electricity a year for the city of
Laura Chick, LA City Comptroller announced an audit of the city’s multimillion dollar contract
with the FleishmanHillard public relations agency regarding suspicious financial reporting. It
was noted that FleishmanHillard employees were being paid excessively for client work that had
DISCUSSION QUESTIONS
1) Why does a public utility and monopoly need private public relations services— or even
Despite being a public utility—and a monopoly—it is important for services like the Los
Angeles Department of Water and Power to have not only internal public relations staff, but
especially private public relations services. As a public utility tasked with managing crucial
public resources, it is critical that LADWP understands its users needs and in turn communicates
with them about any possible threats to these services. Particularly in California, where droughts
are common, public relations staff at water management departments ought to play a key role in
communicating with the public regarding water usage regulation and helping bring the
community together on these initiatives. Additionally, as a large city with a significant carbon
footprint, the public relations staff at LADWP is in a prime position to educate the public
But simply having in-house public relations staff isn’t enough for services like LADWP. As a
monopoly, LADWP is in a precarious position of ethics. It is much too easy for a monopoly to
begin acting against its consumers’ best interest. Without direct competition, little monetary
incentive exists to promote ethical practice. By having an outside public relations firm manage
communications with the public for the department, LADWP is able to avoid bias in motive that
may cloud judgement or allow unethical business practices to go unnoticed. Outside public
monopolies in check.
2) What could LADWP have done to prevent this overbilling situation? What policies or
procedures would you recommend for the utility’s public affairs office?
If the Los Angeles Department of Water and Power (LADWP) had taken action at the first sign
of a discrepancy between the times logged by FleishmanHillard employees and the work
performed for LADWP, the overbilling situation may have been brought to their attention
sooner, allowing them to prevent further unnecessary expenditure. Eventually, LADWP began
requiring billing statements to have detailed explanations of what specific charges were for,
instead of allowing vague descriptors such as “strategic planning.” Had LADWP required these
types of specific descriptors from the start, it would have been much more difficult for unethical
correspondence between the utility’s public affairs office and FleishmanHillard regarding the
work being provided for the public utility and all related billing. Inconsistencies may have
manifested themselves sooner if LADWP had been periodically paying closer attention to
individual bills rather than trying to find inconsistencies in their reports after much damage had
been done.
3) Do you think that FleishmanHillard responded appropriately to this crisis? What were its
response options?
It is admirable that the authorities such as the chairman and chief executive officer John Graham
in the FleishmanHillard agency were willing to fully cooperate with any and all public
investigations without any knowledge of the individuals involved in the scandal. This reflected
their dedication to the company’s long-standing principles that have allowed them to continue
Although the amount of work done by FleishmanHillard to fix its reputation was enough to put it
back on its feet, a company that finds itself embroiled in such a crisis can never do too much to
restore what was lost or broken. Instead of making efforts to return the company’s image to
where it was before the crisis, the majority of its efforts should have been put into improving its
image so much so that the company would hold even more respect from the public than it did
4) Examine the ethical guidelines implemented by FleishmanHillard during the crisis. Do you
think the response was adequate, or would other actions or guidelines have been helpful?
In response to this legal and ethical crisis, FleishmanHillard took steps to review, reform, and re-
emphasize ethical standards and guidelines implemented by the firm on both the local and
corporate levels. Locally in LA, FleishmanHillard took steps to ensure that during the
investigation period no further unethical behavior would take place by putting Doug Dowie, the
then Los Angeles general manager for FleishmanHillard, on administrative leave. The firm
openly communicated with the public through Richard Klein, an executive from its LA office
(and eventual replacement for Dowie), updating local news sources on its efforts and progress
towards resolving the billing issue. Admittedly, however, communication was slow to start. But
only paid back $5.7 million to the City of Los Angeles, but also chose to forgive $1.2 million in
as-of-yet uncollected fees, demonstrating an ethical commitment to not profit off money that
yet again ensure ethical procedures—FleishmanHillard made the decision to terminate or not
renew other outstanding contracts with other LA public services, showing an ethical respect and
In the larger, global community, FleishmanHillard took additional steps to place ethical
safeguards up to prevent similar situations from happening again and to protect other clients.
John Graham, FleishmanHillard CEO, sent out a number of company wide emails reiterating the
importance of ethical conduct to all employees. A 24-hour, anonymous ethics hotline was
watchdogs for unethical behavior without fear of retaliation. Seeing as how many employees
later reported having been aware of the unethical practices, even going so far as to state that they
had been specifically encouraged to inflate charges, the decision to add this hotline was a great
way of encouraging ethical accountability. Corporate management also brought in a top ethicist
to help re-design employee ethics training that would then be carried out in offices across the
globe. By making a significant point on a global corporate scale of what the firm expects in
terms of ethics in the wake of this crisis, FleishmanHillard did a good job of emphasizing just
how seriously it takes ethics within the company. Additionally, within the United States,
FleishmanHillard expanded specific training previously limited to public relations professionals
working with the firm’s federal public service accounts to staff working with both state and local
5) What are the implications of this case for the public relations field?
As a result of this scandal, LA banned government agencies from hiring outside PR firms to
represent them. FleishmanHillard’s actions essentially shut down an entire market—not just for
themselves—but for other PR firms as well. It created a deep sense of distrust within the
community. Internationally, the image of large firms was damaged. Account managers were
given permission to go to considerable lengths to reassure clients across the globe that
FleishmanHillard was an ethical firm and would not take advantage of its clients.
However, some good may have come out of this crisis. It served as a stark reminder to public
relations firms that even they are not immune to public relations crisis. As FleishmanHillard
suffered the effects of using unethical practices to get ahead in the short term, other firms had the
reminder that it is always better to act ethically now for long-term gains, hopefully improving the
field as a whole.
MATRIX
For this section of our paper on “City Utility or Cash Cow? Top Agency Accused of Overbilling
City”, we chose to go with a SWOT analysis of choices that the FleishmanHillard public
Management change
FleishmanHillard has the advantage of having much success in its past campaigns. There are
employees committed to responsible actions and behavior and focused on client satisfaction to
further the company’s goals. It is in a position where it would be beneficial to eliminate the
wrongdoers in its management department and completely restructure the auditing procedures of
the company.
Weaknesses
The agency’s lack of internal and external transparency posed as weaknesses. There is a distinct
lack of understanding between it, its clients, and the public. This secretive nature causes the
public to lose trust in and respect for a company spouting moral values and dealing with crisis
situations. Because they did not fix issues in a timely manner, there has been a necessity for
quick action, putting all of their dirty laundry out to dry. FleishmanHillard also did not have any
regulations regarding how the firm interacted with political candidates, which put them in a bad
position as the relationships between them appeared to be based on bribery and persuasion.
Opportunities
Some opportunities for growth lie in the past successes of the company. In dealing with other
clients who have had positive experiences and have not been overbilled, hopes arise for
FleishmanHillard being able to salvage its reputation. With their past successes in winning
agency of the year, diversity, ethics and named 2013, PR weekly “Agency of the Year”, they
may be able to work through this crisis with their many resources. Additionally, the large
Threats
public affairs group had to even have a 3 million dollar contract with an outside public relations
firm. For FleishmanHillard, having a responsibility to act ethically and deal quickly with trial
and conflict issues has posed as a threat as the crisis is in complete opposition to the company
culture.
CONCLUSION
Ultimately in its practice of not “practicing what they preach”, FleishmanHillard has given solid
lessons to public relations professionals of what not to do. In their lack of recognizing threats
towards their company goals and policies in their work with the Los Angeles Department of
Water and Power they show that without proper strategic planning, public relations train wrecks
can happen to anyone. This case provides accurate lessons promoting ethics in the workplace.
Some of the biggest lessons that this case teaches are of proper transparency between clients and
work officials, and ethical behavior in regards to business strategies and payment. In focusing on
openness between all members of a team much of this situation could possibly have been
avoided. However especially in regards to the nature of the company- being a public relations
organization and their public, they needed to do everything they could to continue that image and
purpose. The necessity of pre-crisis planning is essential in public relations companies, because
as this illustrates, accidents happen. So before you make the mistake as was made here, plan
ahead, and don’t “become the story”, as LA times writer, David Stratified said.
REFERENCES
City of Los Angeles Department of Water and Power. Director of Public Affairs.
http://www.allianceresourceconsulting.com/profiles/246.pdf
Karlamangla, Soumya, and Reyes, Emily Alpert. (2015, August 17). Overcharged DWP
Customers Would Get Tens of Millions Back Under Settlement. The LA Times. Retrieved from
http://www.latimes.com/local/lanow/la-me-ln-dwp-billing-settlement-20150817-story.html.