Business today has to contend with the fact that people are quick to judge companies by how they do things. And people act on those judgements. Service, quality and price are still determinants of business success. But so are treatment of employees, environmental responsibility and community involvement. What's increasingly important today is "corporate character."

The business lesson of the 1970s and 1980s was that companies could do well by doing the right thing. Johnson & Johnson quickly recovered from the Tylenol crisis. Ben & Jerry's grew, in part, because of its social activism. The business lesson of the 1990s is that failure to do good can hurt a company. Texaco is learning this lesson the hard way in a still-unfolding story.

There is a growing body of evidence that corporate character is linked to success. My firm provides community and public relations counseling for organizations like Coca-Cola, Barona Casino, KNSD-TV Channel 7/39 and the Greater San Diego Chamber of Commerce. It's increasingly obvious that consumers, employees, investors and even communities are most likely to support companies with good corporate character traits. This is becoming a differentiating quality among competing companies.

What is the role of public relations in this new corporate reality? It is managing corporate character.

This radically new function in a radically new operating environment is not about glossing over unpleasant truths with pretty pictures; it is not spin control. It is a bout managing and communicating a company's realities. It is the future of public relations. More importantly, it is how public relations can directly impact organizational success. This, in turn, makes public relations vitally relevant, because only public relations professionals have the knowledge base to counsel top management on corporate character.

In the 1960s and 1970s, business was forced to demonstrate social concern, as the activists became consumers, employees and even CEOs. All along the way, public relations helped forge and refine the corporate conscience.

American express didn't originate but did launch cause marketing in the 1980s, linking use of its card with donations to refurbish the Statue of Liberty. Cause marketing was based on a company using its marketing dollars to promote a worthwhile cause, thereby getting its name out with a halo effect. Public relations firms helped find the right causes and developed new programs to fall under the cause-marketing umbrella.

As all sorts of companies adopted cause marketing, the downside was that too many programs made consumers doubt the companies' sincerity. If a program looked like marketing first, cause-related second, it did more damage than good. For example, critics said Philip Morris cynically promoted the 200th anniversary of the Bill of Rights only to push its own campaign for smokers' rights.

As more broad-based corporate interest and involvement in communities evolved, public relations helped develop more multi-dimensional programs. Company contributions of time, money and expertise to not-for-profit organizations were viewed in terms of their public relations value. Most people saw this as a positive. After all, in an era of declining government support, someone had to step up to the plate.

When the Harvard Business Review (May-June 1994) featured a major piece on "The New Corporate Philanthropy," it was a clarion call to public relations to help companies get even smarter about their giving. The article said corporate citizens must "cultivate a broad view of their own self-interest while instinctively searching for ways to align self-interest with the greater good." Public relations, which always functioned as a corporation's eyes and ears in the community, played a big role in this.

"Watch What We Say, Not What We Do"

But there were flies in the ointment. Companies were not always consistent in their enlightened approach to doing business. One company might support education while laying off workers who then couldn't pay for their children's education.

Or, as noted businessman Paul Hawken wrote (Utne Reader, September/October 1993), not all things that looked good were good. For example, "Some natural shampoos and toothpastes are no different than industrial-strength cleaners - they rely on detergents (which) break down human cell walls, as well."

Or consider athletic shoe company Ryka, Inc. CEO Sherri Poe had built the company on a philosophy of fighting violence against women. Because she had positioned the cause ahead of the business, she was held to a very high standard of appropriate corporate behavior. When she then proposed a sell-out of the company that was very good for her but bad for investors and other managers, she was labeled "hypocritical."

In short, business cannot look good in one area of activity, act badly in another and expect to have a good public image. This discrepancy has led to the new focus on the all-encompassing concept of corporate character.

Again, the opportunity for public relations is not in glossing over; it is managing real change and real widespread practice of good corporate character.

What's important is the evidence that success and corporate character are inextricably linked. Linked in what ways? Many ways.

Frank D. walker, chairman of Indianapolis-based WalkerInformation, has studied this for years. In a 1994 survey of more than 1,000 heads of households, he found that "business practices," or how a company behaves, was the second most important determinant of reputation. It was the fourth most important factor in making purchase decisions, and the second most important reason for refusing to buy from or avoid a business. In other words, consumers care and they express that caring with their wallets.

Employees care, as well. Walker also found that the higher employees rated their employers' social responsibility, the higher their job satisfaction. And the Center for Corporate Community Relations found that the more employees know about employers' community involvement, the higher their degree of loyalty.

Managers focused on fiscal matters care, according to a survey Walker conducted for CFO Magazine in 1995. He found that nearly six in 10 chief financial officers believe that balancing economics and ethics is more important today than it was five years earlier. And about five in 10 believed it would be even more important five years in the future.

Can anyone doubt that investors care? When investors sold stock in companies that did business with apartheid South Africa, the picture became clear. There are all sorts of investment managers and portfolios that focus on aspects of corporate character. So-called "green" funds are only one example.

In fact, only one audience is still not entirely sold on this concept and that is CEOs. Many CEOs hear the term "corporate social responsibility" and don't like it. To them, it sounds like an entitlement tha6 will drive down profitability.

It's not, of course. Corporate character is a success factor and a way to get an edge over the competition. Businesses that "get it" and act on it now will gain the advantage. Public relations professionals who emphasize it the most now will add the most value to their work and their organizations.

It's a reality that business has to manage both economics and ethics. And the line is blurring rapidly. Managing corporate character helps a company achieve its various business objectives - from reducing costly employee turnover to preventing purchase avoidance. It is directly linked to economics. It is the future.