Effective public relations can be just as critical to a company's survival as the strength of its balance sheet or the quality of its products or services. Too many corporate heads, it appears, are realizing that much too late for the good of their companies and their personal well-being.

The list of costly communications blunders grows longer as the economic slump deepens, a fact that underscores the need for better public relations with investors.

In his book, "The Winning Corporation," a guide to "management practices that work," Washington businessman and author A.L. Jagoe suggests that corporations "do good and tell about it." That, said Jagoe, may be the first commandment of corporate communications.

If there is such a thing as the 10 commandments of business, then the second was laid down by Scott M. Cutlip and Allen H. Center in "Effective Public Relations," essentially a textbook for practitioners in the corporate arena and other disciplines. A company's interests, they wrote, are "ultimately best served by supplying investors complete current information -- whether good or bad -- affecting their investment."

That much at least ought to be etched on stone tablets above the desk of every chief executive of an investor-owned company. A good many probably wish now that they had followed this dictum rather than allowing the good-news syndrome to dictate their corporate communications policy as it relates to investors. Investors increasingly are blaming executives of companies in trouble for misleading them in public statements about an organization's financial health or about its prospects for growth.

The corporate landscape is littered with such complaints, many of them having been converted into lawsuits. The problem appears to be more one of confusion and poor corporate public relations rather than any violation of law.

The Washington area is no exception, as the difficulties at several regional companies in recent months have shown. The list is familiar by now -- MNC Financial Inc., Washington Bancorporation, Baltimore Bancorp and USF&G Corp., to name a few.

Not only do executives face the challenge of restructuring in a faltering economy, but they also find themselves having to explain -- sometimes in court -- why their companies issued such reassuring statements in the face of impending financial difficulty.

No one has yet produced iron-clad evidence that officials at MNC Financial, Baltimore Bancorp, USF&G and the defunct Washington Bancorp deliberately lied to investors to hide serious operating problems. Each of those companies, nevertheless, seemed to suffer from what the military would refer to unforgivingly as a failure to communicate properly.

Consider the following statement, which was made last April to shareholders of the beleaguered National Bank of Washington and its parent company, Washington Bancorp: "Looking to 1991, we believe the bank will be a stronger, better capitalized and more efficient institution. Everything old is new again." And this: "The bank already is taking positive steps to strengthen its balance sheet as part of our strategic focus on banking products and services. Notwithstanding these difficult times, there are a number of positive things going on in the bank."

Less than four months later, the federal government shuttered NBW and sold it to Riggs National Bank for $33 million. In the wake of the sale, shareholders accused management not only of failing to disclose the true condition of the bank but also of investing their funds in the company's commercial paper without their knowledge.

Barely a month after NBW's demise, MNC investors were yelling foul over management's alleged failure to disclose in greater detail the company's debilitating real estate loan problems. Just months before, analysts were touting MNC -- the region's largest banking firm and parent of Washington's American Security Bank and Baltimore's Maryland National and Equitable banks -- as the Gibraltar of the super-regional banking organizations. But alas, MNC reported staggering losses due to an avalanche of nonperforming real estate loans -- those that are collecting no interest.

More recently, charges of serious gaps in corporate communications have been laid at the thresholds to the executive suites at two other major Baltimore companies -- Baltimore Bancorp and USF&G Corp., the giant insurance firm. At least two lawsuits have been filed in U.S. District Court in Baltimore, charging that USF&G misled investors last spring by indicating its intention to continue its policy of increasing the dividend.

Whether the insurance company misled investors or violated securities laws as alleged in the lawsuits will be decided in court. Investors seemed completely surprised, nonetheless, when USF&G announced last week that it was cutting the dividend and its work force to save money. If investors misunderstood USF&G's earlier public statements on payment of the dividend, then the company obviously has a serious flaw in its corporate public relations.

Baltimore Bancorp appears to have a similar problem in communicating with investors, though the circumstances are entirely different. Baltimore Bancorp finds itself in the awkward position of having rejected a $17-a-share takeover offer from larger First Maryland Bancorp in May, only to see the price of its stock fall from $15 a share shortly thereafter to less than $5. A suit pending against Baltimore Bancorp alleges that the company's actions caused the value of its stock to be artificially inflated. Moreover, the company stands accused of filing false and misleading statements with regulators because it allegedly failed to mention a deterioration in its loan portfolio.

At a time when society is said to be more litigious than ever, corporate heads can't afford to be too vague about what rightfully belongs in the public domain or, indeed, too defensive about the possible effects of bad news. A failure to convey good and bad news effectively to investors can be costly in the long run, as too many executives are learning the hard way.