How is an ideal corporate affairs department structured?
Ithaca Partners has developed a propriety operating model that helps corporate affairs directors identify weaknesses in their department structure
It is the communicators’ equivalent of the Goldilocks Paradox. Yet when it comes to the appropriate size or structure of an in-house team, very few corporate affairs directors believe that they have got it ‘just right’. But what if there was a way to justify not only the size of an in-house team but also its central role within its business?
It was a dilemma that Ithaca Partners sought to resolve when a client operating in the pharmaceutical sector asked for an evidence-based argument that would not only strengthen his request for extra resource but also identify best practice within the industry.
This was not a benchmarking exercise per se. Instead, the search firm, which specialises in the corporate affairs market, sought to examine the sector by plotting competitors’ teams against an operating model that considered not only resource and capabilities but also how they performed in terms of understanding their role in the wider business.
Laura Williams, director of capability development at Ithaca Partners, explains: ‘The pharmaceutical sector is not an apples against apples scenario. Some companies have one specialism while others operate across broad areas. It’s what you draw from that to see, on a sliding scale, whether you’re failing in terms of best practice, whether you’re in the middle of the pack or the bottom.’
She adds: ‘Nobody has ever looked at the function in this way. Other functions have had this done for them. HR or finance know their place within the business, their contribution and the commercial outcomes from what they do. There are still a lot of people in companies who are unsure of the business impact of corporate affairs. We’re trying to say that there is a business impact because everything that the corporate affairs function is doing should be aligned to business purpose and that strategy and feeding into it.’
But there is also an argument that HR and finance ‘know their place’ because they are well-established functions while corporate affairs is relatively new. Often, the department has sprung out of an existing comms or public relations function but has yet to break totally free of this legacy (including scrapping the old ways of doing business). ‘If you’re doing corporate affairs properly, it is completely different [from public relations],’ says Williams.
She believes that when a corporate affairs team is structured correctly and focused on the right activities, its impact on the commercial outcome is much more visible. ‘We’re trying to demonstrate to our client what we believe best practice should look like, and then show how others in their part of the market are performing against that,’ she adds. ‘But pharma is quite an unusual sector. When you look at a corporate affairs team in a pharmaceutical business, the members have often done the rounds with other businesses in the sector.’
The benefits of the merry-go-round of talent movement in other sectors range from a flow of new ideas, different ways of thinking and an insight into how counterparts in other industries tackle similar issues.
It is our vision and mission to make corporate affairs better!
Ithaca’s proprietary Operating Model considers a corporate affairs team’s performance against eight areas: purpose; planning and operations; organisational design; talent; key relationships; resources (technology, analysis, agencies); reporting; governance.
Williams adds: ‘I think it is quite good for a team to be shown that, while they think they’re doing a great job, against our operating model we put them as average. It might be cutting edge for their industry, but compared against what we know to be best practice, it is not that great. It is our vision and mission to make corporate affairs better!’
The same questions were posed to seven directors of corporate affairs at pharmaceutical companies as well as its client. But the answers provided an insight both into how differently the departments operated but also in their approaches to similar issues.
For example, when asked how the function engaged with the business – under the ‘strategy, planning and activities’ umbrella – the answers ranged from ‘critical business enabler’ to ‘reporting through business operations’ to receiving ‘centralised guidance that must be managed on the ground, adapting to local needs’. Indeed, one respondent revealed they did not even have access to social media and only found out about corporate announcements, which were handled by its head office, at the same time as journalists.
Similarly, when quizzed about people and culture, most cited ‘business acumen’ as the top requisite skill, while one director stood out for actively seeking ‘non-standard’ diverse hires who bring strategic thinking and ‘player coaches’ from local communities to help with engagement. ‘How can we connect with our impacted communities if we only employ traditional graduate recruits?’ he asked.
Yet, somewhat ironically, when asked about the roles and capabilities of their teams, having already described it as the key skill, few mentioned business acumen. Instead, they spoke of the need to generate and analyse data to inform actions, intelligence gathering and gaining a better understanding of stakeholders. ‘Intelligence gathering has been hugely helpful in informing the function’s ability to provide strategic advice,’ said one respondent.
If you don’t understand the numbers, then you don’t understand what might have affected them. How can you be at the top table?
Many use external agencies to provide insights and analysis on global trends, such as cybersecurity or global warming, while also tracking the issues that matter to stakeholders. However, one respondent revealed a different approach: it has changed how it listens to patients and is now using those insights to influence product development, its societal contribution and commercial strategy. It is also using technology – the ‘non-people’ resources that forms part of Ithaca’s Operating Model – whereas most respondents appear less advanced in digital analysis or science.
Perhaps the most important question posed by Ithaca related to purpose. What is the purpose of a corporate affairs team? The answers ranged from being ‘external facing ambassadors for the company’ to ‘building trust with key stakeholders’ to ‘inspiring, empowering and educating employees’ to ‘earning the trust of patients’.
Ironically, when Ithaca Partners put the same question to their client’s team members, as part of a deeper dive, an even greater chasm was revealed. While the corporate affairs director believed their role was to create business impact, few, if any, echoed that back. They saw their role as enabling patient access to medicine. Just three saw their roles as helping the business that they worked for grow and make money. ‘Everybody said it was about the patient, that’s why we’re here. But if they think about it, if they help their company grow then this will enable more people to have access to more medicine,’ she says. ‘But there was no commercial alignment at all to the activity they thought they should be doing.’
Williams believes that this disconnect can occur when a corporate affairs director inherits a team who appear busy and reactive, and rather than conducting an MOT of the function, allows this to persist because the business seems happy.
‘I think this can happen because of the way a business resources comms. It can be after the event. The market has grown, it’s got some cash and then decides it needs comms. But if they had the resource earlier, they could truly see the business impact because comms would actually help with the growth,’ she adds.
This situation is common in the pharma sector which has historically been such a profitable industry, leading to some sizeable communications departments. There can also be the issue of fiefdoms, where senior managers employ their own comms specialist who is unlikely to be under the remit of the corporate affairs director. As one respondent, busy trying to bring ‘everyone inside the tent’, said: ‘The barriers to entry for ‘doing comms’ are very low. Anyone can set themselves up as communicators.’
The analysis revealed that there was little consistency in the approach of the communications departments. ‘Everybody is doing it differently,’ adds Williams. ‘And they’re all having varying degrees of success in the way that they’re doing it. What could they do to improve that? Where do we think the function should be heading?
‘And what we’re saying is that the function needs to have that business priority focus. It’s not just about doing comms. It’s about understanding the drivers of the business. Over the past five years, people have banged on about ‘strategy’. But what do they mean by that? It is business acumen. If you don’t understand the numbers, then you don’t understand what might have affected them. How can you be at the top table? We are looking for corporate affairs leaders that are not just experts in their own area, but who are also business leaders. That’s what chief execs want – not just somebody to do the communications.’