What does corporate affairs look like today?
What are the qualities that set apart a successful corporate affairs director from a more mediocre one? In other words, what does ‘good’ look like? It’s a question often asked of Alex Gordon Shute, founder of search consultancy Ithaca Partners, who has more than 20 years’ experience interviewing corporate affairs directors.
Two years ago, working with her business partner Alex Cole, who heads Ithaca Leadership Development, they distilled Gordon Shute’s knowledge, tested it with more than 200 corporate affairs directors, and created the first competency model for the function.
In a fireside chat, at the inaugural Corporate Affairs Summit, Gordon Shute shared her thoughts.
How would you articulate the difference between corporate affairs and corporate communications?
The market is beginning to recognise that there’s a clear difference. If you think of the three core component areas of corporate affairs – internal comms, external comms in all its forms and public affairs, or government relations – corporate comms tends to include only the first two. Corporate affairs is the widest possible definition of this profession.
What is beginning to happen now is that, in addition to those three core functions, there are other things being put into the discipline, such as ESG and sustainability, corporate brand and brand architecture and all sorts of things. When a corporate affairs director is super valuable and super useful, they tend to attract more responsibility?
But do they get more budget?
One of the things about improving business skills for corporate affairs directors is that they are getting much better about making the business case for more resources. A small amount of corporate affairs is often more effective than a large amount of marketing, for example.
What are the key skills needed to be an effective corporate affairs director?
The Ithaca Leadership Frame is, I believe, the first competency model for corporate affairs that’s ever been articulated. In my view, perfect corporate affairs directors have a fairly equal balance of the three elements: business, core and personal.
The business element of the frame is, I think, probably the least talked about, but is also really the most important as the profession matures and comes of age. Corporate affairs is not a thing in itself; it’s a thing that facilitates and is the fuel in the engine of the business. (I say business, not necessarily meaning corporate business; it could well be a non-profit, an organisation or a government department.)
What is this organisation for? And how is corporate affairs making a contribution to help it get to where it wants to go? Some of that’s about risk. Some is about opportunity. Some is about facilitation and diplomacy. And some of that’s about bringing EQ into an otherwise very commercial conversation about how things are going to land with different stakeholders. How may the outside world see us differently from how we see ourselves?
The middle bit of the frame is very much about corporate affairs skills. It’s about the strategy. It’s about the 360-degree vision of corporate affairs, that sense of really understanding. We’re doing a lot of work now helping corporate affairs make sure that their teams are not as siloed as they used to be. For example, that internal comms does use some of the content from social media on the external side. It’s about thinking about your stakeholders in a very joined up way. One of the real shifts in the profession over the past 20 years, driven mostly by social media, is that all the barriers between stakeholders have come down. Everybody sees everything.
What are the personal qualities that you bring? It’s about EQ. It’s about understanding human beings and bringing that quality into the room, bringing that into the interactions that you have with fellow executives.
What differentiates those people who have that seat at the table?
In my view, the first half of your career should be focused on the middle chunk of the frame – the corporate affairs craft skills, if you like. But the bit that gets you right to the top – the leadership bit – is the top and bottom of the frame. It’s the commerciality, and the business understanding. And it’s about the emotional element of how you go about deploying that understanding, the diplomatic skills, and bringing that empathy into the room.
Those are the things that get you to the top, because that’s the stuff which makes people at the senior end of the company say: ‘That’s really useful. We really want that person in the room. We really want that person in the conversation.’
Is it important to have that seat?
One of the things that’s important about the Exco conversation is that you’re in the upstream of the debates within the company. If you think about where the profession has come from – in the sense of putting the packaging on stuff when the decisions had already been made and turning it into a nice press release – we are moving away from that era.
As the profession matures, it’s about steering some of the conscience decisions, some of the trade-offs that the company is making about strategy and its engagement with the world. That’s where, potentially, you’re going to make the most important contribution.
One of the reasons that the profession is on the up is because the world is getting so complex. It’s so difficult. And those trade-offs with stakeholders are really hard. That’s where the maximum contribution is, and that’s where the function tends to get recognised.
Does measurement let corporate affairs down?
It would make everybody’s lives easier if we had some easy, neat measurement but we don’t. And often, the most valuable contribution that corporate affairs directors make is to stop companies doing things or to keep things out of the papers, or to steer the decision away from an acquisition that would have horrible reputational consequences even though it would be great for Ebitda. Those contributions are unseen and unmeasurable.
I do think that public affairs and internal comms have got better in the past five years at measuring. On the public affairs side, I’ve seen some enterprising characters, particularly in highly regulated sectors where you’re looking at specific regulations that may hit the business and have a commercial effect, who have quantified what the potential impact would be. They have worked really hard to ensure that piece of legislation didn’t happen and are then able to go back to the Exco and say: ‘The number on it was £50 million’.
There’s a huge opportunity with internal comms which has been massively upgraded in recent years. They can look at the relationship between the communications that they are putting out, the engagement scores of the workforce, the productivity measures… and you’re straight into metrics that are important to the board: recruitment and retention is just the start, then it quickly becomes productivity and then profitability. As boards have more responsibility for culture, for employee sentiment, that works well.
But for the core external comms stuff, I don’t think we’ve nailed it. But I think that’s okay. We just need to grow up and not worry about it, but instead find ways to talk about successes and how we add value.
Does corporate affairs occupy a unique position?
It’s a precious position. Corporate affairs and HR (or the ‘People Function’) are usually the only people on the Exco who don’t want the chief exec’s job. You’re not a threat. You’re not trying to unseat someone. You can end up in a position of enormous trust.
Can that cause issues?
It’s an important tightrope for corporate affairs directors to walk. They work for the company. They need to have a relationship with the chairman and the board. But it’s also important to the organisation’s success that the CEO is successful and therefore a lot of your job is building up a relationship of trust.
That trust means that they are often the ones to have tricky conversations with CEOs that other people don’t seem prepared to have. I spoke to a corporate affairs director who, within a week of starting his job, was the one who had to tell his CEO that he wasn’t sure that he’d understood the conversation he’d had with the chairman the day before, but it did mean he was exiting.
Conversations about bonuses and remuneration are very tricky. Building that relationship of trust so that you can have the difficult conversations in private in a way that it’s going to land. You are back into EQ, diplomatic skills and resilience.
What is the premium paid for a top corporate affairs professional?
The difference between what the top people are paid and other people at their level who may not be so good is usually between 30 and 40 per cent. But different companies have different structures on Exco reward packages and one of the things I am passionate about is that if the corporate affairs director is on the Exco, they should have a remuneration package which is in the same proportion as everyone else on the Exco, even though they are usually the lowest paid salaried member. It’s that which gives you joint collective responsibility for the decisions that you are making.