Corporate affairs directors face an uphill battle to secure non-executive directorships at listed companies because the chairmen who have the responsibility to fill these roles do not believe they have the requisite skills, a new report has revealed. Indeed, when asked which functional heads they thought had the relevant skills and experience for nonexecutive director roles, chairmen ranked communications/corporate affairs in eighth position, behind human resources, marketing and IT.
But Beyond Corporate Affairs, produced by Cayhill Partners, reveals that in-house communicators also rank themselves in eighth position. The report puts this surprising result down to a lack of confidence and ‘resignment to the fact that non-executive director.
Their scepticism about the ability of communications directors to fill the role is fuelled by several factors, but often it is directly related to their own personal experience in dealing with corporate affairs directors at the companies they have chaired who, they believe, have not displayed the necessary attributes or insights.
A serious barrier to the career progression of communications directors is the fact that many chairmen do not view the function as business critical. In some companies the in-house function is still relatively new and, despite the increased focus on reputation management, seen as a support function. And while there is much discussion about corporate reputation, for which communications directors are the natural stewards, the discipline is still, in many cases, in a nascent stage.
The lack of tangible measurement criteria to prove the value of an effective corporate affairs strategy continues to plague the industry. Similarly, there remains a perception that communications directors do not possess intellectual rigour outside their field of expertise.
The report claims that this is partly due to the behaviours of some within the profession and partly legacy. There is also an image problem: too many chairman still view the profession as ‘dark arts’ rather than a strategic adviser. However, one of the issues most flagged by chairmen was the perceived lack of business acumen among communications professionals. While many run multi-million pound budgets, the fact that they do not have direct P&L responsibility and are rarely involved in money-making activities is seen as a distinct disadvantage.
A major factor holding communications directors back is also the current recruitment process for non-executive directors. The chairmen usually rely on traditional generalist headhunters, who may have identified a chief executive or finance director for them in the past, but who lack a deep understanding of the corporate affairs function. As a relatively young discipline, many of these firms do not have specialist corporate communications divisions and so neither understand the value that the function can bring to a business or the individuals involved.
When asked to draw up a shortlist of potential non-executive directors, they go fishing in the traditional ponds. But the industry also has itself to blame, claims the report. Outsiders trying to understand the in-house communications function would find a lack of clarity regarding responsibilities, job titles and reporting lines.
In some companies, for example, the communications director might have responsibility for public affairs, media relations, internal communications, strategic communications, CSR, branding and other disciplines, but their counterpart in a similar company might have a more restricted range of responsibilities.
Similarly, the industry is now awash with job titles for roles that may ultimately be very similar. The report highlights the variety of titles of its contributors, which included corporate affairs director, corporate communications director, head of external affairs, head of external relations, SVP public relations, VP corporate communications, general manager public relations as well as many others.
This makes it difficult for those outside the industry to understand the role, responsibilities and experience of the incumbent. This lack of clarity over titles also masks a greater issue: not all communications directors are equal. While many are highly experienced professionals running formidable teams, sitting on the executive committee and shaping corporate strategy, others are effectively press officers reporting to human resources with little strategic input.
The situation is not helped by the large variation in reporting lines. While the majority of communications directors within FTSE 100 companies report directly to the chief executive, others report to human resources, corporate services, marketing or finance. Similarly, some sit on executive committees. Others do not.
And every chairman interviewed for the report admitted that they would not consider a candidate for a non-executive role if they had not first been a member of their company’s executive committee.
Just under half of FTSE 100 corporate affairs directors sit on their executive committees, which means that their peers would automatically be disqualified for consideration.
The report also controversially suggests that the boards’ use of external advisers might also be holding back the career progression of communications directors. It points to how in-house communications directors often compete for access at board level with external advisers, who many chairmen rely on for help and counsel.
This has two effects. Firstly, their own chairman or chief executive may not consider an in-house communications director for lateral internal moves if they are not even able to position themselves as the outright expert in their own field. And secondly, the fact that the chairman can already draw on both internal and external communications expertise makes it unlikely that he would recruit another communicator into a non-executive role.
Sadly, for communications directors, the report found that, while recognising that certain individuals in the profession have skills and experiences that could add value to a board, the chairman interviewed were not ‘particularly effusive’ about appointing one.
They view the communications discipline as simply too specialist to produce many effective non-executive directors, and the majority felt that hiring a corporate affairs director to such a role was a potential risk that few FTSE 100 boards would be willing to gamble upon. With an increased personal risk now associated with being on a board, the chairmen felt that recruiting non-traditional candidates would only exacerbate this.
The chairmen interviewed advise that practitioners need to broaden their experience, either by moving to another function within their organisation or taking on additional responsibilities, before attempting to undertake a non-executive role. But the general consensus was that the discipline has to mature further before any communications director makes it onto a non-executive position in a listed company.