It’s easy to see the allure of a great leader in corporate affairs. At a time when organisations face scrutiny like never before amid a wealth of changing market challenges, this is a consigliere to the chief executive, who keenly understands external markets, can keep calm in a crisis and helps safeguard and build reputation.
With wide-ranging expertise spanning corporate communications, government and investor relations, employee engagement and corporate social responsibility, a corporate affairs leader can get beneath the bonnet of the business and communicate effectively with all stakeholders. It is not surprising, therefore, that corporate affairs directors are increasingly being appointed to their company’s executive boards – and operating second only to the chief executive.
‘In a crisis it is clear when a business has an effective corporate affairs function (VW) versus an organisation that has none at all (Kids Company),’ says Hannah Peech, head of the corporate communications practice at Odgers Berndtson. In a world in which reputation is everything, the corporate affairs expert can be king.
‘CEOs are looking beyond functional competency for someone to help them solve the particular business challenge of the moment,’ says Jonathan Harper, partner at executive search consultants Spencer Stuart.
Companies are keen to source leaders who ‘have the impact to drive transformational change and who are seen to be credible at the top’, he says, adding that the corporate affairs function is already having a huge impact on governance structures relating to reputation at board level. But while there’s increasing acceptance of the importance of corporate affairs at leadership level, there is a challenge.
In a role and function with such a broad remit, how do companies break down and prioritise the specific skills they need for the role to be effective? And how do they source such talent when there is no long history of companies investing in and developing it to this most senior level?
‘Too often clients want the ‘renaissance person’,’ says Laetitia Jerabek, a principal at Korn Ferry. ‘For example, do you want a corporate communications professional that understands government relations or vice versa, because the chances of having someone who is equally weighted in both areas is slim.’
Harper says that there is huge demand for the role, but agrees that the pool of truly world class talent is limited. ‘The crucial considerations when hiring a head of corporate affairs are quality of leadership, cultural fit and the ability to contribute to decision making beyond your functional area of responsibility,’ he says.
‘In today’s 24/7 environment it is almost impossible to find the perfect candidate with experience of every dimension of the role.’
It can be tough for companies to scope out the role too. Nick Helsby, founding director at Watson Helsby, says that some companies are getting very sophisticated and know exactly what they need and want from a head of corporate affairs. But he admits that he has written pretty much a ‘whole job description’ for others that are finding it harder to define their requirements in the context of a role that has changed more than most in recent times.
Breaking down corporate affairs
That some might struggle isn’t surprising. The skills wish-list for a good head of corporate affairs is extensive. Basil Towers, senior adviser and director at Blue Rubicon Institute, lists just a few of those that companies should be focusing on to improve the value of corporate affairs:
• Analytical and diagnostic skills
• Understanding of business models, operations and risk mitigation and management
• Leadership skills (influencing, coalition building, persuasion) supported by high level EQ
• Programme and project management skills
• Collaborative skills
• Digital and social understanding
‘The incumbent has to navigate the grey area between serving the CEO and the company and working with the board,’ says Harper. ‘What’s more, today’s technically savvy CEOs and boards demand connected stakeholder engagement strategies.’
He thinks, therefore, that the corporate affairs leaders of the future need to be equipped with practical, social and emotional intelligence.
‘The most effective corporate affairs leaders share a number of characteristics that enable their business to manage reputation for value and their function to add value,’ says Towers.
‘Their experience and capabilities allow them to operate as business leaders and/or advisers. Their understanding of the business model and the complexities of the operating environment allows them to prompt both board and executive debate, to influence choices and strengthen decisions and to align and integrate the reputation strategy with the business strategy.’
The problem is that it’s not entirely clear where all this expertise is coming from. There certainly doesn’t seem to be that much development of it from within.
‘Some corporate affairs leaders have neglected putting in place talent management strategies and programmes that attract, develop and retain the pipeline they need. Often these programmes have been one of the first things to be cut in response to cost pressures,’ says Towers.
In addition, he says that companies have often focused on too narrow a base of technical and tactical skills that develops communications and other specialists but not business advisers or leaders.
He thinks this is changing. Leaders are building capability and competency development programmes, he says, often using 70/20/10 learning and development frameworks, which ‘reflect the breadth and depth of the roles and responsibilities required to deliver business value’.
But it is still a work in progress. ‘In a survey we conducted of the FTSE 100 18 months ago, 63 per cent of those surveyed were external appointments,’ says Harper. ‘Succession remains a critical skill and few companies have mastered this well.’
Not that this is always a bad sign. As Harper says, the rising stars often have to leave to get the experience of running a function in a smaller business. ‘By taking a role in a FTSE 250 company, for example, they can equip themselves with broader experience with a view to returning to larger organisations.’
Cross-sector knowledge can also be advantageous. ‘Because corporate affairs directors have skill sets that can be transferred between sectors, it’s always going to be tough to be appointed to the top job from within because the company will be able to look at candidates from across the spectrum of the economy,’ says Alex Gordon Shute, founding partner of Ithaca Partners.
She hopes, however, that as corporate affairs directors become better leaders of their own people, they will more frequently have an obvious internal successor.
In the meantime, though, poor internal talent development can make it more difficult to source the right talent. Peech advises that any recruitment exercise should begin with a discussion about the expectation of the role of corporate affairs director in meeting the company objectives: how are they to balance their time between protecting and enabling reputation, building a team, re-positioning a brand, telling stories et cetera?
She then suggests that companies need to undertake a mapping of the current skills in-house and additional resources available to help develop a clear picture of the skills required.
‘The ‘tool kit’ of the corporate affairs professional is significant and can vary across sectors; for example, in some sectors there is a blurring of the line between communications and marketing. It is important to be clear about the priorities for recruitment, before going to the market,’ she says.
The appointment may not be the only challenge, however. Failing to put in place a talent pipeline might also point to another problem: a poor team structure meaning the corporate affairs director is relatively isolated and lacks vital support once appointed. It’s not uncommon, for example, for a corporate affairs division to include, say, internal and external comms but leave social media and investor relations as entirely separate units.
This then makes it more difficult for a corporate affairs director to link into the right functions and join up the dots. It may also make it harder to justify investment in corporate affairs as a recognised function on a par with other units like human resources and marketing – making training and development initiatives less likely.
Specialist skills thrive, but there’s scant development of the right capabilities to oversee the whole. ‘In a big global corporation, which is typical of our client base, there is frequent debate around the optimal organisation structure,’ says Harper.
‘There is no one size fits all, but optimally regional functional leaders will report directly into the head of corporate affairs who will be key to the global leadership team. You will see each functional area represented such as media relations, employee engagement, issues and crisis management, government affairs and corporate social responsibility.’
In more sophisticated businesses, he adds there may also be a head of corporate brand and head of strategic communications (effectively a chief of staff-type role with a mix of strategic and operational responsibility). Jerabek takes a similar view, including a diagram of what she describes as an optimum communications structure. An integrated structure could help organisations recognise the importance of the corporate affairs function.
But she thinks companies need to go further in order to develop the right business expertise. ‘It would be helpful if they could give high potential individuals some commercial experience as well, so they understand the commercial elements of running a business,’ she says.
Again Towers sees hopeful signs. ‘There are visible trends in bringing in non-functional specialists, either fast-track general managers or leaders, or other functional leaders with the capability to provide analyses and diagnoses of complex contexts and issues and advise on ‘offence’ and, or ‘defence’ options,’ he says.
A shift in thinking
This might also support the development of more candidates with the right mind-set for leadership in corporate affairs. Functional roles across communications can be relatively short-lived – moving on to new opportunities after two to three years is not uncommon.
But Helsby agrees that it might take three years just to get an understanding of how an organisation really works – to be really effective in a corporate affairs leadership role.
By way of example, he cites Ian Wright who was corporate relations director at Diageo for almost ten years. ‘He was in a position to understand the inner workings of the company and play a key role in influencing decisions,’ says Helsby.
Sure, a company might find such a leader through an external search. But the right team structure with formal training mechanisms in place would help broaden the talent pool, and could help set the right conditions for leadership success – supporting the right candidates to shift from a shorter term tactical view to more long-term strategic thinking.
The role of the corporate affairs leader is still evolving, as is the function as a whole. There remain challenges – companies are on a learning curve sourcing the right leadership talent supported by an integrated team structure encompassing everything from employee engagement and digital communications to media relations, public affairs and brand marketing.
And there is no handy blueprint – corporate affairs divisions and leaders will vary depending on the organisation, the view of the chief executive, the use of external agencies, its risk appetite, and a host of other factors.
But with the right teams in place and investment in a proper talent pipeline, corporate affairs directors will surely be better placed to deliver real understanding and lasting impact at leadership level.
‘Corporate affairs professionals cannot be successful alone,’ says Peech. ‘Their success is entwined with the organisation’s achievements and the people around them. In the same vein, they cannot be a failure alone. They rely on the quality of their ‘product’ in the broadest sense and the engagement of employees across the businesses/organisations they work for.’
The corporate affairs leader may be evermore important in this reputationally-sensitive world. But so too is the corporate affairs team. Those organisations that achieve real strength in corporate affairs will understand the importance of investing in and developing both.