The rise of corporate affairs Article icon

The Corporate affairs is moving from a peripheral division to a strategic business unit within major companies

There’s no shortage of research reports talking about it. And they’re saying the same thing: corporate affairs professionals (or communications directors, where the titles have become increasingly interchangeable) are stepping up the leadership ladder. But their real time in the spotlight may yet be to come.

According to a recent survey, published by Portland and conducted by specialist headhunters Watson Helsby, around three quarters of FTSE 100 companies have a corporate affairs director, and of those, 75 per cent report into the chief executive (a rise of five percentage points since 2013).

Not only that, but 43 per cent enjoy a place on the executive committee, a figure that Watson Helsby’s managing director Nick Helsby predicts will soon break through the 50 per cent mark.

‘This has been the most significant shift during my 20 years in the business,’ says Mark Gallagher, senior partner at Pagefield, who was formerly responsible for corporate affairs at ITV, ITN and Camelot. ‘It used to be almost unheard of for the ‘PR boy’ or ‘PR girl’ to win a place on the exec.’

Now he sees corporate affairs as far more than ‘just PR’: it’s about being a top-tier fixer, tactician and strategist. ‘Who does the smart chief executive call first when there’s a crisis? Whose opinion do smart fellow members of the exec board seek before tabling a paper? Who does the chairman go to for a discreet second opinion? The corporate affairs director – or at least they should do,’ says Gallagher.

‘The role has changed out of all recognition,’ agrees Toby Orr, senior partner at Portland.

Communications once existed in a controlled environment with a focus on delivery – ‘trading, trailing, spinning and selling in news’ – but Orr claims that today it is about strategy and content.

‘[Corporate affairs directors] are restructuring their teams, embedding a global narrative, empowering employees, and generating compelling and shareable content to engage a much broader range of audiences’.

For those with seats on the board, it means new capabilities altogether. ‘They have to be able to contribute usefully to debates around strategy, operational decisions, portfolio planning, strategic investment and divestment decisions, et cetera,’ says Helsby. ‘This in turn means they have to have high levels of financial and business literacy with a deep understanding of how the business actually works and makes its money or margins (key drivers), nitty gritty operational details, as well as the ability to understand the P&L and authoritatively speak MBA/corporate finance language.’

Simon Redfern at Starbucks is a prime example of such a breed. As the coffee company’s corporate affairs director for Europe, the Middle East and Africa, he oversees all the communications activity in 35 markets, with a particular focus on the UK, France, Germany, Netherlands, Switzerland and Austria. ‘The role includes government affairs, stakeholder engagement and internal communications,’ he says. ‘I have a small but mighty team too, and we also have some agency support to provide the bandwidth and to cover the ground.’

In a sign of the times, he sits on the EMEA leadership team. ‘I think corporate affairs can play an important role in the boardroom, providing an external perspective on key decisions,’ he says. It’s perhaps telling that Starbucks is supporting Redfern at such a senior level. Last year’s public backlash over tax affairs at Starbucks showed that even the most popular corporate brands can be dangerously exposed to reputational threats. Having a strong corporate affairs director may be one of the best investments a company can make to avoid trouble.

REPUTATION AS THE FUEL FOR CHANGE

This view is reinforced by a recent Deloitte/Forbes Insight survey in which 87 per cent of 300 company executives across the world rated reputation risk as ‘more important’ or ‘much more important’ than other strategic risks their companies are facing.

‘Seen through the prism of risk mitigation, the role of the corporate affairs director is therefore an important one,’ adds Orr.

Julia Meighan, chief executive at VMA Group, goes further. She describes corporate affairs and communications directors as the custodians of the largest intangible assets in any business – brand and reputation.

‘[Corporate affairs] can help the organisation make better decisions (such as strategic investment decisions or operational initiatives/changes), by showing business leaders the potential downside of certain strategic options and helping them appreciate the unintended consequences of these actions,’ says Helsby. ‘In so doing, the corporate affairs director can help provoke discussions that might not otherwise be had.’

He thinks there is opportunity here too – to create and develop relationships that result in a more ‘favourable operating environment that advances the interests and prospects of organisations’.

Rupert Younger, director at the Oxford University Centre for Corporate Reputation at the Saïd Business School, agrees. In the school’s Corporate Affairs Academy (an annual three day course for corporate affairs directors), he says questions frequently arise around where reputation exists outside of risk and how it can be linked it into more positive aspects of business development.

‘The alignment of reputation and opportunity will reduce risk and improve business credibility and perception of capabilities,’ he says.

This accompanies an increasing focus on a company’s ‘social licence to operate’ – otherwise put as the social legitimacy to act in the interests of the community and environment in which a business operates. Younger cites the example of a mining company looking to win concessions in Africa, where the corporate affairs director will play a critical role. ‘Their engagement with local communities, non-governmental organisations, politicians and so on, will all be vital,’ he says. ‘It can’t be left to chance. It has to be strategically thought out.’ The imperative to work this way is driven by more than just profit but by the recognition that companies need to be seen as a positive influence delivering ‘shared value’.

KEEPING STAKEHOLDERS HAPPY

Not that any of this is easy given the context of an increasingly complex stakeholder environment. ‘There has been a huge proliferation in communication channels and stakeholders in recent years,’ says Paul Lockstone, managing director, corporate communications at Barclaycard. ‘There is a lot more media to deal with – online and offline, as well as specialist publications that have mushroomed in recent years and many of which are now purely digital.’

At the same time, he has seen a significant increase in different stakeholders groups, including single issue groups and regulators. ‘Barclays, and other major global banks, have all experienced that the outcomes of your interactions with regulators are much more visible,’ he says.

Overlaying all of that is social media, where engagement is vital to support the brand and where a rapid response is imperative. ‘This has given [corporate affairs] practitioners the opportunity to push reputation and brand management to the most senior levels of business,’ he says.

In addition, stakeholders are converging across different channels. An obvious example of this is the employee who is also the brand consumer or advocate. It is perhaps no surprise, therefore, that Chantal Tregear, who heads the corporate communications practice at Russell Reynolds Associates, has seen a noticeable recent shift in the senior communications role to include employee engagement, with many companies, she says, now prioritising the internal message over the external one.

‘The chief executive of 2015 appreciates, recognises and values, probably more than ever before, the role of internal communications,’ she says. ‘Without an authentic and credible vision and mission, where values and behaviours are integral to the culture of an organisation, and where the employee community is simply not on board with the business strategy, companies struggle to achieve competitive advantage.’

Redfern agrees, adding: ‘We know younger people in particular expect the businesses they want to work for and purchase from to behave responsibly. Corporate reputation is the responsibility of everyone in a business, not just the communications team, but we have this focus which gives us a critical role to play in advising and influencing from the board to the frontline. And the internal audience is incredibly important as communicators of the business themselves.’

A MANY-HEADED BEAST?

What is perhaps most apparent is that corporate affairs has never before had such a broad and complex remit. In fact, amid the myriad responsibilities it can seem difficult to find any areas in which corporate affairs does not have some part to play.

Meighan, for instance, talks about corporate affairs taking on more responsibility for areas such as marketing, brand management, customer experience and commercial development. This all fits with the idea of the ‘increasing indivisibility of corporate and brand reputation’, as the Portland report puts it.

And Gallagher predicts that more corporate affairs directors will take some or all responsibility for investor relations (from finance or standalone IR directors) and similarly regulatory affairs (from the legal affairs directors).

This is challenging current assumptions as to which skills, capabilities and backgrounds make for a good corporate affairs director, especially where the specific needs of each business are different.

‘Certainly the talent pool is going to get more diverse,’ says Tregear. ‘They are likely to come from within the business and from general management or more corporate functions such as HR, strategy or risk.’

Helsby points out that, in highly regulated industries, the role is already often taken by a lawyer who has expertise in complex policy and regulation.

Even defining corporate affairs isn’t easy. Helsby, for instance, talks of corporate affairs as often encompassing a broader remit than corporate communications, including audiences that influence or shape policymakers such as NGOs, single issue groups, academics, consumer groups, intergovernmental organisations and think tanks.

‘However, it is worth pointing out that corporate affairs and corporate communications, certainly in large consumer-facing companies/sectors (for example, Tesco, Sky, Diageo) are becoming increasingly synonymous and the distinction is becoming increasingly less relevant,’ he says.

In B2B companies, on the other hand, where public and regulatory affairs are less important, he thinks the corporate affairs title is unlikely to catch on. ‘Some in the FTSE 100 don’t even have a corporate communications director,’ he adds.

With no standardised definition of the corporate affairs role and its purpose, the danger could be that businesses fail to value it as a function on a par with marketing, HR and other such well-understood business units. Younger thinks this is a challenge.

‘Corporate affairs directors are not undervalued by those chief executives who have to make difficult decisions,’ he says. ‘Rather it is the professionalization of the function in leadership teams that has not matched that.’

He argues that corporate affairs can be more fragmented than HR or marketing, for example, and sometimes struggles to secure a professional development budget that is typical in other functions.

This means that training in the right skills, such as critical writing or analysis, can fall behind other functions. Lockstone agrees, saying that he has lost count of the number of times he has come across communications professionals who can’t write. ‘Being able to boil an issue down and clearly articulate it in writing is critical,’ he says.

In Younger’s view, these problems can be exacerbated by the perception that corporate affairs is the rapid reaction team – a point that Redfern describes as the ‘best and most daunting part of the job’. While immediacy may be a great strength, Younger also sees it as a weakness of corporate affairs.

‘It can mean it’s not seen in the same way as other professional functions, with structures, written narratives, regular committee meetings, and so on. Businesses need to open up opportunities that allow corporate affairs directors to link into other functions more effectively,’ he says.

Orr believes that the challenge of corporate affairs lies not in skills, but structure. ‘Companies of all sizes have grasped the importance of social media, but often structure their corporate affairs department so that that their social media team is separate to the rest of their corporate affairs colleagues. That makes as much sense as managing separate broadsheet print and tabloid print communications teams. Similarly, some big extractive companies run entirely separate IR and external affairs units. As audiences converge, so corporate affairs specialisms need to integrate, and quickly too.’

JOINING THE DOTS

If this is achieved, then corporate affairs may well further shift. Instead of feeling like ‘we’re constantly justifying our existence’, as Lockstone puts it, it may truly become a function that Helsby envisages. This is one in which corporate affairs directors are supported to join up the dots, to see and interpret the complex interplay and inter-relationships between different stakeholders, and then form a cohesive and coherent picture of the external environment in which the organisation operates. Combined with business and financial understanding, and marketing/consumer insight, it could be a truly formidable leadership role.

‘Really respected corporate affairs in an organisation will see the director evolve into a formal or informal ‘chief of staff’,’ suggests Gallagher. If businesses, and their corporate affairs teams, successfully address some of the challenges associated with this fast-paced and fast-rising function, then this may just be one dream that soon becomes a reality.

HOW TO GET AHEAD IN CORPORATE AFFAIRS

  • Articulate and demonstrate your value and present a persuasive case internally for the corporate affairs role – measuring business success is becoming easier with data available around audiences, media impact and social media innovations.
  • If you are consistently struggling to get recognised at a leadership level, then think of changing to an employer who does value corporate affairs. There are lots.
  • Be prepared to take on a broader remit – companies will increasingly choose people who can see the bigger picture and help consolidate communications functions.
  • Network with other corporate affairs and communications directors in leadership positions. According to VMA Group, communications directors who participate in its quarterly advisory board meetings consistently cite active sharing of knowledge and experience as invaluable to creating their own strategies for success.
  • Be prepared to develop your softer skills – emotional intelligence, ability to influence, leadership and interpersonal skills are essential. Consider going to a coach to develop skills that are lacking.
  •  At the highest levels, a commercial skill-set becomes more critical. An MBA or finance training may be useful. Developing excellent writing and analytical skills will also be key to articulating your position at all levels.