CORPORATE AFFAIRS COMING OF AGE
THE ARRIVAL OF A POWERFUL NEW CORPORATE AFFAIRS DIRECTOR IS THE GREATEST TRANSFORMATION IN OUR INDUSTRY IN RECENT YEARS
Our latest benchmarking research reveals an industry shift and emergence of a much stronger, more influential corporate affairs leader in major corporations, with all legacy communications and reputational functions increasingly centralising under this newly powerful figure. It should be the rallying cry for any ambitious corporate affairs director eager to make a difference at board level.
True transformation in business sometimes just takes time. It occurs so incrementally, over such a long period, you often don’t notice anything changing at all until it solidifies before you one day, fully formed. In the last few years, one such transformation has crystallised among the varied professions responsible for corporate positioning in multinationals – strategy and planning, public policy and regulatory aairs, sustainability, and the traditional communications functions (PR, media, investor, employee, government and digital).
Our latest benchmarking research has found this constellation of teams currently undergoing a radical reinvention in major organisations across the globe; a complete re-imagining of them as a single, coherent group of disciplines capable of delivering fully integrated reputation management, and with the centralising influence of an increasingly powerful corporate affairs leader as the point of orchestration.
The depth of the changes we observed and the striking similarities in the approaches taken by the companies we analysed – from financial services to technology; pharma to telecoms to oil and gas – suggest that this is not simply one of those random rearrangements of the corporate furniture. Something fundamental, and lasting, appears to be shifting across our whole industry. What it is leading to is not just a redefinition of the roles these individual teams perform in the 21st century organisation but perhaps the final coming of age of communications as a coherent business discipline, with a settled structure, a universal purpose, and a clear point of mobilisation behind a corporate affairs director with true executive clout.
AN EPIPHANY AT BOARD LEVEL
COMMUNICATIONS MATTERS BECAUSE REPUTATION MATTERS
During the course of 2020, Broome Yasar conducted in-depth benchmarking research on behalf of several of the world’s leading organisations, looking to understand how the structural sands of the profession were shifting in response to a highly volatile economic and social environment. In total, we conducted more than 100 in-depth company assessments and held interviews with senior communications leaders at some of the highest profile organisations in the UK/Europe and US.
What emerged was a revelation. Nearly every single organisation we analysed had embarked on a back-to-the-drawing board rethink of their communications and policy functions in the last 18 months. Housed in different departments, reporting into different areas and with poor cross-pollination of ideas or intent, our interviewees also characterised these teams as having had hopelessly anachronistic corporate profiles. Most had been born into corporate life during a completely different era-pre-digital, even pre-internet; pre-social activism; pre-financial crisis and pre-Covid – a time of largely analogue management of the company’s reputation, small-scale stakeholder relationships, blunderbuss mass communications, slow feedback loops, one-way dialogue, and plenty of space for quiet corporations to hide from public view if they so wished.
But the world had since changed beyond recognition, as had the expectations placed on these functions. Yet their legacy structures and remits had lingered on, imprints of a former life. Public policy and affairs was still often permitted, bizarrely, to stay disconnected from other external communications efforts; investor relations too was often detached. Sustainability and environmental responsibility, once little more than an annual reporting function for shareholders, was now a genuine strategic influencer, yet was still usually structurally isolated as a lone subset of the CEO’s office, just as it had been in the early 2000s during its incarnation as ‘corporate social responsibility’. Digital was often still resourced and staffed (and still housed in the marketing department) just as it first had been in 2008, when apps and ‘Web 2.0’ were the hottest new things in town. Worse, with structures so clearly anchored to the past, it had proven hard to truly refocus these teams away from old behaviours – insularity, weak oversight, tactical objectives, firefighting, and poor integration into the forward strategy. Whatever maturation our various professions had made over the years, these idiosyncrasies were always lingering – because they were there in the very bones of the discipline.
Now, the risks in this disaggregated set-up had suddenly become apparent, seemingly in a surge of mass enlightenment, to the senior executives in the organisations we studied. Almost universally, though, what had caused them concern was not that such dysfunctionality jeopardised the company’s success (although it might well do). It was that it jeopardised the company’s survival.
A newer breed of CEO and senior management had emerged in recent years, we learned, who understood not just the power of an effective corporate reputation strategy but the challenges of trying to maintain it without a top-tier corporate affairs leader and powerful communications and policy teams acting in alignment with them.
A perfect storm of factors in recent years – the threat of digital disruption and the urgent promotion of technology to the heart of the company’s future; the proliferating tinderboxes of social media, political activism and civil unrest; and a viral pandemic changing companies’ relationships with the public and employees, possibly forever – had led to an epiphany in the executive ranks.
“The world around us has changed, so we too must change. Above all, we had to become faster and more agile. Therefore, we introduced a new organisational structure with flatter hierarchies and simplified processes.”HEAD OF CORPORATE AFFAIRSLARGE EUROPEAN MANUFACTURING COMPANY
Communications, once viewed with a certain agnosticism, was now credited with having a central role in the company’s future. And the corporate reputation was instinctively understood to be not just fragile but the product of a dizzyingly complex interplay between executive policy, strategy, communications, brand and service. So challenging was that mix, in fact, that these executives had understood that a great reputation would not magically arise simply from the sum of good intentions. It needed to be managed centrally, rigorously and with purpose; with deep integration across multiple communications, policy and strategy areas; perhaps even then overseen as a standalone function of the whole executive on an ongoing basis.
They knew, too, that moving around reporting lines on the org chart would not deliver what was required. This could not be another ‘reorganisation’. Instead, in company after company in our research, these senior teams had commissioned their heads of communications or corporate affairs to conduct a tabula rasa reimagining of what these departments did and how they did it in the service of the organisation’s standing: If we had to design a world-class reputation management function today from scratch, with no preconceptions, how would we do it?
“What I’ve been doing with the restructure is modernising the corporate affairs function to support [that]. It’s not been driven by costs, per se. We want to be more efficient, but most importantly we want to be more co-ordinated in how we communicate inside and outside the business and have a more campaigning mentality in the approach. We’ve created a new planning campaigns team, who will drive campaigns across multiple stakeholders."GLOBAL CORPORATE AFFAIRS DIRECTORUK TELECOMS
A NEW, HOLISTIC REPUTATION MANAGEMENT FUNCTION
The headline results of that reform work were eye-catching. Almost unanimously, we heard of new budgets and structures for communications and strategy teams; reforms of creaking old processes; clearer reporting lines and consolidated strategic goals. But these were just the surface – the effects of a far deeper and more radical change in attitude. What underpinned it was the way these businesses clearly now thought about communications and policy teams – as the indivisible components of a multi-skilled, swiss-army-knife approach to reputation management.
Most strikingly of all, the companies we assessed had, by now, largely landed on the same unifying structure to accommodate the transformation: These teams were being folded into a much larger and more influential corporate affairs function–newly centralised, global and all-encompassing; the big tent for all the shapers and protectors of the company’s reputation. A department that has so often in the past struggled for a clear definition (sometimes a synonym for corporate communications; sometimes a synonym for all the public and policy affairs to be kept away from corporate communications) is now fast being repurposed worldwide, it seems, as executive ‘mission control’ for all the orbiting satellite teams of communications, strategy and policy that circulate in the reputational cosmos.
Corporate affairs’ professionalism is being elevated to match, too, as is its stature. Many of our interviewees were being asked to head up the new function and bring their expertise to bear on it. In the past, their organisations had often shipped in professionals from other fields – legal, marketing or strategy – to lead corporate affairs, seen as a generalist training ground for the next wave of company leaders. Now, those same businesses were instead recruiting communications and reputation experts to the role – and giving them greater access to the C-Suite than ever before, with the heads of corporate aairs in our study commonly saying they now reported direct to the CEO. In multinationals around the world, if it wasn’t before, it seems that corporate affairs is fast becoming an obligatory executive function.
This is not a little tinkering around the edges, and nor (as a seasoned cynic in the profession might suggest) is it merely another round of corporate meddling – the contraction into a hub-like global department simply the latest in the waves of centralisation and decentralisation that form the familiar tides of corporate life.
The story that emerged most commonly from our research was not the structural changes per se but rather the intent that drove them; the awakening consensus from boardroom to boardroom worldwide that communications and corporate affairs had a clear and intrinsic value – guardianship of the business’s reputation; that this value was now held as axiomatic, so much so that it was deemed worthy of its own executive seat; and that enabling this remit meant disciplinary reinvention, integrating communications’ varied forms of expertise into an intelligent matrix of actions, all choreographed by a corporate affairs director with the necessary heft and operational control to be able to deliver.
For so long our professions have yearned for this – the answer to credibility and value. Now, for the first time, it seems we have an unambiguous answer: Communications matters because reputation matters.
“We are turning the function on its head from a reactive to a proactive one which encompasses our purpose and our sustainability programmes – no longer a media press office but a campaign management approach with almost a grid function.”DIRECTOR OF CORPORATE AFFAIRSONE OF THE UK’S LARGEST ENERGY COMPANIES
“Reputation management is now core to how [we] function and therefore corporate affairs now sits centrally within our business. This is a recent realisation.”VICE PRESIDENT, GLOBAL CORPORATE AND OPERATIONS COMMUNICATIONSUS RETAIL
THE PATHWAYS TO TRANSFORMATION
In many ways, what is happening is not a sudden turn of events but the predictable culmination of a series of events within our profession – a tipping point we were always bound to reach eventually, given the development path our professions were on. That should give us succour through this transformation, because it means it has been earned.
For it is not just the pressures of a changing society that have induced this epiphany among the C-Suite but the complementary maturation of each of our different professions. We have often noted these growth paths, of course, but usually only the individual stories, rarely spotting the full sweep of the movement. Over the last decade in particular, we have seen our different professions evolve in response to upheavals in society, professionalising themselves and realigning to constant new normals. All that inward development and external pressure was bound to create a perfect storm of growth demands one day, necessitating a total redrafting of what we are all here to do as a collective.
It is only 10 years ago, after all, that ‘digital’ meant having an unpaid intern post comments on Twitter, and a developer make a basic app for the few global customers with iPhones. Now, it’s often one of the first words in the corporation’s annual report. Back then it was just a channel. For increasing numbers of industries today, ‘digital’ is a core product; at bare minimum, a central feature in the business’s long-term growth plans.
PR once meant leveraging contacts with long lunches for column inches. Now, in an era of protest, unrest, populism and political division, it means hyper-vigilant risk management, navigating vulnerable reputations through a highly unpredictable public world. A decade ago, businesses could allow the Occupy movement to come and go and remain largely unaffected by it. Today, there is no boardroom in the world that has not, in the last few months, discussed Black Lives Matter at great length and not just agreed a position on it but developed active programmes around it.
What has been the raw material of external communications for decades is now foremost strategic policy for major organisations. In a world of unregulated public conversations, the whole of the business world is PR.
Look at the growth of sustainability functions over the last 20 years: At the turn of the millennium, little more than ‘environment’ and ‘charity’ sections of the annual report – something the business simply ‘needed to be seen to be doing’. By the 2000s, corporate social responsibility (CSR) heralded the maturation of those ideas to the ‘need to do’ stage, as soon as ethical business practice began mattering to the buying public. The growth of environmental and corporate social governance (ESG) over the last five years shows these ideas are now entering the final developmental stage, the one its sister communications disciplines have also closed in on – ‘need to leverage’ – as businesses increasingly not just nod to ESG but orientate large sections of future growth planning around it.
“We want to actively shape – and even transform – the changes, and actively manage the new challenges facing us”DIRECTOR OF CORPORATE AFFAIRSEUROPEAN TELCO
Or look, finally, at benighted internal communications – once upon a time, campaign guys organising glad-handing roadshows and newsletters for senior leaders; since Covid-19, stepping into the executive spotlight as an integral part of the company’s global crisis response, even its future strategic planning.
Over the last year, the best in the industry have come to be truly seen by their organisations as employee engagement experts, largely because, during the pandemic, their capabilities have been on display exactly where it matters most to the C-suite – in protecting and enhancing the company’s reputation: This year has arguably been the first time in history that the way companies treat their employees has become not just front-page news but actively on display for the whole world to scrutinise, with protective programmes for staffcommunicated to a public needing the reassurance to enter outlets, branches and offices.
“We’ve been busy changing how we do ‘community investment’, establishing strong structures within the corporate affairs arena that touches on nearly every aspect of the team – communications, public affairs, internal comms, ESG, trade communications. It’s much more responsive to our business priorities and our people and has clearly been more agile and efficient compared to how it used to be done within a Foundation, which were structured outside of and beyond the control of the communications function. A no brainer for us.”HEAD OF CORPORATE AFFAIRSUK HOSPITALITY
Indeed, across all communications functions, nothing in recent years has galvanised the fusion of purpose more than the Covid pandemic because it has demonstrated to any intelligent observer in the executive suite – beyond the point of reasonable doubt – how these teams operate most effectively when resourced as an integrated whole. If the future of the communications profession is to form the component parts of a reputation management ‘mission control’ department, then the pandemic has been that model’s dry run.
“Covid has shown comms needs to be unified and can’t be muddied. Making it as simple and effective as possible and thereby making it as impactful as possible”HEAD OF CORPORATE COMMUNICATIONSEUROPEAN TELCO
"Covid has ramped up the centralisation of the function to one which is far more focussed and overarching."GROUP DIRECTOR OF CORPORATE AFFAIRSUK ENERGY
THE ULTIMATE REALISATION OF THE PROFESSION
A DEFINING MOMENT
Independently, then, on separate trajectories, all our professions have been on journeys of validation and growth over the last decade, each on a trajectory towards its own maximum point of value. Course-corrected by emerging events around them, learning and evolving, what we are witnessing now is the inevitable point of convergence of their individual paths, as each arrives at the very same value point: the corporate reputation.
Like a critical moment of cosmic mass – when the attraction of a black hole on orbiting bodies becomes an unstoppable gravitational pull, becomes a fusion into a single entity – this is the corporate aairs profession’s singularity moment. We are at the point of convergence. The coming together of all our multiple disciplines behind a single purpose, arrayed within a corporate affairs function of real heft and operational complexity, and choreographed in an intelligently integrated way to protect the company’s reputation – this must be the future, because it is the answer to the questions underpinning so many of the existential crises our profession has suffered over the years: What is our most fundamental purpose? What are we here to do? How do we add value?
These new structures answer how the executive class view the best of what we do: We matter because the reputation matters. And all the indications are that this worldview is contagious, so lagging organisations need to mobilise fast: If the 100-plus organisations we assessed is a reliable indicator, then we would expect this sort of transformation to become near-universal in multinationals within the next five years. What is now being written, then, is the future of our profession. It is exhilarating and also unsettling, because the answers aren’t yet fully clear. It promises a better future and a clearer purpose, but in which our personal value point is more opaque: more inter-dependent; more diffuse; less our own. We will have to recalibrate our professional thinking, too, and even how we speak about what we do, because the building blocks of the job will not be the same, nor even many of the core skills. There will be so much to learn.
“The convergence of forces of ESG, technology, globalisation, proliferating stakeholder groups necessitate a greater level of communications and public affairs coordination, integration and coherence than ever before.”GROUP GLOBAL DIRECTOR OF CORPORATE AFFAIRS AND PUBLIC AFFAIRSUK FINANCIAL SERVICES
The new breed of corporate affairs director will likely have to think more in terms of risk levels than engagement levels; market management more than event management; and multidisciplinary awareness more than the comfort of personal expertise. They will have to monitor the whole market constantly for reputational shockwaves with the senses of an analyst, then have the touch of a diplomat if it turns into a crisis. Management won’t be easy either, coordinating a dozen historically siloed teams – crafting and implementing new processes will be easier than new habits. Can credible metrics then be created to track reputation against the department’s united efforts? Conversely: How do we avoid being made accountable for the uncontrollable?
Such is the price of success. Corporate affairs is finally getting what it has always craved and has shown it deserves – a seat at the table as an influential business partner. After decades adamantly arguing that its value is intrinsic, now the profession must deliver. But with the full suite of communications and strategy teams at their disposal, the new generation of corporate affairs directors will at least have much more control over their own success than was enjoyed by any of their predecessors. It’s a great place to start – with true ownership and influence. It’s just one reason why the next few years promise to be the making of our profession, in every sense.
FOR FURTHER READING
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