At your own risk

Corporate affairs is changing. The skills now required in the role are often outside current corporate affairs directors' experiences. Ashley Keir-Bucknall examines the risks and rewards of evolution

The 2007 financial crisis caused society’s confidence in business to hit an all time low. Since then, companies have been under increased public scrutiny from many angles. This scrutiny has only been exacerbated by the advent of web 2.0 and the public forums and social media channels it supports.

The influence of corporate affairs directors however, is thought to have grown steadily over the past number of years. Yet, it has become more and more important for the reputational dimension of strategic and operational decisions to be considered at an early stage.

With this in mind, executive search consultancy Spencer Stuart conducted a study on corporate affairs. Jonathan Harper, who leads the group’s consumer practice in Europe and is a partner in the consultancy, says, “We thought it would be useful for us to find out and delve deeper into the companies and the structures, so that we could genuinely be the most knowledgeable firm i n the market.”

Spencer Stuart employed its knowledge of industries and job functions to gauge (amongst other things) the level of influence held by corporate affairs directors. It also conducted research into the changing scope of corporate communications work since the development of digital and the role of corporate communications directors in mitigating the reputational risk for the companies by which they are employed.

They found it important to understand these factors as, prior to conducting the study, they perceived that the role and the influence of the corporate affairs function had reached an all-time high. However, it was also thought that “there isn’t necessarily a one-size-fits-all, approach to it,” according to Harper. “There are a variety of different factors and people that influence the matrix, even though we didn’t necessarily know what they were.”

Completed during the third week of September, the report specifically studied FTSE 100 companies’ corporate affairs departments. Its findings demonstrated the expanding breadth and level of responsibilities encompassed by the corporate affairs function. It found that many major FTSE 100 companies’ reputations are suffering due to their lack of an integrated corporate communications team.

The report says that the accelerating changes sweeping through the legal and regulatory environment, in addition to the development of new technologies and the proliferation of social media has, according to Harper, altered the communications landscape. “The financial crisis was a good thing for the function, I think; in so far as boards and executive committees are much more concerned now about their reputations,” he says.

The rise in social media has also led the general public to revel in the simplicity and speed that online platforms provide. This newly-discovered ability to share their opinions and criticisms amongst a large and engaged audience leaves companies vulnerable to attacks on their reputations.

Widespread access to information and awareness has meant that these attacks can come from anywhere and at any time. There is also the added risk that these reputational attacks can more easily gain media attention and escalate virally into a full- scale crisis.

However, when asked if she thought the rise of digital had caused a change in the role of corporate affairs, Clea Rosenfeld, head of corporate affairs at Spectris plc, said that although the role of corporate affairs has evolved over the last ten years, she views the growth of digital as “more of a symptom rather than a cause” - a viewpoint shared by Spencer Stuart.

“Corporate governance and regulations’ demand for increased transparency as well as stronger influences from stakeholders are, in my opinion, the driving forces,” says Rosenfeld. “Digital communication is a very effective way of communicating with stakeholders; it allows better and faster reach to the targeted audience and vice and versa. It is a very valuable tool to keep abreast of the latest developments.”

Gone is the corporate affairs leader who once played an advisory and largely superfluous role. As their role now includes both an increased level of risk management and stakeholder responsibilities, they are now thought to hold a far greater influence on the reputation and therefore future of the businesses of which they are a part.

This bodes well for the future of corporate affairs directors, whose positions as part of company executive committees are, according to Jonathan Harper, expected to rise to 75% within the next five years – largely due to the increased acknowledgement of the importance of the role.

It is clear therefore, that the role of corporate affairs directors, and the influence they hold, has risen significantly. However, as Harper points out, “The route to the top is very different, and what we are seeing now is that much more importance is being placed on government and public affairs.”

The current challenge within the function is that “there are not necessarily a vast amount of qualified candidates within the FTSE 100,” Harper says, which leaves definite potential for growth in this area.

Many of the perceived issues in corporate communications and stakeholder engagement identity; companies need to balance their corporate vision alongside their stakeholders’ expectations and the capabilities and alignment of their staff.

“Corporate communication has today a wider responsibility; it isn’t just about communicating a message to employees and the media,” says Rosenfeld. “The function has an embedded strategic role where corporate communication employees are required to be nimble in order to address stakeholders’ fast changing needs and to influence internal policy ahead or, at least aligned with external trends.”

Undertaking the responsibility of both internal, external and stakeholder relations is clearly a multi-faceted and demanding task. However, by acknowledging the rising influence of effective corporate affairs, executive boards have shown that there is a definite need for a different kind of skill set in these roles – those trained in governmental affairs.

Clearly the role has changed with the times. Now it’s up to the companies themselves to interpret the findings and fill in the gaps in their own departments.