Arun Sudhaman 29 Oct 2013 // 7:49AM GMT
As we gear up for the launch of our annual Influence 100 — which profiles the world's 100 most influential in-house communicators — a new report [pdf] sheds more light on the increasing influence wielded by corporate affairs directors, this time at FTSE 100 companies. Ironically, the study — from headhunters Spencer Stuart — follows a post we ran earlier this year, asking if the chief communications officer is an endangered species. That's not a conclusion Spencer Stuart is about to make, according to this story in Management Today. Instead, says Spencer Stuart partner Jonathan Harper in the article:
'In the past, corporate affairs was a total backwater, a job for retiring general managers. But now, 81% of the 33 FTSE 100 corporate affairs heads who we interviewed report directly to the CEO.'It's a small sample size, but the ratio sounds about right. In our own Influence 100, which will be unveiled at November's Global PR Summit in Miami, 64 percent report to the CEO. I'd expect a higher proportion from FTSE100 companies, particularly as they tend to hew closer to the "classic" corporate affairs model, that values CEO counsel and boardroom experience above all else. Unsurprisingly, these are people who, most of the time, come from a media relations (42%) or public affairs (32%) background. By contrast, one of the main findings in our Influence 100 this year, was the rise of people who would not traditionally be classed as corporate communicators, but are having as much if not more influence over their organizations' reputation. These include the likes of digital specialist Bonin Bough at Mondelez; VC veteran Margit Wennmachers at Andreesen Horowitz; and consumer CMOs Marc Pritchard and Keith Weed. As noted in the aforementioned post about the threats facing CCOs, it is the change in the marketing role — in particular — that poses the greatest cause for concern. CMOs are, increasingly, being forced to think about issues that have typically fallen under the corporate umbrella. This is, in part, down to the fierce consumer backlash that now confronts decisions as diverse as tax policy, supply chain and advertising. It is also because senior marketers are becoming increasingly involved in such areas as CSR, public affairs, and crisis planning — each of which are now areas, in the social media age, that have a direct impact on brand reputation and consumer loyalty. Encouragingly, the Spencer Stuart study notes that the corporate affairs director is largely being afforded the CEO and ExCo access required to actually help shape business decisions, rather than merely communicate them. There is no mention, however, of one critical factor — the corporate affairs function’s budget, particularly as it compares to other departments, notably marketing. That is accentuated by the finding that only seven percent of respondents oversee social media, with responsibility typically lying within marketing and customer services. It is difficult to reconcile the idea of a communications function that holds sway over corporate behaviour operating in isolation from the public opinion that is supposed to shape it. It may be no coincidence, furthermore, that corporate affairs departments have trouble finding talented young candidates. Rather than working at the cutting edge of reputation and culture, the corporate affairs function is more likely to focus on less innovative areas like media relations, public affairs and internal communication. As the study notes, several corporate affairs directors pointed to difficulty in persuading internal candidates to move into corporate communications, “which is seen by many as a limited career despite the fact that corporate reputation has never been more critical to a company’s valuation.” The study also finds that 45% of corporate affairs directors were appointed within 18 months of a new CEO, and that 87% of those were external hires. It would even more interesting to see how many of those corporate affairs heads have a prior relationship with the CEO, given that many of these duos (such as Meg Whitman and Henry Gomez) operate as a kind of a partnership that persists regardless of the corporate setting. There are many who see this as a good thing, but I am not totally convinced. It is clearly an implicit vote of confidence in the corporate affairs director by the most important stakeholder around, the CEO. But CEO tenures are short and so, correspondingly, are the tenures of their comms heads (the FTSE100 average is 4.2 years while our Influence 100 is around eight). There is a risk that the function of corporate affairs is not sufficiently institutionalised if it is merely seen as an extension of the CEO. In short then, if the corporate affairs director hopes to continue playing a leadership role as marketing and communications continue to converge, they are likely to have the address a number of challenges. They probably need to become more digitally savvy; perhaps learn to act more independently of the CEO; and, certainly think beyond communications in helping to shape corporate policy. As the Spencer Stuart study points out, the corporate affairs function is no longer a backwater. That strikes me as a fairly low bar, particularly given some of the people featured in the Influence 100. It is clear that the function has never been more vital; the jury may still be out, though, on whether traditional corporate communicators are ready for these new challenges.