Does the external affairs function need to be reinvented?

15 September 2016

A recent McKinsey survey – How to reinvent the external affairs function – undertaken amongst a sample of executives (it did not specify titles) revealed a dissatisfaction with the capability of their external affairs teams.

A few stats stand out:

“Only 11% of executives said their companies frequently succeeded at shaping government and regulatory decisions.” And there were no regions or industries where more than one in five respondents reported success.

“Only 25% said that their companies have taken a very active approach to engaging with governments and stakeholders.” This figure was further broken down to reveal that of this 25% only a quarter say their companies frequently succeed at actually shaping policy and regulatory decisions (this was less surprising since I doubt that many public/external affairs teams would claim success levels in excess of this).

The overall conclusion was that a) companies need to strengthen their external affairs capabilities and b) that they need to be “more skilled” at organising their external affairs functions. This referred to getting the right mix of central and local management and, related to this, to get the right balance between local needs and corporate level priorities.

We can see where some of this disenchantment may stem from. A recent report we produced in partnership with a Brussels based head-hunter, Viapublic, entitled “Getting your voice heard in Brussels”, observed that the public affairs function is not always plugged into the strategic priorities of the business and its leaders. The report also revealed some concern about the dangers of going native in Brussels “and becoming disconnected from the business and getting too immersed in the minutiae of Brussels policy-making”. When this happens the report went on to say “there is a danger that the team/individual will look at things rom a policy perspective rather than a business perspective. They may also lack the relationships and conduits into the business”.

But nonetheless the findings are not a reflection of what we see. Many of the FTSE 100s we work with, and i appreciate that is a UK-centric view, have a strong external affairs capability and take a very active approach to engaging with political and regulatory authorities. 

The findings may also reflect the fact that regulatory and political intervention/scrutiny has increased considerably over recent years. But external affairs team have not grown much and the impact that they can have on an increasingly expanding spectrum of public policy and regulatory issues is consequently compromised.  

Are these findings a fair reflection of the current strength of the external/public affairs function? Does it need to up its game? If it has shortcomings how would you define these? We would be interested in your views and experiences so please do share them.

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