What happens when general counsel leads the corporate affairs function?
11 March 2015
Over recent weeks I have had a number of conversations about the impact on the role and contribution of the corporate affairs function when it is led by a corporate lawyer (i.e. general counsel). And the subject cropped up again today over lunch. There is no doubt that CEOs of companies in heavily regulated industry sectors (e.g. tobacco) feel more comfortable with a lawyer at the top. And maybe it is a ‘horses for courses’ decision. But transferring responsibility for reputation to someone who has less time for relationship building and sentiment/mood, both of which are important components of reputation and potential reputation risk, can have its drawbacks. Furthermore, legal opinion/advice and reputation opinion/advice will often be at odds with each other, and the GC will tend to have less interest in, and time for, the court of public opinion; particularly when a crisis hits.
Other potential drawbacks include the absence of a communications instinct, an instinctive distrust of transparency (which, in this age of social media and digital transparency, is like trying to stem a rising tide) and last but not least increased expenditure on legal advice (seeking a second opinion from the retained law firm).
It would be interesting to hear what others have to say on this subject. We need a second opinion!
In our recently published research, “Staying on the front foot”, we analysed the capabilities that the corporate affairs leader (and their team) need to exhibit to be effective in an organisation.
One that seems to crop up frequently in conversation these days is emotional intelligence. There are a number of reasons why it is so important, not least because it is a quality that is probably most conspicuous in its absence in executive teams. It is important that the corporate affairs director compensates for this EI deficit. An organisation with an executive team that behaves and communicates in a manner that shows little understanding or regard for the impact on its key stakeholders is not likely to make many friends. This may appear to matter less when times are good, but enemies quickly emerge, with plenty to say, when performance slumps.
It is abundantly clear that the days when a company could single-mindedly pursue its own agenda to the exclusion of the needs and expectations of its stakeholders are long gone. There now has to be someone at a senior level who has the EI to understand and anticipate the emotional reaction of those stakeholders affected by its decisions and behaviours. This includes the media who can quickly turn against those that have, in their opinion, lectured or talked down to them or just shown little inclination to engage with them.
One of the CEOs we interviewed for the research remarked that the quality he valued most in his corporate affairs director was “his blend of IQ and EQ on a testosterone loaded board!”
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