Changes in the corporate affairs landscape and the organisation of the function
Soon we will start gathering data and insight for our annual FTSE100 Director of Group Corporate Communications & Affairs survey. This year we will be exploring the usual topics through a COVID lens (budget cutbacks, salary freezes etc.) as well as adding a few COVID related questions to the questionnaire. It should make for an interesting set of findings.
This year the function, along with its senior advisors, has been and is being challenged as never before, due to the ever increasing task of decoding the complexity of the outside world and the intense scrutiny of corporate behaviour. Potential sources of reputation risk are everywhere and continue to accelerate and intensify. This should present opportunities to those that have been able to step up as well as threats to those that have not been able to or those that have been found wanting.
The findings will also be influenced by the arrival of some new names in the FTSE 100 such as ASOS, Avast and South32 and the departure of FTSE100 stalwarts such as British Land and Centrica, where corporate comms & affairs are established disciplines. Interestingly, last year only 36% of companies in the FTSE 51-100 had senior level communications capability. Will this decline even further this year with the arrival of companies with less established and sophisticated communications & corporate affairs functions?
With the role of communications very much to the fore in 2020, will the status and importance of the function changed? Last year only 76% of those companies with a senior level director of the function had the role reporting directly to the CEO. ExCo membership was 49%, not bad, but still low compared to other corporate functions such as HR, finance, legal, IT, which almost automatically sit on the ExCo. What do both these stats say about the perceived importance and value of the function and its influence? It certainly suggests that the function does not do a good enough job of selling itself and demonstrating the value it creates. Corporate comms/affairs has to accept that, unlike other corporate functions whose reporting line and representation on the ExCo is almost taken for granted, it still has a big education job to do.
Will COVID, and the constant crisis management mode that so many companies have been stuck in, have had any impact on these %s?
What about diversity, another highly topical issue and one of great interest to most boards. In last years’ survey we reported that 44% of group corporate comms & affairs directors were female, a figure that increase to 58% in the FTE 51-100 (only 20% in the FTSE 20).
We also identified a gender pay gap, not previously highlighted, with females paid on average 7.5% less then their male peers. Will this gap have closed? We will see.
COVID has focused the minds of most business leaders on their broader societal contribution and it has become clear that if they don’t identify the contribution their company can make, and the purpose they can carve out for themselves, then they will find it increasingly hard to prosper and to retain and attract talent.
In our 2019/20 survey we introduced two questions about purpose. We discovered that only 40% of companies had a well established purpose that was understood by both employees and external stakeholders. The survey also revealed that in 46% of FTSE 100 companies, the corporate communications & affairs function was leading the purpose agenda. Given the acceleration of change in this area and its dominance of the business agenda, it will be interesting to see what our next survey will reveal.
We will again explore the dynamic between the non-executive board and the corporate affairs/comms function and its leader. Last year we found that 62% had seen increased interaction with the Board, a trend that was aptly illustrated by the following quote, “Yes, they are much more actively involved and asking us to do more horizon scanning. The world is moving so fast and so are the questions that they are being asked”. A Partner from one of the top agencies that we interviewed also observed that the “The board is becoming a lot more executive”; at the time he had been asked by the Chairman of a large FTSE 100 to undertake a reputation audit on behalf of the board.
We have also heard of instances were the Board is putting pressure on the ExCo to elevate the function to the ExCo, to demonstrate to investors that it is now a key corporate function.
Lastly, we will see whether reporting lines and relationships with the markets have had to be reset in light of the need for a coordinated, global response to a global issue. We know some corporate affairs leaders who believe that they are working with a structure that is no longer fit for purpose and certainly not set up for success.
In the FTSE 50, companies tend to have 50-70% of their corporate comms/affairs headcount out in the regions and BUs, with a smaller proportion working in Group. This ratio has not changed significantly over the years that we have been conducting the survey, although last year we did identify a trend towards hard lining the wider team, partly for governance reasons.
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