Housebuilders – building houses a greater priority than building reputation
Every year the executive search firm Watson Helsby publishes a FTSE 100 Group Corporate Communications/Affairs Director survey. As ever there are a number of companies that do not have such a position/individual. This year (2019/20) there are 22 companies where the position is not represented at a senior level at Group. This figure has oscillated between 20% and 23% since the survey began in 2013. It’s not that the companies concerned don’t have a communications function, just that the function lacks the senior level leadership that is comparable to other corporate functions.
It confirms what we have been saying for several years, that the function is not yet as established, nor its importance as well understood, as other corporate functions, particularly in the lower echelons of the FTSE 100.
What is more surprising, given the fact that the sector plays a major societal and economic role in a highly politicised sector, is that very few of the housebuilders have a senior level Group Corporate Affairs Director. A couple used to, but have subsequently de-powered the function.
For housebuilders a strong brand and reputation is crucial and the license to operate a key strategic and operational asset. So this lack of in-house corporate affairs leadership, and the insight and advice it delivers at executive level, is surprising and increases the chances of stockpiling risks which could prove costly to mitigate in the longer term.
The problem is that housebuilders tend to be atomised companies, driven by regional divisions, where central control is seen as anathema to the culture of local ownership and autonomy.
Furthermore, a key aspect of stakeholder engagement for housebuilders, relationships with local government to secure planning consent, is seen as a regional responsibility. In principle this makes sense, but It ignores the fact local engagement and planning consent is not just a local isolated issue, but also reflects the corporate culture and the reputation of the business as a whole. Building goodwill and trust at both a national and local level, along with a narrative and a brand that works both locally and nationally, is critical to success at a local level.
The capability to influence the overall national policy framework and to provide political insights and practical opportunities to engage with local government is also potentially forfeited without strong central corporate affairs leadership.
Housebuilders, who undoubtedly require the institutional support and goodwill from the broad stakeholder base in which they are embedded, need heavyweight corporate affairs capability to help them navigate this stakeholder ecosystem in a sensitive and sure-footed manner. The fact they don’t have it suggests, as is often the case, a lack of a real understanding of why the role is so important.
There is also a commercial angle that they are missing, in that the function can contribute to shifts in supportive stakeholder behaviour and is thereby integral to business growth (and risk management).
Perhaps the biggest risk is one that other organisations also leave themselves exposed to. That is that companies can be introspective and don’t always consider how a certain initiative or decision will look to the outside world and how it will therefore land. Misjudging the public and political mood and failing to anticipate stakeholder disquiet or expectations can cost a company dearly.
A lack of corporate affair leadership means that the executive team risk losing the perspective that ensures that all decisions and actions factor in the external environment and help the business mitigate risk, but also identify and leverage the opportunities within. Most of us can think of one particular housebuilder that has fallen victim to this lack of perspective.
Without a seat at the top table, corporate affairs (and communications) inevitably becomes reactive and its plans become activity focused rather than outcome driven. And who has oversight of the way that the business behaves with stakeholders, building both brand and reputation into the mainstream of every day activities?
Housebuilders, with their strong regional culture, are understandably disciplined on head office/group cost, but is this a case of “knowing the cost of everything and the value of nothing”?
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