Trusted counsel. CEOs expand C-suite mandate for best-in-class corporate affairs officers.

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1 Trusted counsel CEOs expand C-suite mandate for best-in-class corporate affairs officers.

2 1 The best-in-class corporate affairs role evolves. Essential to the success of this role is being fully integrated with the management team of the company. David Marchick managing director and global head of external affairs and a member of the management committee, The Carlyle Group. years, companies have learned that their businesses are more easily impacted by reputational problems because social media them.... That requires companies to be a lot faster to respond. The role defies easy definition. Titles vary greatly, and the position exists only in some organizations. Even the terminology used in this report the new breed of best-in-class corporate affairs officer may not adequately convey the sweeping scope of responsibilities: corporate communications, government relations, public affairs, public policy, stakeholder engagement, corporate social responsibility/philanthropy, employee communications, consumer relations, community relations, and sometimes marketing and investor relations, as well. In short, the purview of this evolving role is anything that affects or enhances the organization s brand and reputation. What truly defines this new breed of corporate affairs officer is the role as trusted advisor. They have not only the ear and the confidence of the CEO, but also a mandate from the senior leadership team to provide direct input into strategy as they wield increasing influence inside the C-suite. In fact, best-in-class corporate affairs executives frequently are members of the executive team. The more an organization values its reputation, the more corporate affairs needs to be in the C-suite inner circle. This paper explores the emerging role of the best-in-class corporate affairs executive. Within the realm of executive leadership roles, this elite position is the outlier in terms of predictable experience or career track, skill set, responsibilities, and pay. Talent of this caliber is scarce, and demand is growing among progressive multinational companies that recognize the importance of close alignment among strategy, reputation, public affairs, communications, and government affairs within an increasingly complex business and legislative/ regulatory environment. Edward Skyler executive vice president for global public affairs, Citigroup

3 TRUSTED COUNSEL 2 The title is irrelevant; access and influence matter most. Strategy. In every conversation with an elite group of corporate affairs officers, this word more than any other was used to describe their roles and the value of their counsel to the CEO and other senior leaders. And strategy marks the No. 1 difference between what is defined as a best-in-class corporate affairs officer today versus 10 or even five years ago. The biggest change is the demand to give strategic advice to the CEO, said Victoria Torie Clarke, senior vice president of global corporate affairs for SAP, a global leader in enterprise software. It s critical for corporate and government affairs to work with the business to be a contributor to the strategy, not just an interpreter of the strategy, added Kathryn Karol, a vice president of Caterpillar, where she is responsible for global government and corporate affairs. If your team doesn t understand the business or isn t meeting with customers, and you re just the machine that interprets, you will not be the leader you want to be in this industry. I have a kind of leadership mantra for [these leaders], which and advise. Sean O Neill chief corporate relations officer, Heineken N.V. Given the breadth of their responsibilities, executives who occupy best-in-class roles are skilled at far more than communications. They understand the organization and how it operates and makes money; they have a deep grasp of the business and its social context. They possess political savvy and comprehend issues from a global legislative, regulatory, and policy perspective. They also can dive deeply into the external issues facing their organization and how such conditions affect it. As senior leadership team members, they have a 360-degree perspective of the world in which the organization operates. They contribute analyses and understanding of the macro and micro to help inform senior leaders and to devise strategy that guides the organization. While the scope of the role may vary within organizations, the best-in-class corporate affairs executive has a singular focus on the institution. This means concentrating on more than just its products and services or its leaders, and zeroing in on its brand and reputation two corporate assets that can never be compromised. Despite their far-reaching responsibilities and, by necessity, their holding the most holistic view of the organization, best-in-class corporate affairs executives often operate behind the scenes and prefer to do so. One professional wryly stated: If I am never in the public eye again that will be too soon. Rather, their role is to guide and influence leadership and strategy, not simply serving as the organization s spokesperson.

4 3 Communications people aren t going to persuade boards and management that they need this kind of new talent. Boards and management have to demand it. The corporate affairs advisor-strategist role does not diminish the CEO s other trusted advisors, such as the CFO, chief operating officer, chief human resources officer, chief marketing officer, or general counsel. Best-in-class corporate affairs officers are integrators and synthesizers. They are interpreters of how outside stakeholders view and understand the organization, its products and services. They help to develop strategy to best connect their companies actions with a diverse and ever-expanding set of stakeholders. Senior leaders who recognize the strategic value of the best-in-class corporate affairs executive place a premium on this role, leveraging it to advance the agenda and goals of the organization. Jim Wilkinson head of international corporate communications, Alibaba Group Holding Limited

5 TRUSTED COUNSEL 4 Speaking truth to power. To devise and implement effective reputational strategies, senior leaders must be grounded in reality. Best-in-class corporate affairs executives have gravitas and dare to be truth-tellers, even when the message is uncomfortable. Speak truth to power, said Clarke, the SAP senior vice president. The more senior the people around the CEO, the more they want to make the leader feel good by saying everything is great. The corporate affairs leader must be attuned to the environment of what is going on and be willing to say, This is not really working, or to suggest Have we thought about this? That s definitely part of [being a] strategic advisor. When a challenge or opportunity arises, no hand-wringing can be allowed only swift, decisive, and effective action designed to protect or advance the institution, accompanied by a communication plan that targets all appropriate channels. It s saying, Here s what we re going to do. It s exercising dispositive power, said Jim Wilkinson, head of international corporate communications for Alibaba Group Holding Limited, the Chinese e-commerce company. A mult-faceted communications and public affairs strategy embedded in the business plan goes far beyond the traditional drafting of a statement or news release. Continuous, thoughtful, and consistent communication with all constituents and stakeholders (employees, shareholders, Wall Street analysts, suppliers, traditional and social media, policymakers, regulators, and others) is crucial for any strategic action, whether the organization is making an acquisition, launching a new product or service, expanding, downsizing, responding to an activist, challenging new or proposed regulatory conditions, or taking action because of a crisis. If you have leaders who believe in this role and see it as a valueadd, you don t have to sell it internally. Then most of your time can be spent on how to best make an impact. Kathryn Karol vice president, Caterpillar Inc., responsible for global government and corporate affairs. Today, there are no longer walls between internal and external audiences. If one group knows more than another, such inconsistency can raise doubts and concerns that amplify easily and rapidly in a digitally driven world. In many ways, the advisor-strategist who spans all facets of communications and government affairs is becoming analogous to a political strategist or campaign manager who helps a candidate develop the platform, drive the agenda, and manage the message.

6 5 As business strategy is devised, the best-in-class corporate affairs leader works closely with other senior leaders to pressure test it to ensure the organization s actions are clear, consistent, authentic, and in line with its organizational ethos. It is crucial to the successful alignment and execution of strategy to have CEOs and other senior executives who are on message and will walk the talk whether testifying before Congress, meeting with heads of state, speaking with employees at town hall meetings, or doing media interviews. These senior executives are the face of the organization; behind the scenes is the corporate affairs advisorstrategist ensuring the optics and content of messages are on point, synchronizing the timing and choreography of actions and events, and providing counsel on best methods and fine-tuning for delivery.

7 TRUSTED COUNSEL 6 Social media means continuous transparency. In the 24/7 digital world, news reporting and commentary never stop; even traditional media Web sites update news constantly. In a digital world, immediacy is relentless. It drives everything an organization s response to news, real-time management of the message across multiple channels, and tracking of social media to gain insight into changing public sentiment. Ten or 15 years ago, you could be late on a story and play catch-up, said Ed Skyler, executive vice president for global public affairs, Citigroup. Now, if you re late, you re dead. Other senior leaders face similar digital-world demands: chief marketing officers manage consumer impressions via social media; chief information officers enable analyses of data gathered via digital channels. For their part, best-in-class corporate affairs officers understand the ubiquitous, ceaseless nature of social media in which accuracy often takes a backseat to speed. Against an increasingly fragmented and complex backdrop, best-inclass corporate affairs officers carry out their strategy and publicfacing mandates utilizing teams that span media, government affairs, public affairs, public policy, and much more. In organizations with these advisor-strategists, all the levers are put in one set of hands, thus giving these leaders greater control and consistency over brand, reputation, and marketing voice. Marrying strategy with a multi-channel and multi-stakeholder communications plan requires a new way of thinking for some senior executives. This could be very different from what was familiar to them earlier in their careers, making them uncomfortable with the transparency of the new world. At the same time, there are digitally savvy senior leaders who have instant access to social media tools but may not fully appreciate or understand the ramifications of responding too quickly, or singularly, without a well-considered strategy to guide their actions. In both instances, senior executives rely on best-in-class corporate affairs officers and their teams to take charge and to help guide them in real time. The most challenging aspect is trying to manage reputation in a blurred and shifting social landscape. The blurring comes from a steady fragmentation of stakeholders and channels, which makes it hard to build productive relationships. Björn Edlund senior advisor, Kreab, and retired communications chief for Royal Dutch Shell We have significantly enhanced what we do in social media, Clarke said. We have people who are strengthening our relationships with primary bloggers out there and working in that space, and we are using social media as a tool ourselves to reach various audiences.

8 7 A breadth of experiences leads to success. With such broad and expanding mandates around strategy, communication, and reputation, it s no surprise that executives qualified for elite corporate affairs positions have impressive backgrounds. Many have served in government as aides and strategists to top officials; others have been top executives and led organizations. Most have blended backgrounds that combine political, government agency, or nongovernmental agency (NGO), and corporate experience. They fully understand their audiences because of leadership experiences in complex, time-sensitive situations. The people who are successful in these roles are able to put themselves in the shoes of the stakeholders and the shoes of their colleagues in the company who have different points of view, Skyler said. They can anticipate problems and design solutions to mitigate them. They need to be collaborative because, with all the issues that arise, you have to have the support of your colleagues. Certain knowledge and skills are critical, particularly business acumen (essential for helping drive strategy) and financial literacy. A global perspective, especially from living and working overseas is highly desirable, as is the ability to navigate internally in a collaborative and influential way. Political savvy is imperative to understand the nuances and impact of global legislative, regulatory, and policy issues. These skills, attributes, and experiences allow the advisorstrategists to interpret the outside world for leaders inside the organization, while also leveraging diplomacy to influence the workforce, break down silos, and act as a leader who can synthesize and integrate information. Above all, seasoned perspective and judgment are required for this role. Such breadth of experiences and the ability to translate them to help the C-suite address emerging and immediate needs speaks to the value of learning agility, which Korn Ferry has defined as a key predictor of success. 1 Executives with a high degree of learning agility can take previous experiences and apply lessons learned to novel challenges and opportunities. 1 Dai, Guangrong, King Yii Tag, and Jonathan Feil. July Fast rising talent: Highly learning agile people get promoted at double speed. Proofpoint. Los Angeles. Korn Ferry Institute.

9 TRUSTED COUNSEL 8 Best-in-class corporate affairs officers are skilled at team-building, assessing and deploying the right talent and further developing it with assignments to broaden key skill sets for example, assigning communications or government affairs people to other business functions or units, instituting financial literacy training for their teams, rotating international assignments to cultivate a global perspective, and creating an ongoing learning environment to further develop knowledge and skills. With additional education and experience, an individual develops a crucial capacity for judgment the ability to decide what to do, how to do it, and how best to communicate to all involved. As individuals build their capabilities, skill sets within the team expand. In time, more highly qualified communications and government affairs professionals will enter the elite ranks of the best-in-class corporate affairs officer. With a seat at the leadership table and the ear of the CEO, best-inclass corporate affairs officers occupy the unique role of both advisor and strategist, helping to drive decision-making within the C-suite and ensuring that a multi-faceted, multi-channel communications and public affairs strategy helps to position the organization in the best way to all its audiences. The best-in-class corporate affairs leader shapes, manages, protects, and enhances the organization s reputation in a new world dominated by digital media, where live news and commentary can create profound changes of opinion in the flash of an online update. The objective is harnessing the full power of our collective functions to protect and enhance the brand. This kind of tightly coordinated strategy is more crucial than ever before in today s stakeholder society dominated by stakeholders who have voice, access, control, and the ability to drive, or hijack, the organization s agenda in the digital era. Sally Susman executive vice president, corporate affairs, for Pfizer.

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11 TRUSTED COUNSEL 10 Authors Richard Marshall Global Managing Director, Corporate Affairs Beth Fowler Senior Client Partner, Corporate Affairs Nels Olson Vice Chairman and Co-Leader, Board & CEO Services Practice Head, Global Government Affairs Practice

12 11 About Korn Ferry Korn Ferry is the preeminent authority on leadership and talent. For nearly half a century, clients have trusted us to recruit world-class leaders. Today, we are their partner in designing organizational strategy and developing their people to achieve unimaginable success. For more information, visit Korn Ferry s Corporate Affairs Center of Expertise is a dedicated specialty practice that focuses on helping organizations recruit and select the highest caliber global corporate affairs leaders. About The Korn Ferry Institute The Korn Ferry Institute, our research and analytics arm, was established to share intelligence and expert points of view on talent and leadership. Through studies, books and a quarterly magazine, Briefings, we aim to increase understanding of how strategic talent decisions contribute to competitive advantage, growth and success Korn Ferry. All rights reserved.