Corporate affairs shifts from reputation management to strategic growth driver

A new report examines how the core strategies, structures and capabilities of the corporate affairs function are evolving as companies strive for growth amid disruption and uncertainty.

Volatility and Value: A Study of Corporate Affairs Strategies, Structures and Operations in Time of Uncertainty, a new report published by Deloitte describes how the role of corporate affairs within large organisations is shifting from reputation management to growth driver.

The study investigates the function's role from the perspective of corporate communications leaders and senior management. These are under-researched areas of management and public relations practice.

Corporate affairs is the management function that incorporates corporate communications, internal communications and public relations. My own management research at Leeds Business School has identified more than a dozen terms used to describe it, depending on the market sector, operating environment and geography.

Deloitte describes the high-performing corporate affairs department as an organisation's "central nervous system," gathering information, sending signals, and alerting management to risks and opportunities.

Managing risk and building resilience

Corporate affairs teams are facing an unprecedented surge in the volume and complexity of risks. Geopolitics, regulatory uncertainty and reputational risks are top concerns. This includes challenges such as international conflicts, trade tensions and political instability.

ESG communication strategies are shifting, focusing less on broad messaging and more on specific, business-critical ESG topics. While ESG remains important, there's a more cautious approach to communications. This shift is partly due to changing public sentiment but also the need to align ESG efforts more closely with business performance.

These findings align with those in our NewsWhip report - From hindsight to foresight: Taking a proactive approach to purpose and polarization - published earlier in the year. Organisations are less inclined to speak out externally because of political and societal polarisation and prioritise internal, employee concerns.

Exploring the management dynamic between CEO, Chair and corporate affairs leaders

Corporate affairs leaders work more closely with CEOs and chairs, playing a greater strategic role in business decision-making and leadership.

This trend has been evident since the pandemic, which we highlighted in the COVID-19 Communications Advisory Panel report published in 2020 by the UK Government Communications Service. The corporate affairs function was called upon to support organisations with the public health emergency, the shift to home working and rapid supply chain changes.

The Deloitte study shows a high level of CEO understanding of (82%) and appreciation (95%) for corporate affairs. Communications leaders are increasingly involved in strategic decisions, acting as trusted advisors and providing crucial external perspectives to leadership.

Effective corporate affairs functions are characterised by strong alignment with the CEO, a seat at the executive table and the ability to influence business strategy.

Almost three-quarters (73%) of corporate affairs directors now sit on the Executive Committee, up from 66% in the previous Deloitte study published in 2022. It allows communications leaders to contribute to high-level decision-making, ensuring reputation and stakeholder concerns are considered in strategic planning.

The journey to functional excellence

The Chartered Institute of Public Relations State of the Profession Survey published earlier in the month, reported that 69% of in-house workers made a valuable contribution to management but worked longer hours and were paid less than in 2022. I’ve struggled to explain this contradiction beyond practitioners marking their own work and the diversity of respondents.

The Deloitte study provides an alternative viewpoint. It suggests that high-performing teams are aligned with management and demonstrate high levels of competence.

Communications leaders are aligning their strategies more closely with overall business objectives. This is an important strategic imperative that focuses on creating favourable conditions for growth through reputation management and stakeholder engagement.

There is increasing pressure for corporate affairs to demonstrate commercial value and impact. Teams are exploring ways to measure their impact on business performance, such as quantifying the value of policy advocacy, regulatory engagement and reputation management. Some are setting specific financial targets for their contributions to the bottom line.

Internal change management and employee engagement have become top priorities for corporate affairs, especially in supporting business transformation. This includes supporting new leadership, helping employees navigate transformations and fostering a high-performance culture.

Future competencies

Emerging competencies for corporate affairs leaders include data and insights, business acumen and integrated communications planning.

Data and insights are seen as crucial for better decision-making and demonstrating value. Business acumen is essential for aligning corporate affairs work with business objectives. Integrated communications planning aims to create more cohesive and impactful campaigns across various channels and stakeholders.

There is notable caution about artificial intelligence (AI).  Corporate affairs functions are still in the early stages of adoption but see significant potential for enhancing their capabilities.

While most corporate communications functions rate their technological maturity as basic (57%), there's growing interest in AI applications. Current use cases include content development, data analytics and task automation, with the potential for more advanced applications in predictive modelling and crisis management.

Methodology

The study is based on in-depth interviews with 58 corporate affairs directors conducted between January and May 2024. Interviews were conducted both in person and virtually. Companies were predominantly public companies listed on European, US, and Middle Eastern exchanges. Participants represented major industry groups, including financial services, consumer, technology media and telecommunications, life sciences and healthcare, and energy resources and industrials.

Reference

Mark Hutcheon and Hannah Shattock. (2024) Volatility and Value: A Study of Corporate Affairs Strategies, Structures and Operations in Time of Uncertainty. Deloitte.