Is PR getting closer to the boardroom?

Corporate affairs has historically been a low priority for many firms but there is evidence this is changing. SABMiller's ex-corporate affairs chief Sue Clark tells Alec Mattinson about her rise to European MD.

Sue Clark, SABMiller
Sue Clark, SABMiller

It has become something of a truism that corporate affairs now has a voice in the boardroom.

The soft and fluffy view of PR as a function has, we are frequently told, been replaced with a hard-headed understanding of the pounds and pence at stake when it comes to a company's reputation.

But if a firm's reputation is indeed its greatest asset, why are so few reputation managers in operational roles in the boardroom, compared with professionals from other disciplines dotted around the executive table?

Research from headhunters Watson Helsby last month found that, of the UK's largest listed firms, a third did not even have a dedicated corporate affairs function, and of those that did, fewer than half sat on the executive board with direct influence when decisions are made.

Earlier this year, recruitment firm Robert Half found that more than half of FTSE 100 CEOs have a financial background, with others emerging from engineering/mining (14), retail/hospitality management (ten), marketing (six) and IT (four).

Corporate affairs did not merit a mention.

But that will change next year when Dame Marjorie Scardino steps down as chief executive of Pearson, to be replaced by ex-corporate affairs chief John Fallon.

And there is a growing trickle of evidence that change is under way elsewhere.

A number of other senior comms professionals have moved into management roles away from the corporate affairs function in recent years (see box overleaf) and there have been several examples of those from PR backgrounds reversing the usual trend and assuming control of marketing functions.

One of the most notable elevations from corporate affairs into an operational boardroom role is that of SABMiller's Sue Clark.

The widely respected Clark became MD of SABMiller Europe in June and over the next two pages she tells PRWeek how the corporate affairs world has 'come of age' from a home for 'failed sales managers' to achieve true recognition of its impact on the bottom line.

Clark and Fallon may currently be bucking the trend. But it seems more likely they are setting a new one in the longer term.

HOW CORPORATE COMMS IS CHANGING - Q&A WITH SUE CLARK AT SABMILLER

Moving from a corporate affairs role to an operational role remains a seldom trodden path. Why is that still the case?

I really think it's a path you'll begin to see increasingly travelled because corporate affairs is coming of age as a discipline. Over the past 20 years the whole value companies place on corporate affairs has risen markedly. I think that's one of the bigger changes I've seen in my career - business people now see reputation as something that's not just nice to do, but something that's key to the business.

What previously held back the image of corporate affairs?

There was a view that companies put the failed sales manager or the useless marketer into corporate affairs. Companies didn't value the function so they put failed business people into the role and didn't necessarily recruit the right talent. One of the key reasons the profession is coming of age is that we are seeing a much better quality of people moving into the function.

So what has happened to move corporate affairs up the boardroom agenda?

At the centre of that is a definite recognition now that reputation has a very direct impact on the bottom line. There are a whole bunch of things that have caused that to happen. One of the fundamental trends is the globalisation of big businesses, which has made the whole comms piece much more complex. Your employees are suddenly all over the world and you've got stakeholders ranging from Latin American governments to Geneva-based regulators. Also, globalisation has raised important questions over trust in businesses and what the role of businesses should be besides just making a profit.

Have those CSR issues become more closely intertwined with the strategic direction of the company?

All businesses are increasingly being asked to play a bigger role in areas that we would never have thought were the primary responsibility of business in the past, like driving environmental change through commitments to reduce CO2. Businesses do see these issues as part of their role and bigger businesses are stepping up to the plate. Also NGOs are maturing - instead of seeing business as the enemy as they did 20 years ago, more mature NGOs see business as a partner that can get things done, particularly in developing markets where there isn't a lot of infrastructure.

To what extent have CEOs become more aware of their own role in corporate reputation? Has the CEO become part-PR person?

In some ways I think we've seen the peak of the cult of the CEO and are moving on from that. There was a period when CEOs were often very visible, but I think partly because of the growth of digital and 24/7 media that the focal points of a business have broadened out again.

Has digital helped elevate the importance of the corporate affairs function?

We're all trying to get to grips with digital. It's clear that in some organisations marketing has picked up and run with the digital ball quicker than corporate affairs, but I don't think that's universally true. Corporate affairs really needs to own the 'corporate' part of this - some people have relinquished that to marketing and that's a mistake.

In terms of the difference between your new and old roles, are you dealing with many of the same themes?

Both have a huge focus on relationships - relationships with customers, consumers, regulators and employees. There's also overlap on what I would call genuine execution. One of the things I think corporate affairs does well is it makes you good at making decisions. You have to drive projects and campaigns to conclusion. Also in corporate affairs very often you have a lot of complex data to assimilate and sort through to produce something quite simple and easy for people to digest.

Crucially in corporate affairs you get deeply involved in the strategic direction of the organisation. Because you're at that interface between external and internal, you actually have a perspective on many things that a lot of people in the company don't get. You are out there hearing what's going on and getting feedback from shareholders and stakeholders.

So why do CEOs invariably have a finance, marketing or sales background?

Corporate affairs hasn't had a seat at the executive table until more recently. In the dim and distant past corporate comms people didn't get to grips with the business itself, intimately knowing the business model and how the company creates value. It's a hugely important change - to effectively carry out the corporate affairs role now you have to become both business literate and financially literate.

Yet many senior communicators still don't sit on the executive board?

If corporate affairs isn't on the executive board that becomes a challenge at any company. To be able to do the job properly you need to be part of that forum.

CLARK'S CV - THE FIRMS THAT SHAPED HER

Central Electricity Board

Clark joined the nationalised company as a non-engineering graduate straight from university, but it was not until the company's 1990 privatisation that she became involved in PR and investor relations. 'It is a great time to get into IR when a new industry is coming to the market - the sector was completely unknown to investors,' she says.

Scottish Power

After working on an energy privatisation she seemed a natural fit to take a director of corporate affairs role in 1992 at recently privatised Scottish Power. During her eight years at the firm it was highly acquisitive, including the hostile takeover of Manweb and Southern Water.

Railtrack

She became corporate affairs director in 2000, a year before the firm was wound up by the Government in the wake of the Hatfield rail disaster. She stayed on to lead a fight for compensation for Railtrack's investors. She says: 'The firm really lost its licence to operate, but I strongly felt the shareholders had a legitimate right to be repaid.'

SABMiller

Joined as the firm's first director of corporate affairs in 2003.

THE BOARDROOM CLUB - THOSE WHO MADE IT

John Fallon

John Fallon last week became a notable member of the exclusive club to have made the journey from corporate affairs to the chief executive's seat.

The former Pearson corporate affairs chief, who has also run corporate affairs at Powergen, will take over the CEO role at the FTSE 100 publishing and education giant in January 2013. But even his corporate affairs responsibilities at Pearson were back in the late 1990s, before taking wider divisional management roles.

There are, however, a number of other former corporate affairs chiefs who have also assumed wider roles. GlaxoSmithKline's global comms head Duncan Learmouth became head of a new emerging markets-focused division in 2010, and supermarkets Asda and Tesco combined corporate affairs with legal affairs under John Longworth and Lucy Neville-Rolfe respectively (although Longworth has since departed and Neville-Rolfe retires this year).

Another route to executive responsibility has been for comms professionals to head up trade bodies. Former Vodafone comms chief and Number 10 spokesman Simon Lewis is now CEO of the Association for Financial Markets in Europe and Simon Walker, formerly of H+K Strategies and Brunswick, is director general of the Institute of Directors.

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