Recent industry research shows that most companies place a premium on public affairs as a valuable business strategy and influencing function. However, while companies rank the capability's importance highly, there continues to be a startling lack of understanding of the practice and its business value, particularly in the context of the increasingly important role government is now playing in business.
A recent McKinsey & Company study, “How Business Interacts with Government,” shows that corporate executives view government primarily as a stakeholder; however, there is a lack of rigor in managing these relationships.
Two McKinsey data points:
- “Government is likelier to affect companies' economic value than any other group of stakeholders except customers, say executives in response to a new McKinsey survey.”
- “A variety of government actions, in addition to laws and regulations, powerfully affect companies' finances, executives say. But executives also indicate that companies' processes to manage their relationships with government are generally less robust than are the ones used to manage relationships with other stakeholders.”
A 2009 study conducted by trade magazine PA in Asia found that nearly 90% of consulting firm CEOs agreed that public affairs is still not fully understood as a practice in Asia, slightly higher than the percentage in the US. Additionally, the US Public Affairs Council has referenced public affairs as "the most important corporate function that nobody understands."
This indicates we have more to do to inform business executives of the strategic value of public affairs. In the day of financial services industry regulatory fighting, Toyota recalls, and the battle over healthcare reform; if any sizeable portion of the public questions the value and importance of public affairs, this perhaps says more about those of us who are practitioners in the space than it does about our business colleagues and clients.
Torod Neptune is SVP and global public affairs practice leader at Waggener Edstrom