WHAT DO CHAIRMEN THINK ABOUT COMMUNICATIONS LEADERS BECOMING NEDS?
On the subject of whether corporate affairs directors would be good NEDs, what do chairmen think? The simple answer is: not a lot. The majority we spoke to had simply not considered it. And when they did, most were quite sceptical. Nevertheless, what they had to say makes for an illuminating read. It is worth remembering that most of those interviewed were FTSE chairmen. Their board seats are the most coveted, but there are other NED opportunities too.
Some were slightly positive
At best, some chairmen were slightly positive about the chances of communications leaders securing NED roles to broaden their career path. None was particularly effusive. They recognized that certain communications directors have skills and experiences that could add value to a board. They singled out those that sit on the ExCo, are responsible for all communications disciplines, are able and credible advisors, have an in-depth understanding of corporate reputation and brand and who have commercial understanding. These were seen as potential, rather than probable, NEDs.
Those communications leaders that have worked for big brands and for large, publicly-listed companies, particularly in highly-regulated industries were considered by chairmen to have more chance of securing an NED role than their peers in smaller, lower-profile companies. But even then, they pointed out, these candidates would be viewed in the same way as management consultants, with their industry experience seen as less relevant compared to say an operations director.
Most chairmen were very positive about the corporate affairs directors they knew and rated them highly. They commented that the communications discipline has come a long way over the past decade and that the function was becoming a critical part of an organisation’s armoury.
Most were neutral or negative
However, for most chairmen, the communications discipline is seen as just too specialist to produce that many NEDs. They see corporate affairs directors in the same way as they see those in the legal function: strong functional heads with specialist knowledge rather than business leaders with a broad set of skills. Chairmen recognised that the likelihood of a communications leader making it into an NED post had a lot to do with whether the recruiter (be that the chairman, nominations head or headhunter) was both knowledgeable about what corporate affairs experience could bring to the board table, as well as willing to encourage and sponsor that application. However, they identified competition for these board seats from former politicians and regulators too. The majority saw the hiring of a corporate affairs director as a potential risk, with one pointing out that few FTSE boards would be willing to take that gamble. Some chairmen felt that since the financial crash of 2008/9, there has been a significant increase in personal risk associated with being on a board, and as a result recruiting ‘non-obvious’ NEDs could exacerbate that risk. However they recognised that it was a question of the calibre of the hire.
In addition, the limited number of seats around the board table meant there simply wasn’t room for a dedicated seat for a NED communicator.
Many communications leaders are adept at seeing things from other points of view which is a valuable asset on a board, but unfortunately there are very few seats around a board table.
The risk/reward ratio of being on a board was raised by a number of chairmen, some of whom felt that corporate affairs directors weren’t always fully aware of the potential risks of taking on an NED role. They pointed out that whilst the NED role itself hasn’t changed over the past decade, the understanding of how the role is delivered and executed has.
In addition to the statutory duties, there are personal legal responsibilities too and the role has become a tough balancing act, often carried out in the full glare of the public eye, particularly during times of crisis.
Most chairmen recognised that a good corporate affairs director adds tangible value to corporate thinking. They appreciate that corporate reputation is important and is becoming increasingly so, and therefore, longer term that might create more opportunities for communications leaders to take up NED roles. However they don’t think that corporate reputation is yet high enough up the board agenda to warrant a specialist on the board and they believe that they can rely on that expertise via the executive, or through their external PR advisors. They said that the ambition for a corporate affairs director should be to be at the top of their game.
It’s not going to be impossible for communications leaders to become NEDs but they have a very slim chance at the moment. This is not an indictment on communicators, or meant to be negative, but communications directors need to go where their skills are relevant, valued and valuable and that’s not generally as an NED.
Communications leaders’ lack of commercial, financial and operational experience was a key factor in their negative outlook, with chairmen stating that there are far more relevant candidates from other functions to consider first. A number were downright skeptical about the prospect, particularly for those communications leaders that aren’t members of the executive committee.
These chairmen are aware of the negative perceptions of the discipline and acknowledge the onward career challenges facing communications directors. However, most believe that corporate affairs is not a natural career path towards an NED role.
They recognised that practitioners would likely have to move into another function within their company, or take on additional responsibilities before attempting to undertake an NED or other leadership role. One example of a senior communicator who has taken on broader responsibility is Shane O’Riordain. He became managing director, communications, at Royal Mail in 2010 and subsequently assumed responsibility for strategy and in 2014 added regulation and pricing to his brief. Likewise, in 2015, HSBC’s Pierre Goad took on the leadership of the bank’s human resources function, in a new role that retains his oversight of communications.
This is an evolutionary jungle and those companies that have experienced great corporate affairs will become more successful and will spawn corporate affairs directors who go on to bigger and better things. But it’s going to be a slow burn.
The chairmen we spoke to said that there may be more chances for communications leaders to join boards in the future. They cited a number of opportunities including the rise in social responsibility committees which boards are now forming and which many chairmen struggle to find people to chair. British American Tobacco, for example, has a corporate social responsibility committee comprised of three non-executive directors one of whom chairs the meetings. Just because the in-house senior communicator regularly attends this committee should not negate the desire for additional, external, corporate affairs experience in this arena.
The growing need for social media experience as well as the increasing reliance on technology was also mentioned as potential pathways to the board. Continuing on this slightly positive note, some chairmen recognized that corporate affairs is still an emerging function and has come a long way over the past decade. As the discipline matures further, they believe that an increased number of communications leaders would become NEDs. But, in their view, it’s not going to happen overnight.