There is no one-size-fits-all approach to structuring communications and Public Affairs functions. But several key trends are merging – most notably the need to localise and to direct resources to the most critical business areas. This section examines what impact the shape and size of the function has on the development of strategy and return for the business
Communications and corporate affairs functions come in many different shapes and sizes. Depending on the location of headquarters, be it Singapore, Shanghai or Switzerland, some companies apply rigid global structures, while others localise or develop country-by-country solutions to their structural and business needs.
Views on what constitutes a large or small team can vary widely – one practitioner representing a leading chemicals company describes a 60-strong public affairs team as “pretty lean” but the public affairs chief of a large private equity operator runs the function with a team of less than five. There is truly no “one-size-fits-all” approach.
One of the world’s largest FMCG firms adopts a global structure for its communications and sustainable business function. Having led a streamlining effort over the past five years, it now has a firmly global function, with seven or eight VPs running operations that have either a regional brief, such as Asia, or a functional brief, such as strategy and planning. In Asia it has over 130 people spread across the function in three clusters, South Asia, South East Asia and Australasia. The decision to bring in sustainable business, which was previously aligned with another part of the organisation, reflects the increasing links between these two areas.
While the director responsible for global sustainability in that company believes the business need for the function will increase, he did not predict any significant change to staffing levels. Future efficiencies, he predicts, will mean the business can achieve more with current resources.
It’s a similar picture in most firms. Despite the progression of the communications and corporate affairs function up the corporate league table, now seen as a must-have and not a nice-to-have function, few practitioners expect endless budget increases.
Within many companies, corporate headquarters remain powerful, but more emphasis is being given to decentralisation and regional empowerment.
Across all sectors, the trend towards the internal alignment of functions is continuing, with public relations, corporate social responsibility, financial communications, investor relations, crisis management, marketing, government relations and public affairs are now frequently under the same management structure – and often with the individual in charge taking a seat at the top table.
One regional function head with significant global experience says there is a realisation that communications and public affairs practitioners must understand what drives their business. They also stress that senior management “must understand the importance of communications and public affairs to secure their regulatory and social licence to operate”.
“Today they are willing to have us at the top table. But they demand we understand the key business drivers which are going to take us where we need to be,” he says.
To help achieve this, one regional Communications Director has instituted a programme of monthly meetings with her teams and individual business line heads. “They tell them what’s going on and the team can ask them anything they want. Our teams then feel they have knowledge,” she says.
2.1. Resourcing Issues
The power shifts in the world economy are bringing change and uncertainty to the structure of global communications teams. The Communications Director of one of the world’s largest companies, headquartered in the US, says the repositioning of the business towards new markets and away from America is one of the critical issue as that still has to be addressed structurally by his business.
“Previously two-thirds of our global revenues were from the US. Now two-thirds are from the other regions outside the US. The speed of change here has been rapid. But from a communications perspective we have very well established teams across the US. We can’t simply change that overnight. But we now need resources in places like Indonesia and Papua New Guinea, where the real growth is, where we need to be closer to the local media and local customers.”
He adds: “What we now need to do is employ senior people locally. This is a big change from five years ago when we put more junior people into local roles.”
Just as US and European multinationals are seeking to reconfigure their communications and corporate affairs teams across Asia, Asian MNCs are moving in the opposite direction. Having invested significantly in building their local market capabilities, they are now set to invest in the communications functions that will service their expansion in Europe, North America and Africa. The Head of Communications at one of Asia’s largest supply chain and logistics businesses says that despite the function being relatively new and still only servicing the office of the CEO, it will soon be devolved to key markets such as London, Paris and New York.
Whichever way multinationals structure their global communications and public affairs activities, one senior in-house Corporate Affairs Manager insists that it must achieve “expectations alignment”. “In a complex organisation made up of global, regional and unit levels, making sure that people have proper expectation management is vital,” he says.
2.2. Streamlining Despite Growth
And although new markets present opportunities for growth, many directors interviewed predict that the tougher operating environment experienced over the past five years is set to continue for another five. This, observes the CEO of one of the largest agencies operating in the region, is resulting in a lack of future planning. “Macroeconomic factors are limiting client vision, reducing everything to the short term,” she observes.
As a result of the ongoing pressure on budgets, “streamlining” is one of the current buzzwords. For example, a major drinks manufacturer recently set about revamping its global communications and public affairs function and at the same time it reduced headcount at the regional and in-country level. By removing a regional business unit layer, it allowed communications staff to report directly to their management in-country, while remaining part of a global corporate affairs team.
Communications Directors and their colleagues in corporate affairs and aligned disciplines believe that their CEOs and board colleagues increasingly understand the value their functions bring to the business. Indeed, some now say they have to play a game of expectation management because the top officials overestimate what can be achieved through communication and stakeholder engagement.
While they have the support of their management, communications leaders are not given a blank cheque. One of the most significant internal challenges, they say, is finding the budget to support communications. There is a strong perception that the budget is not an entitlement and that they must compete for funding on an equal footing with other operational business units, such as sales.
This can put the function at a disadvantage. “Our CEO and management board are very supportive of the communications function but because we cannot always show a direct link between our efforts and the company’s bottom line, there will always be other areas of the company that are a higher priority,” says one industry veteran.
Significant pressures on resources remain prevalent in many businesses. According to one senior practitioner, “non-profitmaking functions are most vulnerable when the business outlook is challenging”. And even in markets where growth has been significant, the long shadow cast by the 2008 financial crisis means that expenditure remains closely monitored.
The net result is that Communications Directors are under pressure to use the same financial and budgetary systems that apply to the business when dealing with their own communications and corporate affairs budgets. Says one VP-level interviewee: “We have just gone through a zero-based budget review. It is an excruciating and horrible thing to do. You start from scratch and you have to set your priorities and justify every element of expenditure. It is a very painful process.”
But it is not all negative. Sectors projecting significant growth include the hotel and leisure industries, which have to spread their resources beyond their HQs and into the domestic markets. One leading hotel company started with just two communications staff in Australia two decades ago and has 20 today. “In terms of structure, we have tried to decentralise so that each region has a local team who are in touch with the media in their own market rather than having everything come from a regional office,” says the company’s Vice President of Communications in Asia Pacific. “I believe the size of the department will continue to grow alongside the expansion of the company, but I believe we will become more closely aligned with the marketing and social media departments of the group and we are increasingly involved in the development of content for the brands and the group.”
2.4. There’s Going to Be a Discipline Mash-Up
Many interviewees believe that a more blended approach to communications and corporate affairs is developing between once-competing disciplines. One top-level corporate affairs professional interviewed characterises his role as “blurry and increasingly blurry”. “This reflects a global trend. We need to do more and more to collaborate,” he adds.
Another head of agency operating in a regional role from Australia says his firm has made integration central to the evolution of its business over the past five years. This trend means the silos that once governed the broader communications and marketing industry are going to be removed once and for all. “There’s going to be a discipline mash-up, so PR will be part of an integrated offering,” says the head of one of the largest agencies operating in the region. He believes that digital has driven much of this shift towards practitioners offering a “different service” to their colleagues and clients. “The nature of our business is changing. Marketing, public affairs and public relations are coming together with digital, it’s just a different service,” he stresses.
The blending of functions, allied to the drive towards the communications function focusing on content generation rather than dissemination, is a welcome change for many. “The blurring of differences has definitely taken place and it’s a strength,” says one respondent.
This blending is also challenging the existing split between traditional approaches to media, says one consultancy figure. “It’s definitely a sharp focus on integrated communications across the full Paid, Earned, Shared, Owned spectrum. Earned was, and will always continue to be, the sweet spot. More and better integration of Shared and Owned channels is a sign of the digital age. Paid is a modern necessity again brought about by the digital, social age. To support all of this you aren’t credible if you’ve not got the specialists to support it.”
In tandem with bringing these new specialist skill sets on board, some agencies have removed the simple old “corporate practice”, “brand practice”, “technology practice” structure. “We now have industry sector specific vertical teams – such as automotive, aviation, pharmaceutical, food and retail – supported by horizontal service specialist teams in public affairs, financial communications, digital, brand, change and internal communications. We’ve gone from having five practices to over 20,” he adds.
2.5. The Rise of the Gifted Generalist?
Another practitioner, who has held senior agency and corporate roles in the US, China and South East Asia, points out that not everyone “necessarily wants to be a generalist”. “People need to engage internally and externally, they need to engage with government and with media, they need to handle a crisis and be able to engage with industry associations, and it can be difficult to find people that can do all of these things,” he says.
With some companies employing small teams to cover often wide-ranging geographic and functional responsibilities, staff frequently need to multi-task and work beyond the boundaries of their core skill set. The Communications Director of a European luxury car brand has a team of just six across the region, with four based in Singapore and one each in India and China. This, she says, requires them to work across different boundaries, including internal and external communications. “The focus is going to continue to move towards content creation. The central team will be focused on content but will need to have blended skills,” she says.
One Head of Communications for a major property management company says change is not always an easy process to manage in the in-house environment, where staff need a lot of attention. “Keeping them happy, keeping them coordinated, keeping them active, keeping them committed and offering them growth opportunities is a major challenge. Running an in-house team is difficult. Many in-house people don’t like change, which is why they’re in-house,” she said.
Some teams have seen rapid growth and continue to specialise. A global real estate services firm has a 90-strong marketing and communications team working across 16 markets – with functional heads in sub-divisions such as marketing, design, and communications. This team has grown rapidly over the past five years, with content, marketing and digital being the key growth areas. “With digital we will continue to create more online content and we will invest in analytics to ensure this investment is providing returns,” says its director.
In a similar vein, one practitioner cited the need for measurement of the communications and PR functions as the biggest challenge she now confronted.
While functions have undoubtedly “blended”, some practitioners believe key functions such as government relations and legal will remain broadly independent of the communications and marketing function, even if there is significant collaboration and “chatter” between the two.