While the proposed Corporate Governance reforms around executive pay, Board diversity and employee representation make the headlines, there are other elements which also need to be addressed – and quickly.
As the new requirements on culture and effective stakeholder engagement come into effect in 2019, organisations will need to demonstrate that they understand corporate culture and behaviour and are formally taking into account the interests of wider stakeholders in their decision-making processes.
Sir Win Bischoff, Chairman of the FRC, notes “the importance of the intrinsic value of corporate culture” as a new addition to the Corporate Governance Code, and that “engaging with and contributing to wider society must not be seen as a tick-box exercise but imperative to building confidence among stakeholders and in turn the long-term success of a company”.
For many, gathering this insight will be a new challenge and the question will be who is best placed to provide the senior management team and the Board with the relevant insight and advice. We believe that the Corporate Affairs function is well placed to take the lead and should do so.
It will be both a challenge and opportunity for organisations to ensure that their behaviours are aligned with their stated values and that stakeholder expectations are understood and factored in to company strategy. This will entail collecting stakeholder insight in a useable way to feed into strategy and decision-making, as well as using that insight to shape corporate narrative. Companies should get ahead of the game and start this work now, before the reporting requirement forces them to be transparent.
Every company should ask themselves three important questions:
1) Who should own the responsibility to define, measure and manage our corporate culture and behaviours?
2) How does our corporate narrative relate to our corporate behaviour and the need to communicate with a broader set of stakeholders?
3) Is the corporate affairs function set up to meet the future demands from the CEO, the Board and the company in general?
These questions and the implications for the Corporate Affairs function are examined in our latest White Paper.