While organizations often acknowledge the importance of stakeholder engagement and acceptance, they don’t always effectively address many of the risks that could threaten corporate reputation, and ultimately profitability. Believe it or not, more often than not, organizations don’t often integrate public affairs with business strategy very well, if at all. Just to be clear, I am defining public affairs as pertaining to all external stakeholders of potential impact to a company, covering several corporate functions including government, investor, and public relations, as well as community engagement and investment.
As we all know, companies grow by pursuing either organic (growth in customer base or products) or inorganic (mergers and acquisition) opportunities. As it concerns major industrial interests in the global natural resources/extractives sector for example, these opportunities are profoundly impacted by the nebulous and often-abused term “license to operate”, an expedient catchphrase to describe the acceptance of local communities and stakeholders of the company and their operations, or in some cases entire sectors. Sometimes, there may even be opportunities associated with proactive public affairs strategies that are not considered in the context of a business venture.
If you think about it, neglecting public affairs in business strategy is like bringing a knife to a gun fight, with at least one arm tied behind your back – companies are often woefully unprepared for contingencies, and are thus less competitive. I’ve often asked myself why public affairs risks are often among the most overlooked in business planning. It can happen for many reasons, such as a natural bias of some senior leaders to regard public affairs as overhead with little long-term strategic value. Or perhaps there is a natural cynicism towards public policy issues among corporate leadership - perceived as being squarely in the domain of self-interested politicians, and viewed as exogenous variables in the business planning process.
Understanding where the company is going, and what it is trying to strategically accomplish, is entirely germane to the core purpose of public affairs – the mitigation of risk. Preconceptions that marginalize the importance of public affairs considerations serve to compound corporate risk. Failure to effectively identify and mitigate public affairs risks negatively impacts corporate reputation, investor sentiment, and potentially every stakeholder relationship in between.
I’m not talking about involving public affairs a few weeks in advance of a major transaction, and certainly not reactively trying to mitigate the ongoing public risks associated with an established investment. For public affairs functions to be truly effective, they must be proactively factored into the conceptual genesis of a venture, with business strategy weighed against policy, legislative and regulatory risk, geopolitical risks (some easier to predict than others), and even public sentiment.
Early public affairs planning and engagement is perhaps even more meaningful in international markets where pronounced cultural differences exist, and could necessitate specific in-market resources and expertise, even local partners, to effectively mitigate risk. In fact, the benchmark for effective public affairs activities for western-based companies can be even higher in international markets than in domestic markets. Building a formidable corporate presence, political capital, and credibility in markets with impactful geopolitical nuances (and not necessarily aligned with western interests), presents unique and formidable challenges to business ventures.
Preparation and execution are not the only contingencies of an effective public affairs plan – performance measurement is also a critical aspect of successfully executing a communications strategy. Without using metrics, it is nearly impossible to determine the success of your campaign, and adjust your efforts moving forward.
Although metrics can be used in different contexts depending on your industry, key performance indicators (KPI’s) in public affairs are tools that are used to quantifiably measure the success of cross-channel communications and advocacy campaigns. In communications for example, KPI’s could include media impressions and placements, as well as analytics from social media posts, like engagement rates, likes, comments and shares.
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