The reputation agenda: If trust is key, corporate comms, not marketing, drives growth; but insular Australia falling further behind on ESG and purpose, lacks talent to solve it
Marketing used to be the biggest driver of sales. Today, consumer behaviour is increasingly influenced by trust – which is corporate affairs’ turf. Meanwhile, as environmental and social governance (ESG) becomes a top corporate agenda item, Australian firms are realising just how far behind the world they have fallen. They need smart corporate affairs and comms talent to guide them through major change – problem is, expertise is thin on the ground and Australia's closed borders are exacerbating the crunch. All this as the power shifts from employer to employee: workers want purpose, meaning and flexibility before they will even think about taking the growing number of jobs on offer. Executive search specialist Anna Whitlam, Commtract’s Vanessa Liell and Australian Pork’s Andrew ‘Billy’ Baxter say firms that do not quickly adapt “will just miss out…. And we are already seeing that.”
What you need to know:
- Some of Australia’s top CMOs think corporate affairs can be too risk averse, acting as a drag on marketing and change initiatives.
- But corporate affairs professionals disagree. Reputation and trust, not classic marketing, is now the biggest driver of growth they argue – and it has to be robust.
- But Australia is severely lacking the talent to drive ESG and purpose shifts.
- Meanwhile the disconnect between what employers are offering and what employees want has never been larger. So the talent crunch will only worsen.
- That increases the opportunity for specialist comms professionals – because companies that fail to recognise the tectonic shifts now underway are already missing out.
Marketing was once the most significant function to drive sales. In today's world, consumer behaviour is more is more influenced by trust – consumers buy from organisations they trust. Building trust is a direct outcome of corporate affairs.
Comms rising as marketing fades?
The apparent tension between marketing and communications is “definitely valid – but it’s a healthy validity,” says Anna Whitlam a former marketer turned executive global search specialist as founder of AWPeople.
“I think a lot of it's got to do with relevance … and what's more important now and what actually drives product sales and relevance for organisations. Marketing was the dominant player, it was relevant in the the day before technology. Before digital channels went above the line – it was really the main form of driving product sales,” she says.
“In a world that's actually driven by new technologies and engaging at different levels, some of that above the line related activity is no longer needed in the same way that it was. We also know that consumers buy from organisations that they trust and that corporate affairs essentially drives reputation.
“So there's definitely a tension. The tension comes down to relevance of functions. Marketing was once the most significant function to drive sales. In today's world, consumer behaviour is more is more influenced by trust – consumers buy from organisations they trust. Building trust is a direct outcome of corporate affairs. So we're starting to see the rise of corporate affairs because of its relevance.”
All the strategy in the world around ESG can't be effective unless you can effectively engage your stakeholders and your audiences in it.
Sustainability shift: Marketing versus comms
When it comes to environmental, social and corporate governance or ESG, says Whitlam, that power shift is especially apparent. Yet some of Australia’s top CMOs think corporate affairs can be too risk averse, acting as a drag on marketing and change initiatives.
ESG initiatives – and the ability to drive them – was the headline item discussed at a recent Mi3-Accenture roundtable. Some marketers in the room pointed to the role and influence of corporate affairs and investor relations, whose risk appetite skews to staying under the radar in the hope of remaining small targets instead of engaging and advancing public awareness and behavioural change.
But Vanessa Liell, Executive Director at Commtract, Crescent Institute and Choice of Super Association, and co-founder and former CEO of Herd MSL, the comms group now owned by Publicis, thinks that is a necessary tension: Reputation takes years to build but can be destroyed in seconds. Targets and strategies must be robust if they are not to become counterproductive – but then communication becomes critical.
“All the strategy in the world around ESG can't be effective unless you can effectively engage your stakeholders in it and your audiences in it,” says Liell.
“So in terms of who owns it, the organisation needs to own it. But it requires communication leadership at every level – and if that organisation cannot communicate or effectively engage or influence stakeholders, it's going to be very difficult to be effective. So communication has to be at the table with CEO and it has to be integral to every stage of those strategies to be able to bring them to life and to ensure that they're effective."
Purpose or bust
Anna Whitlam, also a co-founder and Non-Executive Director at Commtract, says comms is likewise a key owner of brand and corporate purpose – now critical growth drivers for brands and increasingly key to attracting and retaining talent.
“The communications function helps to deliver purpose through consistently sharing what that actually means through the actions and words of the business. And last year, particularly during Covid lockdowns, it really helped organisations build that authentic connection to their people and to their customers; really enabled purpose to come to the forefront,” says Whitlam.
The pandemic shone a light on the companies that truly value their employees by allowing them to work as “safely and productively from home” as possible, says Whitlam.
“But in the case of many organisations, we haven’t seen that, so ...[in those instances] there is a disconnect between the organisation's purpose and their activities,” Whitlam suggests. “But it's going to be a key differentiator – and it already is. That's where reputation, trust and behaviour is all stitched together.
I have personally never found it so difficult to secure good talent. There's a mismatch between what somebody wants to give and how the organisation values that.
Power balance upended
Moreover, the shift in employee demands faced by employers from even those approaching the foothills of middle age have accelerated: Post-pandemic, more people are applying a different set of values to life, debt and work. That is making life “very, very difficult” for both corporate HR and headhunters, says Anna Whitlam.
“That’s not because people's needs are demanding. It's because companies are well and truly behind the eight ball in relation to what expectations are,” she says.
Whereas older staff are making more demands on employers post-Covid, “we will be more flexible, because we've got ourselves into situations where we have significant overheads that we need to meet”, says Whitlam. But it’s a different kettle of fish for the under forties, especially those still living with their parents. “They have decided to set themselves up slightly differently, so they don’t get themselves into our situation,” says Whitlam.
“And I think this transition that we’re all going through – from ‘what was’ to ‘what is going to be’, particularly in relation to work from home, having much more fluidity between performance and hours – is coming to the forefront,” she adds.
“We knew that this was going to happen, but I think Covid's brought it ahead 10 years. I have personally never found it so difficult to secure good talent. There's a mismatch between what somebody wants to give and how the organisation values that.”
Corporate affairs has a key role in helping leadership square that circle, suggests Whitlam.
The generation coming though has a much higher expectation [of employers], particularly around ESG and some of those areas of brand purpose... and you can't ignore that. You need to listen and adjust.
Billy Baxter agrees.
“There's a huge amount of research around that younger generation coming through and what their expectations are. They've got a much higher expectation, particularly around ESG and some of those areas of brand purpose – and really, just working for a company they really believe in," he says.
"So I'm seeing this across the board and I think boards are acknowledging that it’s the case. We have a very large new generation of employees coming through, these are the things that they believe in, and you can't ignore that. You really need to listen to it and then adjust,” adds Baxter. “These aren't necessarily difficult things to do, other than for those who don't like change.”
But Anna Whitlam warns that firms that do not change fast enough “will just miss out. That’s all there is to it – and we are starting to see that.”
Upskill or go extinct
Given all the change coming at companies, corporate affairs is under equal pressure to adapt, says Whitlam – which requires constant upskilling, more often than not on practitioners' own dime.
“At the very senior level, the role is becoming less about the technical capabilities – which once were writing and the basic forms of communication – and much more about judgment, understanding the business, being able to influence through having high EQ, being ahead of the game,” says Whitlam.
“Having that resourceful or resilient nature and being able to bring the outside in – these are things that we don't get taught. These are things that you have to develop as a leader. And so you have to invest in yourself,” she adds. “There were many years where large corporations developed their people and put them through every single program in the world to continue developing. That doesn't happen anymore.”
Whitlam uses the current macro environment – probably never more challenging – as a case in point.
“Look at climate change, the pandemic, our relationship with China – three major issues that no one has a solution for. But in most cases, the communications function is looked upon to help navigate out of that through communicating with customers and keeping employees updated on what the company is doing. And there is no rulebook. There is nothing that shows them how to do that.”
In her view, the corporate affairs execs that are attempting to bridge those gaps are in the minority.
“Probably 40 per cent [are doing it] or have a sense of the importance of it and therefore are trying to understand it,” says Whitlam. “I don't blame that on the function: The world that we're all living in has changed so much in the last 12 months alone. Coming up to speed with that while trying to influence and help your organisation get its head around it at the same time is challenging.”
In this part of the world, we are very immature when it comes to our understanding of ESG. We simply don't have the knowledge here. We haven't had the development.
Sustainability scramble, Australia crunched
Sustainability may now be a key corporate agenda item, but Whitlam says Australia’s insularity is increasingly putting its corporations and government out of step with the rest of the world. Because Australia has lagged so far behind on ESG, CEOs and boards are now scrambling to catch up.
“In this part of the world, we are very immature when it comes to our understanding of ESG. If you look at mature multinationals that are headquartered in Europe or in the US, [ESG] has long been an embedded part of their business, so the operation that follows through is a lot more sophisticated. We just simply don't have the knowledge here. We haven't had the development,” says Whitlam.
But now “there's almost been this change that's happened overnight, with a growing expectation for leaders here to just understand it. But at the same time, Australia, as we know too well, has been pretty much shut off from the rest of the world. And we're not great at embracing and learning from others outside of our own country. So I see that as one of our greatest issues, and I'm very fearful of what's going on right now with the borders,” says Whitlam. “We need to learn from other parts of the world that are so much more sophisticated in these areas that are going to really matter to our children and our children's children.”
On the flip side, the climate crisis, and demands from employees, customers and financial markets on brands to at least attempt to solve it, creates even more opportunity for leaders with the flexibility to grasp the nettle and drive changes – and those that can help communicate and implement those changes internally and externally. “That’s quite a sophisticated, nuanced area of the function, and again, we don't have as much capability in this part of the world,” says Whitlam.
Employers are looking for deep specialists that really understand those disciplines and [people who] can join as part of a multi-functional team to be able to build that reputation, but also integrate with marketing to ensure that we're growing those market shares – we are really seeing that demand.
Skills: most wanted
Of Australia’s skills crunch Vanessa Liell, as Commtract Executive Director, has deeper and broader visibility than most. She sees huge demand in two key areas.
“One is in growth – so digital marketing, content creation, social media and product launches. There is a lot of demand in that marketing space,” says Liell. On the communications side, “we've seen huge demand in any skills that build relationships – so media relationships, stakeholder relationships, government relationships, regulation, employees,” says Liell. “That demand has been unprecedented over the last 12 months.”
She thinks the main driver of that spike is “a big transition from generalists – communicators that communicate with everyone – to specialists”.
“Employers are looking for deep specialists that really understand those disciplines and [people who] can join as part of a multi-functional team to be able to build that reputation, but also integrate with marketing to ensure that we're growing those market shares,” says Liell. “And we are really seeing that demand.”
Why Dentsu Creative’s new structure, strategy and processes will work where other consolidation plays failed
A lot of agencies have tried to put media and creative back together – with some success, especially at scale. As Dentsu Creative’s ANZ CEO Kirsty Muddle writes, that’s why Dentsu’s Cannes 2022 announcement is so significant. It is taking many brands in the creative pillar and forming one – Dentsu Creative.