While the concept of stakeholder capitalism has become highly politicized – synonymous with woke corporations and the culture wars gripping pre-election America – the idea that a business need concern itself with more than just profits is as old as business itself.

Long before the Business Roundtable defined the purpose of a corporation as delivering long-term value to all stakeholders, that’s how business got done. The growth of the technology industry kicked off a war for talent that empowered employees wanting to make a ‘dent in the universe,’ to quote the late Steve Jobs. Purpose statements were written, employee value propositions were drafted and employers found themselves taking a stand on issues far outside their area of expertise and comfort; all in the interests of securing and retaining talent.

Customers, investors, employees, policymakers and activist groups share the same technology platforms. The ease of information dissemination creates an information fluency between communities that exposes every action corporations make to stakeholders who engage, purchase, invest and retaliate accordingly.  A complex cacophony of competing, conflicting and often equally fact-based points of view is driving the social narrative and corporations are caught in the crossfire. Share prices have been hit and CEOs have lost their jobs, but after twenty years of competing for increasingly leveraged workforces, companies can’t back down.

At a Fortune town hall event last year, CEOs of leading global brands dismissed the backlash on corporate wokeness and ESG on the basis that it’s just good business. If the circular economy means their companies can appeal to workers and customers, reduce operating costs, AND benefit the planet, then not investing would be an act of self-sabotage. Unfortunately, different constituents have different opinions – multi-generational workforces disagree on what the company should stand for; some investors want long-term ESG growth and others want short-term profits. Inclusion is a challenging concept when a broad base of customers buy your products and those who don’t like your position are ready to activate in opposition.

All of this is the context for the rise of the corporate affairs function.

Corporate Affairs, like stakeholder capitalism is nothing new. At its base, it is the structural alignment of a company’s stakeholder engagement capabilities (comms, government relations, investor relatons, brand, etc.) into a single organization. Not, all things to all people, but dedicated specialists working side by side, aligned to the same priorities and reporting to the same leader.

Corporate Affairs has been common in heavily scrutinized industries like pharmaceuticals, aerospace and energy for years. Those industries can’t afford a misstep in government relations or communications that might put their broader business at risk. As those risks have spread to other industries, so has the practice. Many leading technology companies use a similar structure to manage rising government intervention in their affairs.

Risk mitigation is one motivating factor, but some companies are being proactive. They want to coordinate their policy agenda, investment thesis, ESG strategy and employee value proposition for impact amplification around critical business priorities.

A corporate affairs operating model can help. If all stakeholder engagement resources are organized on the basis of a shared framework of priorities, narrative and strategy then multiple levers can be pulled simultaneously to advance business goals.

Does that require structural alignment into one corporate affairs organization? No. The goal is strategic alignment. Structural integration is one way to get there – a ‘forced’ alignment that can reduce friction and waste between the units. Some organizations achieve the same objective by setting clear priorities that functions align around. It takes a firm hand from a leader actively engaged in stakeholder strategy, but it can be done with clear and effective governance.

However it’s structured, the most effective way to strategically align stakeholder functions is at four key points of intersection:

1. Shared intelligence: every business makes trade offs between stakeholder communities, but without a single view of your multistakeholder environment, you’re hopping between those communities in a senseless balancing act. Executives report that this integrated, 360 degree view of stakeholders is one of the biggest benefits they receive from a corporate affairs leader on their Executive Committee. It means they don’t have to do the work of balancing competing priorities from across their organization and one person is accountable to coordinate the response.
2. Shared narratives: narrative is a loaded term, but essentially it’s how you articulate your strategy and it requires nuances for each community. If its not 80 percent consistent, the inconsistencies can lead to misunderstandings and frustration, especially given the fluency of information between communities mentioned earlier.
3. Coordinated execution: Most business priorities require support from different communities at different times. Pulling the right lever at the right time in an intentional and coordinated way is how sophisticated companies drive advocacy at scale.
4. Shared accountability: It all starts and stops here. Accountability shouldn’t be for the metrics of the individual function like reputation, employee engagement or policy wins. It’s for the business. Strategic alignment means sharing the same goals and all being accountable for playing a part.

It’s possible over time that stakeholder dissonance will lessen. Workforce automation may reduce employee leverage and the consequent need to prioritize talent concerns against or over the concerns of shareholders or elected officials. Many companies will suffer before then. You don’t need to believe the role of a corporation is to serve employees or prioritize under-represented communities; you just need to know that in a multi-stakeholder economy, the path to profits is a minefield and everyone needs the same map.

United Minds is a Weber Shandwick consultancy dedicated to making business more human. To learn more, reach out to [email protected].