Are you a business leader? You understand the business, what it does and what it is trying to achieve. You attend meetings with peers and you see the company vision – however, this is no longer enough.
In the first of my follow up blogs on the recently released KPMG report titled Through the Looking Glass, I want to address the idea of a GC being more than just a GC. The report, which I summarised in my last post, discusses the five characteristics that best describe the ‘GC of tomorrow’.
The first – and I think in some ways the most important – attribute described by CEOs and COOs who featured in the KPMG report, is the requirement for GCs to become business leaders. Executives need GCs to understand more than just what the business is and where it’s going. They need to have a commercial and cultural understanding of the business, the wider market context and the trading environment in which it operates. The GC needs to be able to offer advice and consultancy that combines contextual understanding with legal insight. The report actually goes further and suggests that there are 12 roles that GCs are now expected to perform:
- Provide strategic advice
- Lead global compliance
- Maintain awareness of enterprise risk
- Lead legal function
- Manage contracts
- Develop corporate and social responsibility
- Build corporate culture
- Serve as chief ethics officer
- Serve as company secretary occasionally
- Serve as board member (in some cases)
- Oversee corporate transactions.
I’m sure, for some of you, this is no surprise but, nevertheless, it is still a daunting list. Happily, the report states that GCs are coping well and adapting, where they can, to this new paradigm; and that for me is the key point. Adapting and being flexible is crucial to being able to fulfil such a multi-faceted role.
Understanding the commercial realities of the business is about more than just reading reports and attending meetings (although these activities do help – see my list below). It’s about being flexible and understanding that there might be new or alternative ways of meeting challenges and solving problems, and about creative thinking. With in-depth analytical training and a propensity to say ‘no’ more than ‘yes’ because that lowers risk, GCs can often be perceived as unapproachable – and perception can become reality.
It sounds contradictory, but possessing insight and being more flexible with decisions can result in less risk, as well as heightened commercial awareness. If colleagues and peers have confidence that seeking your consultancy will lead to a positive outcome, they are more likely to request your assistance. This keeps you abreast of what’s happening around the business and raises your commercial awareness. It also means colleagues are less likely to circumnavigate the legal department when unsure about decisions or scenarios which in itself reduces the risk of ill-chosen decisions.
Another point on KPMG’s list that I found interesting is board membership. This is somewhat of a contentious issue. I hear many GCs saying it is harder to be objective on board-led decisions, and governance issues may apply. But, conversely, I hear from others who say that if they are not on the board they miss vital snippets of information that could provide insight and shape legal advice.
I think, ultimately, this will become inevitable. As the role of GCs continues to morph and develop with a greater desire for commercial ability, exposure to the board and board-level meetings are the only real ways of achieving this.
A recent survey by US firms NYSE Governance Services and Barker Gilmore demonstrates to me how widespread this has become in the US. Ninety-seven percent of respondents to their survey expect the GC to be part of the executive management team by the year 2020, an increase of 16% from 10 years ago. The KPMG report echoes this stating that, whilst the US is further along the path, the evolution of the GC into senior management will, increasingly, be taken for granted.
Be more business-like; 7 things GCs can do to heighten commercial and cultural business awareness:
- Attend ad hoc meetings you wouldn’t normally join, even just as an observer. You don’t need to participate in everything, just seeing how other people work, different areas of the business and how problems are solved by colleagues will help develop your flexibility and creative thinking.
- Be social. GCs can be seen as serious and unapproachable, so attending social events and showing a human side can facilitate colleagues seeking advice and consultancy from you. Company events are often the litmus paper test for the general atmosphere within an organisation and can highlight areas of employee success or strain.
- Join social media; as much as social media is cat videos and vacuous individuals, it is also a useful business tool. Articles you might not otherwise find are often shared on Twitter and LinkedIn.
- Sit in on the quarterly meetings of every functional area of the organisation – HR, marketing, sales, finance, production, distribution, research etc. It’s helpful to have some understanding of your key stakeholders’ respective areas and the challenges they face.
- Work with the FD to understand how to interpret spreadsheets, company reports and financial data. This gives you the ability to not just decipher more about your own organisation, but also recognise anomalies in potential acquisitions and opportunities for competitive advantage.
- Take on commercial tasks or roles outside of work – consider becoming a school governor, treasurer of a club or sports team.
- Visit relevant analyst firms’ websites. Find an independent analyst organisation for your sector and read the websites/press releases and surveys to get a vision of the future of your sector. This will help you understand any potential areas of risk and opportunity.