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Skip to main contentThe problem: To grow value, stakeholders are holding boards, as well as the C-suite, more accountable for reputation management.
Why it matters: Corporate reputation is estimated to account for as much as 25% of a firm’s market value.
The solution: Boards are leaning on CCOs more and more to help navigate business and cultural transformation, opening a path to directorships that has long been closed to them.
The Geico gecko. Liberty Mutual’s emu. Flo from Progressive and Jake from State Farm.
When small, New Jersey-based NJM Insurance began mapping out plans to expand into the mid-Atlantic and Midwest regions, it knew that standing out would be no easy task, given the enormous popularity of these four insurance-industry characters. So the firm did something unusual: It appointed a former communications executive to its board. “The board wanted someone with experience driving—and more importantly measuring—brand awareness and reputation,” says Joan Wainwright, a former communications, marketing, public affairs, and customer-experience executive with such Fortune 100 companies as Merck and TE Connectivity.
In the press release announcing Wainwright’s appointment in 2019, NJM Insurance highlighted how she had led a 20-point increase in TE Connectivity’s net promoter score, a measure of customer loyalty, and noted that her skillset would “be an excellent complement to [its] existing board members.”
As corporate reputation grows in importance—some estimates suggest it accounts for as much as 25% of a firm’s market value—more boards are elevating communications to a priority in corporate governance. Committee charters in industries including energy, pharmaceuticals, and consumer products now expressly mention accountability for corporate reputation and stakeholder relations. Richard Marshall, global managing director for the Corporate Affairs and Investor Relations Center of Expertise at Korn Ferry, says boards are regularly turning to chief communications officers for advice, whether informally or officially, through board placements. “CCOs are growing in attractiveness for board service because of their view of the business landscape and expertise in reputation management,” he says.
The growing importance of CCOs to boards is directly correlated with the complexity and volatility of today’s business environment. Boards play a critical role in helping management to navigate issues that influence public perception of the firm, including business transformation related to artificial intelligence, diversity and social-impact initiatives, talent recruitment and retention, domestic and international regulatory policy, and geopolitics.
While the path to a board seat may be clearing, CCOs still face many hurdles to an appointment. Director turnover moves at a glacial pace, for instance. When seats are vacated, CCOs face stiff competition from other subject-matter experts in equally critical areas such as cybersecurity. Communications leaders, as a group, aren’t exactly racially or ethnically diverse either, with nearly 85% identifying as white.
Most importantly, however, is that communications leaders need to bring something more to the boardroom than just functional knowledge, says AnnaMaria DeSalva, global chairman and CEO of strategic-communications firm Hill & Knowlton. DeSalva has served on two public-company boards over the last seven years, in both cases as the nominating and governance chair. “CCOs earn their place in the boardroom as business leaders first, with a communications competency secondary,” she says.
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CEOs are under more pressure than ever. So are board directors. It’s more than a coincidence, for instance, that last year saw both a record number of CEO exits and a 13% increase in the number of board seats won by activist investors. It was the third straight year activist representation on boards grew, with 122 incumbent directors being forced out of their positions.
In many ways, the elevation of CCOs in the eyes of the board mirrors their rise as trusted strategic counsel to CEOs. The influence of CCOs in guiding the strategic business decisions of management has been growing stronger since the pandemic, with CEOs investing in and growing the function to respond to the increasing demands of stakeholders. With directors under just as much scrutiny, it only makes sense that boards would turn to CCOs to help enhance performance, says Peter McDermott, a senior client partner in the Corporate Affairs Center of Expertise at Korn Ferry. “Boards are thinking about reputation management more proactively,” says McDermott, “both the company’s and their own.”
Boards are placing an increasingly high value on CCOs’ ability to see—and, more importantly, anticipate—the expectations and reactions of stakeholders and interpret how they will play out through a commercial lens, says McDermott. “CCOs bring a diversity of perspectives to the table,” he says.
CCOs used to be invited into the boardroom only when the rare crisis erupted. But nowadays, boards are leaning on communications leaders more for “peacetime planning,” says Aedhmar Hynes, who serves on boards in the US and Europe and is regularly ranked among the most powerful global communications professionals. She says boards face a new urgency to be fully equipped to help firms develop strategies to meet the growing challenges around business and cultural transformation issues such as AI, sustainability, talent, and social impact. Hynes says communicators can also help boards address the expectations of a wider and more demanding variety of audiences. “People who have built their careers in communications think differently than other board members who built their careers in finance or legal or risk,” says Hynes.
To be sure, the value CCOs can bring goes far beyond messaging, or even communicating. Rather, their true value is in bringing the voice of multiple stakeholders to the board, says Kym White, a healthcare CCO who currently sits on the board of public companies and not-for-profit organizations. “CCOs have a big picture view of the business,” she says. Pointing to the strong, yet fragile trust people place in business relative to other institutions, she says, “CCOs are an underleveraged asset for many boards, who could benefit from their expertise.”
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Timing is everything, and what makes CCOs attractive to boards relates partly to a company’s specific circumstances. Coming out of the pandemic, which is when interest in CCOs from boards started picking up, many companies were entering a critical period of change. The need for transformation has only increased since then. DeSalva says she wouldn’t have landed her first board seat without her extensive experience leading business transformation at Dupont—including a major activist situation, CEO transition, merger, and subsequent breakup—and Pfizer. “Functional knowledge alone won’t make CCOs relevant to boards,” she says. She would know, having overseen substantial board formation and refreshment activity as nominating and governance committee chair.
To be sure, even as boards appoint more directors with specialized subject-matter knowledge, they want candidates to tick other boxes, too—among them, having profit and loss responsibility, international experience, government and policy expertise, and strategic vision. “CCOs have to be able to hold their own when it comes to business and financial issues,” says White. “They can’t be the weak link in the director chain.”
Here’s where timing comes into play again. Whereas CCOs used to show up for a meeting maybe once a year, the nature of disruption now ensures that they are regularly and actively engaged with the board. A transition to a new CEO who wants to pivot the business could put the CCO front and center with the board for an extended period of time, for instance. “CCOs need to take advantage of those opportunities to prove their business and strategic acumen,” says Wainwright.
And if those opportunities don’t exist? Wainwright recommends getting in front of the board in any way you can. As in most jobs, networking is critical to getting a board seat. “I told anyone I could about my interest in getting on a board,” says Wainwright. It doesn’t have to be the board of a Fortune 500 company, or even a publicly traded one, either—nonprofits, private companies, universities, and other boards can serve as fertile areas for CCOs to gain governance experience and sharpen their financial and operational skills.
There’s never been a more opportune time for CCOs to make the jump to board service, says Korn Ferry’s Marshall. The major elections taking place around the world are danger zones, he observes—for misinformation, disinformation, and cybersecurity threats—that could thrust CCOs into the spotlight and make them more visible to boards. At the same time, he notes that as interest rates and the economy stabilize, the pressure on leaders and boards to drive commercial growth will only grow. “CCOs are going to be playing an outsized role in driving value creation this year and into the future,” Marshall says, “and that could help them to become players in the boardroom.”
For more information contact Richard Marshall at richard.marshall@kornferry.com or Peter McDermott at peter.mcdermott@kornferry.com.
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