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Serious incidents such as the deepwater horizon oil spill and factory fires in India and Bangladesh highlight why some companies should create a new 'chief external officer' role, according to a recent research published in Organisational Dynamics, Sotirios Paroutis, of Warwick Business School, London. The new position in the C-suite would be part of an upgraded external affairs policy that can help align strategy and improve a firm's competitive advantage in a world that sees a greater need for non-market - social and political - strategies.
The traditional set-up of most firms is to have an established legislative or regulatory affairs function and a separate office for tasks such as community relations and social responsibility. The report says most companies underappreciate the challenges emanating from the non-market arena and, therefore, relegate their external affairs function to a lower status than it should be accorded. A balanced approach to corporate strategy, political activity and social responsibility is needed, which emphasises alignment across these priorities and functions that are responsible for them.
