Four in five CEOs want their general counsel to be a strategic business partner and valued member of the management team, according to a recent study. report by the Group CEO and BarkerGilmore.
However, the report found that only 61% of CEOs of public companies and 40% of CEOs of private companies consider their [current] GC as meeting the ideal.
John Gilmore, managing partner of BarkerGilmore, explained that for past reports, board members were interviewed. This year, they surveyed CEOs of 100 public and private companies to get their perspective. He said it was “not really surprising that boards and CEOs are well aligned with the need for a GC capable of serving as a strategic business partner.”
With 84% of public GCs and 57% of private GCs in the leadership team, GCs have the opportunity to contribute more strategically to their organizations. The top three areas CEOs would like their CGs to improve are business strategy, new market expansion, and industry knowledge.
Only 6% of CEOs of public companies and no CEOs of private companies believed their CGs added the most value by contributing to the discussion of corporate strategy.
The report shows that there is a mismatch between the strategy the CEO wants from his general counsel and where they have them in the management team, especially in small businesses.
If the General Counsel is not part of the management team reporting to the CEO but rather is informed of decisions after the fact, he is doomed to be performers without having the opportunity to add strategic value.
The general counsel who is not currently part of the leadership team should work with his supervisor, most likely the CFO or COO, to develop goals that will allow him to show his strategic value. Ideally, their boss can be their sponsor by developing roles and responsibilities that allow the general counsel to expand beyond legal work.
Most important impact areas
CEOs believe that CMs, in both public and private companies, have the greatest impact on litigation / investigation management, risk management and crisis management.
In terms of oversight, overall, companies do not understand the value that a legal perspective can bring to human resources and cybersecurity, with only 22% of GCs involved in human resources oversight and 17% with the cybersecurity.
GCs in private companies are more likely to oversee risk management (81%), compliance and ethics (50%), human resources (42%) and government relations (35%); compared to GCs of public companies who oversee compliance and ethics (84%), government relations (49%), risk management (44%) and confidentiality (31%).
In all areas, a good KM can âbridge the gapâ between departments from a risk assessment perspective, and they can add value around strategy.
After analyzing how CEOs use their general counsel on the leadership team, CEOs need to ask themselves whether they have given their general counsel the opportunity to be the strategic partner they want them to be. .
Some questions CEOs should ask themselves:
- Has the CEO outlined his expectations to his GC?
- Have they jointly created annual SMART goals that reinforce this message?
- Does the Advocate General have the resources to devote his time to strategy?
Conversely, attorneys general must find the time to learn more about the profession by assessing their responsibilities and delegating where possible. They should also not outsource strategic opportunities to outside advisers.
Some questions that GC should ask itself:
- What can you do alone?
- What can you delegate?
- What can move outside of the legal system?
Finally, the General Counsel should be encouraged to step outside of the legal environment by learning about products, competitors and customers, and then use that knowledge to contribute to senior management discussions. They are responsible for understanding where they add the most value to the CEO, the board of directors, their senior management peers and their legal team, and, more importantly, taking action to deliver that value.
Research also shows that 58% of CEOs do not have an identified potential successor. This problem escalates as the size of the company’s annual revenue shrinks with 95% of CEOs at $ 100 million to $ 249.9 million in annual revenue not citing a potential successor, down from 45%. in $ 1 billion + businesses.
Most CEOs (63%) plan to compare internal candidates against external talent when hiring their next GC.
For more information on CEOs’ perspectives on their General Counsel, access the full report here.
This column does not necessarily reflect the opinion of the Bureau of National Affairs, Inc. or its owners.
Mary Rombaut is the Managing Director of Research and Analysis at BarkerGilmore LLC.
Marla persky is Senior Advisor at BarkerGilmore LLC and previously was Senior Vice President, General Counsel and Corporate Secretary of Boehringer Ingelheim USA.