Making Global Business Work
What We Did
Whether in a heavily regulated industry like financial services or less regulated ones like retail, companies seek to mitigate risk and avoid undue scrutiny from government regulators. For example, companies cite the government’s role in passing and enforcing taxation and regulations as the main hurdle to overcome when engaging with the public sector. Managing government relations can help companies stay on top of these challenges.
The opportunity goes far beyond risk mitigation, however. At a time when public finances are under pressure, governments are seeking to tackle large-scale problems, access new sources of foreign investment, and utilize private sector expertise. As a result, private companies ranging in industries from technology and finance to healthcare and education are increasingly working with the public sector to help achieve policy and organizational goals.
Companies are also partnering with governments to work together on large-scale projects. From improving infrastructure to renovating or building hospitals, public and private sector groups are collaborating to achieve mutually beneficial results. In these public-private partnerships (PPPs), the private company often bears additional risk and management responsibility, while helping governments operate more efficiently and execute projects on time and within budget.
Companies with successful government relations develop and continuously refine a proactive, market specific strategy for each country in which they work. Before a company enters a market, a network or stakeholder map can help it target influential members of the government who may be key decision makers or detractors. With this information, the company can take a targeted approach to cultivating relationships with specific political entities, economic players, and thought leaders. Partnering with industry or trade groups can also help the company learn the political landscape and cultivate relations.
Understanding government interests goes a long way. Alignment with local interests, and a genuine concern for tackling pressing local needs via volunteerism, pro bono cases, or public impact work, help to align with public goals and foster long-term public-private partnerships. Government relations in one country also affect those in others; pay attention to political or historical ties that can influence business across national borders, particularly in high-profile business agreements.
What This Means
Embrace opportunities to grow the business and increase access to new or evolving markets. As countries seek foreign investment and expertise to grow their local economies and strengthen domestic industries, many are creating special economic investment zones and seeking private sector partners. For example, a large oil and gas company invested heavily in China and formed a joint venture with state-owned enterprises, sharing their expertise on carbon capture and storage. Through this relationship, the company gained greater market access and political support to continue operating in the country.
Closely monitor state influence in business. Government influence can vary from country to country as political objectives may drive business decisions more than purely economic objectives. In many countries, state influence in business is widespread throughout the public and private sectors. State-owned enterprises, for example, are often an important instrument in a government’s toolbox. Some governments use ownership as a form of supervision and a way to maintain control of industries crucial to economic performance and national security.
Form localized government relations teams. Partner local hires with expatriates to strike the right balance in knowledge on how to navigate local governments with business expertise and a global perspective. As government relations need to be localized, so too do companies’ teams who have personal relationships and understand cultural nuances for doing business in each country. Companies utilize the on-the-ground knowledge of these local teams to advise a global government relations strategy group and review issues that may impact the organization overall. CEO-level engagement is later called upon when working with high-level stakeholders such as government ministers.
Build a customized government relations toolkit. Company processes range from tracking community plans and investments to identifying client relationship owners for each government organization. Government relations tools include developing an issues-monitoring dashboard and reporting structure, planning thought leadership events, updating internal customer relationship management systems, and compiling a portfolio of community impact and government projects.
We continue to gather best practices from various industries on how they are engaging governments around the world. We are also conducting a pilot study on select countries and developing a framework to understand how companies tailor their government relations programs to local challenges. This knowledge helps every company develop appropriate engagement strategies as they work in today’s global society.
Joseph Brancato, Diane Hoskins, Meredith Ludlow, Miranda Chiu, Erica Oppenheimer, Katie Slayden