A study finds that “executive” GCs can strongly influence a company’s decision-making process
GCs need to go beyond just providing legal guidance, according to a study conducted by US research and advisory firm Gartner Inc.
The study revealed that GCs who devoted much time and focus to strategic tasks and offering business advice were more effective than their peers who didn’t. The most effective GCs take an executive approach to their role, Gartner said, and are able to significantly impact strategic decision making in their companies.
“In an era where corporate success is often defined by assets that legal protects (IP, data rights, reputation) and services legal provides (risk governance), GCs are essential to corporate strategy and must focus their time accordingly. The pandemic – with the interdependence of governmental action and corporate response – has only heightened the importance of the GC,” said Abbott Martin, vice president of research in Gartner’s legal and compliance practice.
The study indicated that “executive” GCs are more likely to meet personal goals and exert more influence in dealings with other executives, including CEOs. However, the majority of business leaders and GCs themselves often restrict the GC role to a strictly legal one, with only 8% of GCs taking on an executive role in their companies.
“GCs often default to focusing primarily on the strictly legal aspects of the guidance they provide, failing to meaningfully incorporate extra-legal business considerations such as the impact of the law on strategic initiatives or the bottom line,” Gartner said.
Moreover, chief executives, executive teams and boards must be “trained” to utilise GCs in a more dynamic way, the research and advisory firm said.
“As a starting point, GCs should think about the role they occupy and have a direct conversation with the CEO about long-term corporate needs. GCs should rework their future commitments so that they are keenly focused on the highest priority corporate goals and strategy,” Martin said.
The COVID-19 pandemic has generated opportunities for GCs to step up – the influx of new legal and compliance issues necessitates quality legal advice. Executive GCs zero in on in the strategic aspects of matters they are typically involved in, such as contract management, M&A and regulatory analysis.
“Pivoting their time towards more strategic work will naturally lead to the GC being more closely involved in executive decision-making and execution, where they can add the most value to the organisation,” Gartner said.
In the process, GCs need to carefully consider how they utilise their time, as well as on whom and on what tasks.
“COVID-19 might be a catalyst for action, but it’s certainly not the end of the story of the importance of the GC being personally effective. The success of a modern company usually depends on its ability to generate revenue from the types of assets that typically fall within a GC’s stewardship,” Martin said.