Media proliferation and aggressive investors
Before “Big Bang” Investor Relations for the world’s publicly quoted companies was all about a cosy chat every now and again between the CEO and various analysts from investor organisations. The CEO definitely had the upper hand, controlling as he (in those days it was pretty much always a ‘he’) did the flow of information.
That hasn’t been the case for decades and today conversations between companies and investors take place against a highly regulated background and with increasing scrutiny and pressure. Some of the biggest investors, such as pension funds, moved away long ago from passive investing to a far more aggressive involvement. Then, in the last two decades or so, hedge funds reared their heads, often building positions as a prelude to bolder moves such as leading a shareholder revolt to change the senior management or even delisting and taking the company private. Business media has proliferated, particularly electronic media. They need to be served too and some of those media professionals can often have a broader knowledge of the your sector than the business leaders themselves and will be more current on latest sectoral trends. All in all it’s a minefield for those engaged in investor relations activity.
Little wonder then that we have seen a proliferation of IROs and Investment Relations Directors signed up to augment the efforts of the CEO, the CFO and from time to time the Chairman. There is just so much to do and many find themselves beleaguered. The reporting cycles don’t help. In the UK the majority of businesses are still reporting on a half yearly basis – just Interims and Finals. In the US where quarterly reporting has been the norm for years. Then there are also Trading Statements, particularly for businesses that have a distorted annual trading cycle – retailers for example, who often offer pre and post-Christmas statements.
Repelling potential invaders
In less well organised businesses IROs can often feel they are being “sent naked into the chamber” if, because of their relatively junior position in the company hierarchy they are not necessarily privy to all they need to know to “repel potential invaders”. A successful IRO has to be seen as ranking parri passu with the CEO and CFO when it comes to information flow.
Consistency of messaging and trust
Certain rules still hold true. The content of any exchange, whether formal or informal, has to be consistent, both in content and tone. It’s a major IR sin to give conflicting information to differing parties. All this means proper message preparation and decent rehearsal. There also has to be total trust between those representing the business to the outside world. Time spent with the CEO, CFO, IRO/D and indeed where applicable, the Chairman, rehearsing their spiel in front of each other is never wasted. Such rehearsals are even more effective when conducted in front of a Communications Coaching professional as they will highlight areas where not everyone is ‘singing from the same hymn-sheet’ and help resolve and nuance tricky messaging areas.
Rehearsal, rehearsal, rehearsal
In short it’s tough being in Investor Relations. It needs a well thought-through approach. Key messaging is essential. Coupled with proper preparation and rehearsal, the whole process can be turned into the opportunity it should be, rather than the reputational threat it is often perceived to be.
By Professor Khalid Aziz, chairman of Aziz Corporate and Lead Communication Skills Coach. Khalid has been coaching and advising senior executives in Finance roles for over 30 years.