Communicating in an Uncertain Economy
There was a great session at the Boston chapter of the National Investor Relations Institute this week. As the moderator commented, this session topic was relevant in July when the agenda was set, but it's REALLY relevant these days, with the scary headlines about the financial markets and given the President's speech last night.
The two speakers provided excellent viewpoints on the subject: Len Griehs, a 30-year veteran of IR who is a VP at Campbell Soup Company, and Robert Stimson, currently managing director of Eastern Investment Advisors and previously both a portfolio manager and sell-side analyst in the technology sector.
There were some good takeaways from both speakers about both IR and PR in these volatile days.
Len talked about the things to do when your company or sector is just not as attractive as a stock buy. One option is to go inward regarding what you can do differently, such as stock buybacks, increasing dividends, restructuring, etc. Now is the time to get these things in place for when the situation improves. Most importantly, he said, this is a time for one-on-one meetings with your top 50 shareholders. Instead of speaking at conferences, do more direct communication with your current shareholders. Schedule more meetings with institutional investors. Invite the sell-side analysts in to meet with your management team. Don't go underground. Use this time to get stronger and to communicate more. Improve the quality of the information on your web site.
One quote I particularly liked related to his goal of eliminating the need for sell-side interpretation of the information you convey: "Make sure we put words to our own story."
Another was: "Let's put the relations back in investor relations."
Bob Simpson really echoed Len Griehs advice from the other side of the desk. He lamented that the financial analysts have fewer resources these days -- no big research groups issuing papers to explain complex markets and product areas -- and are fewer in number, so it's key for the companies to make their lives easier and convey just the numbers and the critical Q&As to help them understand quickly. He lamented, "Why does the press get access to information before the analysts do?" He also voiced strong opinions against long press releases, wanting just the facts, and as short in length as possible. Len Gries pointed out that the regulatory authorities require more explanation in earnings announcements which adds to their girth, but he believes, overall, that less is more these days.
Bob Simpson also called for upgrades to web sites to make them easier to use. Control the information flow, he urged, by including an index of who is covering your site and a white paper that clearly explains what you do.
The common themes were not to go underground -- although it is tempting for companies to do so right now -- and to over-communicate in a very direct way. It's about strengthening existing relationships and making it easier for new shareholder prospects and analysts to learn about you via your web site (which is the first place they go, rather than the press release you labored over.)
If I were to sum up the entire session, I'd say that the answer is to over-communicate in an uncertain economy. I'd welcome your feedback.