The following is a series of notes from interviews conducted with thought leaders in various key roles in organizations with a focus on best practices.
All too often, those firms that carefully measure value creation and returns are the very ones who misalign efforts in communication with the very stakeholders who impact those measurements. In our recent interview with over thirty Heads of Corporate Communications (“CorpComm”) as well as Investor Relations (“IR”), we have distilled a few common themes:
Different Skill Sets. Organizations often believe IR teams can handle corporate communications. In fact, the skill sets are very different. IR talent often arises from analyst and sell-side brokering backgrounds. On the other hand, CorpComm talent tends to come from journalism, media, and public relations backgrounds.
Proactive Crisis Management. Organizations often deal with crisis management as a reaction to an event whereas one interviewee at a major regulator suggests that it is entirely feasible to plan for crisis ahead of time – by identifying key threats and planning step-by-step how to deal with these threats if they arise and training the firm not only top management…in effect, building muscle memory in crisis management.
CorpComm is a Strategic Asset. Too often CorpComm is treated by business leaders as a tactical asset rather than a strategic one. Another interviewee suggested that organizations need to engage CorpComm at the very beginning of strategic planning and determine what messages need to be shared with each layer of stakeholders.
Reporting to the CEO. An increasing number of organizations we have spoken to have not only split the roles of IR from CorpComm, but they have also elevated the latter position into directly reporting to either the CEO or the “Office of the CEO.”
Long-Term Goodwill is Value Creation. One often forgotten role of CorpComm is the creation and fostering of goodwill in the community, whether financial or otherwise, through communicating a clear message about the organization’s ESG activities, community outreach programs as well as through preparing media through proactive communications. Developing this goodwill with the community not only builds upon brand value but also the community’s reaction in times of crisis.
Different Relationships, Different Messages. Finally, it is important to recognize IR’s key relationship is with fund managers, analysts, and shareholders. The message is often focused on historic and future business performance. CorpComm’s key relationship is with the public, business partners, influencers, and even rating agencies through media. The message, in this environment, is broader and often more strategic.
In a recent conversation with the CEO of a unicorn in the life science sector, he commented that one absolutely cannot underestimate the value of a strong CorpComm (and IR) team in the process of creating shareholder value. Delivering numbers alone is not sufficient; it is equally important to clearly articulate a story behind those numbers and to sell our success. In the CEO’s case, his stock price rose tenfold within a few years. The CEO was one leader who successfully aligned his company’s communication efforts with his stakeholders.
The conclusions of our CorpComm survey are a few actionable points: determining whether you have a credible CorpComm leader, creating direct reporting lines to top management, mapping out stakeholder priorities, and better leveraging stakeholder engagement and strategic communications. The benefits are wide-ranging from improved share price, new customers, better community relationships, and, most importantly, greater stakeholder trust. Decent outcomes from avoiding the shortcut!
TK is a Partner at Global Sage. He is a serial alternative investment industry entrepreneur and brings over 35 years of experience in the alternative investment industry. TK built one of the largest alternative investment firms (private equity, real estate, and hedge funds) in Asia by the mid-2000s and brought in ABN AMRO Asset Management and BNP Paribas Capital Partners as shareholders and Aberdeen Standard Investments as acquirer.
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