Remember the Emotional Drivers
Andrew Blum and Robert E. Swadosh
With the 2017 proxy season well underway, it's important to remember that what you convey about corporate governance impacts far more than investors alone. It also has the potential to leverage the power of your corporate brand and enhance your corporate reputation. Just ask the scores of activist investors who increasingly focus on issues far broader than operating performance – and do so in real time.
Messaging is key at all times, not just at the Annual Meeting but also during proxy fights and in response to activist investors, like the May 10 move by Whole Foods revamping its board. Developing proper investor messages is not simply about responding to governance issues or updating the same old metrics. Ironically, perhaps the most effective way to create compelling investor messaging is to know what all of your client’s key audiences are thinking.
At the start, understand that that up to 20% of non-algorithmic investment decision-making is affected by emotional rather that rational factors. So in addition to providing strategic communications advice, you are also acting as a de facto psychologist. This is particularly relevant as you help a CEO and CFO better understand the underlying dynamics that move your investors.
One way to ensure accuracy and consistency in company messaging is using the PR quiver in your IR toolbox. Today that includes social media content as well as traditional media vehicles such as press releases and advisories for business and trade media relevant to all constituencies. And don’t think its passé to reach out to key reporters.
Approaching IR communications generally, it's important to tell your client upfront that all companies face heightened uncertainty and increasing doubts about the best path forward – especially in an era of social media and humongous amounts of data (both useful and other.)
In fact, all of a company’s constituents – employees, customers, investors, and competitors alike – find themselves in the same web.
Clients need to understand that now is the time to ensure they have a handle on their most important audiences – and in real time.
We as IR/PR practitioners need to help clients evaluate and improve the effectiveness of their efforts by providing objective guidance that identifies the most promising directions for communications strategy, establishes priorities, sets reasonable expectations, and implements positioning and messages that address multiples audiences and similar needs.
How to make it happen?
We recommend using qualitative and quantitative techniques to develop a holistic view of the corporate brand – one that takes into account cultural as well as business and financial factors. This provides significant actionable insights into the attitudes, motivations and behavior of a company’s most important constituencies.
The first step is to establish a baseline: a rolling, qualitative research study that generates rapid response strategic development feedback. It will quickly provide an understanding of how investors, business and trade media, a cross-section of C-suite influencers, and others assess the client’s issue or situation and its longer-term impacts.
The objectives of this study are (1) to gauge the attitudes and beliefs of key audiences about the client and (2) to identify sources of discontinuity between these perceptions and the messages the company is intending to convey. The research aims to determine the Company’s strengths and weaknesses and whether its messages are clear, credible, persuasive and differentiating.
How often? Quarterly at minimum, typically tied to earning reports; and then attendant to significant events, be they planned or responsive.
At minimum this will help create opportunities. At worst, it may prevent one of those feared “jump off the cliff moments.” At best, we it provides valuable insight into the psyche of your key influencers and decision makers.