Whether it’s earnings, a new company announcement, or crisis communications during a pandemic, timing can be everything when connecting with your investor base. Especially during times of crisis, knowing how, what, and when to communicate critical company details to the financial community can bring a host of complexities for IROs.
Through the turbulence of recent weeks, IROs continue to understand the importance of communicating in a timely manner. In fact, in a recent study conducted by Rivel Research, two-thirds of IROs volunteered that their firms have launched initiatives to keep the investment community informed on COVID-19’s impacts.
We spoke with Q4’s VP of Customer Experience, Karen Greene, about best practices for, and potential pitfalls of, communicating during these extraordinary times. Here’s some of her advice:
With remote work a necessity of social distancing mandates, it is imperative that IROs stay connected to and coordinated with all stakeholders – but especially the C-suite – as the team continues to assess impacts of this situation. Karen recommends continued calls and virtual team meetings to ensure IR is plugged into the latest developments. Staying connected with management can keep the IRO aware of upcoming news, concerns or obligations, negate selective disclosure issues, and ensure that continued communications with the street are both timely and consistent.
IROs must also stay connected to the sell-side to help understand exactly what they’re looking for in this environment. Investors in the COVID-19 era are most interested in what resources the company has available (how much cash does the company have? Is it accessible? What cash and liquidity could the company obtain in the short-term?), what actions the company can take to ensure viability (how will they manage expenditures in the short term? What other levers can they pull?), and how the company is protecting its key assets and value drivers to ensure future viability.
“This is not the time to communicate just for the sake of communicating, but sharing new, relevant and valuable updates can bring much needed comfort and reassurance,” Karen explains.
However, she also cautions IROs to take a moment before providing any forecasts likely to need updating and additional clarification down the road. Companies should avoid changing guidance and outlook multiple times, and possibly damaging credibility as a result. As difficult as it is not to provide answers to the Street’s questions, timely doesn’t necessarily mean immediately, especially in the throes of a crisis.
Finally, Karen recommends staying connected with advisors to think beyond what is happening internally. Reach out to these resources to review communications with an external eye, considering the actions of your peers, what others in the market are saying, and public sentiment.
Just a few weeks of mandated social distancing highlights the importance of technology. Now that we’ve all experienced a virtual workplace, tech will only be more integral to IR in the future. CRM and surveillance solutions that allow IROs to manage through crises using data will be increasingly important components of any comprehensive IR program.
This evolution was already under way but recent experience will help speed the process. Perhaps the best example is the immediate transition from in-person to virtual meetings and events, enabling effective communication with shareholders without missing a step.
This shift was born of necessity, but Karen thinks IROs will see the cost savings and efficiencies delivered by these virtual tools and many will look to maintain those benefits. That said, engaging an audience in a virtual environment and delivering a successful event is different from in-person.
“This is new for many of us and IROs have to figure out how to modify what we’re used to and help management transition to a virtual one-to-one or one-to-many structure,” Karen cautions. “For some, the transition to video conferences will be a smooth one, but for others, leveraging webcast technology with shared slides might be a better fit.”
Karen also highly recommends utilizing your IR website to clearly and consistently communicate in times of crisis. Leveraging this existing asset ensures that the investment community can easily access relevant information that is organized for easy location and regularly updated. Especially during these chaotic times, companies should use this platform to make critical company details clear and easy to find. As a byproduct, the IR website can be a great way to keep employees updated on the rapidly evolving landscape.
Maximizing the impact of your company’s social media accounts is another way to keep your investors up to date. According to Brunswick’s 2019 Digital Investor Survey, 98% of investors report using digital sources to conduct research, and 88% say they’re actually making decisions based on information they have learned online. Social media platforms, like Twitter, are particularly effective for providing real-time updates to a broad audience, a valuable tool in communicating critical updates in a timely way.
Be the voice of calm and reason
Perhaps the best advice for IROs communicating critical information during these disconcerting times is to be the voice of calm and reason for both the executive team and the investment community.
“Now is the time for the IRO to truly be a conduit for the exchange of critical information between management and the Street. Karen explains. “Especially when the context is changing this rapidly and continually, it’s important to deliver that information to all stakeholders in a calm even tone.”
Based on important lessons from her own experience in the IRO seat, Karen highlights the importance of guiding management to focus on what the company can actually control in a crisis, quieting as much of the outside noise as possible.
“Considering the inherent pressure of these situations, it can be a real challenge not to react to huge swings in stock price,” she shares. “Markets bounce back, but the health of the business is particularly dependent on where management focuses during turbulent times. To the extent that they can, IROs should look to data to help management understand where the investment community is at and remain focused on the decisions that will sustain the business going forward.”
Learn more about engaging the investment community during times of crisis in our post, Communicating Effectively During COVID-19.