Well-Versed

I often feel a sense of kinship with investor relations and communications professionals who are well-versed in crisis communications.  We share an understanding of the pressures, stresses and urgencies experienced.  Another commonality is we often journal about our experience.  From simple timelines to full case-studies, journaling (even if done after the fact) stimulates the reflection critical to making sense of the situation, your role in it and lessons learned.  Such reflection is important to honing one’s leadership skills.

I’ve certainly experienced my share of crisis.  My journal has served as a resource for many of the stories and advice shared via these blog posts.  For one crisis – about a failed capital refurbishment project – I later converted my journal entry into verse, which I’m sharing below.  This story is available, along with many other case studies, on NIRI-Chicago’s website in a traditional case study format.


 

On the shores of a sweet-water sea,
Stood a fire-breathing furnace – the biggest in the west.
It produced materials that built our cities and industries,
Voraciously consuming fuel day and night without rest.

But the fire-breathing furnace worried about the air,
And the quality and efficiency of the fuel it burned.
With our engineers in the green mountains fair,
Our customer found a cleaner technology in which to turn.

Eager that its new technology should grow,
And the ability to meet EPA standards demonstrably show,
Our engineers designed an innovative new facility
To provide the furnace fuel and generate electricity.

The construction contractor was anxious and had much to prove.
To lay the foundation, they tried something new, guaranteeing it wouldn’t move.
But our engineers pointed to their plans,
And warned the foundation might not stand.

The new facility began to settle – the engineers were right.
Yet the company waited fifteen years to begin to fight.
We can fix this and make it better” said the new boss,
And we will no longer tolerate it operating at a loss.

An $85 million refurbishment effort was begun.
We repaired, rebuilt and replaced – the process was no fun.
Nevertheless, we were hopeful,
And often talked about the EBITDA potential.

But two years later and $40 million over plan, the facility was still in a poor state,
The COO’s head was put on a plate.
This announcement was two weeks before quarter end,
So, a reinvigorated focus on operations was the message we decided to send.

Now faced with another earnings miss and the prospect of more of the same,
Only transparency could help save the company’s name.
Two weeks early earnings were announced,
Down nearly 20%, our stock price was trounced.

The facility was better we pleaded,
And a new test underway just might be the cure.
But we didn’t estimate the capital needed,
As we needed to see if the test worked for sure.

Post-earnings the IRO and CEO went on the road,
And spent even more time on the phone.
Before and after facility photos we showed,
But shock and anger was our investors’ tone.

Our news came at the worst of times.
Not a shred of good news could we find,
Our customers were teetering and closing plant gates,
While shareholder wealth continued to deteriorate.

It wasn’t long before we heard from the sharks,
A seat on the board was their mark.
Negotiations then ensued,
The number of activists added to the board was two.

The board decided to pursue a new direction,
And we laid out a new plan of action.
Refurbishment of the facility would continue,
But the search for strategic alternatives was on the menu.

However, in this industry there are no quick fixes,
Solutions that require perseverance are what sticks.
A few years later the stability for which we all yearned,
Was in place and business results finally began to turn.

 

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

Wake Up Call

It began like any other day … walking into the office, cup of hot tea in hand.  The place was quiet as staff began to roll in. I had checked the news headlines before leaving home, so it looked to be an ordinary day.  But then, minutes before market open, my phones lit up and email caught fire.

Dumbfounded, I listened to the first of several messages. One of my company’s major customers had issued a press release announcing its intent to temporarily idle a facility where we were co-located.  This customer represented more than 10% of my company’s business and 100% of the co-located plant’s output.

I popped up and peered around the corner, the CEO wasn’t in yet, but I caught a glimpse the COO as he walked in the door.  Off I go to download what’s happening to the COO and on my way, I asked my communications manager to call the affected plant to see what he could learn.  No one knew – not the CEO, not the COO, not the local plant manager.  The customer gave us no advance warning.

I sat in the office with the COO as he called the customer, who reassured they would continue to honor our contract, including inventorying or shipping to alternate facilities all the output our co-located plant produced. But, of course, this information wasn’t in their press release.  Investors in my company could only assume the worst.  The stock opened down, hard and fast, and investors were calling non-stop. This was not going to be a good day.

In a crisis like this, you realize how important it is to have a history of consistent, transparent communications that provide context around your business and its operating environment.  In our case, we regularly discussed the structure and terms of our take-or-pay contracts with investors and the why surrounding them. We even filed redacted copies of these contracts with the SEC to be as transparent as possible.  As a result of these practices, investors had a baseline understanding of how we protected and mitigated commodity, operating and customer-risk.

We needed to respond and fast.  So, leveraging this existing context, we aligned messaging during a brief executive team meeting and then:

  • Issued a public statement indicating our customer’s obligations under our take-or-pay contract remained in effect, regardless of plans to temporarily idle its plant,
  • Blasted an email with this key message to everyone on our investor and media distribution lists,
  • Confirmed our CFO’s attendance at an investor conference scheduled to be held the next day,
  • Painstakingly returned all investor calls over the next several days, initially starting with the sell-side in hopes of amplifying our message faster,
  • The following week we reaffirmed annual guidance in a routine press release to further reassure the investing community.

Late the night of the announcement, I contacted the IRO at my customer company to let him know what we were saying.  It was a late night for him as well, as he quickly replied telling me he received almost as many calls from my investors as his own.

This experience highlights the importance of ongoing, consistent messaging that provide business context.  It also points to the importance of developing relationships with the IROs at customer companies.  After this, I found it useful to periodically touch base and align messaging around customer relationships and businesses with them.  This served all of us well by reducing confusion and the risk of unpleasant surprises.  You may want to consider doing the same if your company depends on a handful of customers or suppliers.

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

Don’t Pass(ive) The Buck

I was having coffee with a newly-minted CFO a few months ago, when he asked, “Our advisors are telling me we need to target passive investors. What do you think about that? How would we even do that?”

I had one of those “Say what?!!” moments. Target passive investors?  Either you’re in or you’re out (of an index).  But then I realized who he had been talking to and why.

So, I explained, “A company of your size and industry is going to have passive investors regardless.  This is good. They form your core shareholder base and don’t take up a lot of your time or call often.”

“However, as essentially permanent investors, they expect boards to actively represent their best interests.  That’s why they place such heavy emphasis on board composition and governance practices.”

I advised him to talk with his general counsel about implementing a governance outreach strategy. With passive investors typically owning (and voting) 25% to 35% of a public company’s outstanding shares, this is increasingly considered a best practice.

Now governance outreach does not have to be a massive undertaking (in non-crisis situations).  The first step is knowing the strengths and weaknesses of your company’s governance principles and practices.  You should also be familiar with the governance priorities of your company’s major investors – many of whom make this information publicly available.  Also, it can be helpful to review the major proxy advisory firms’ guidelines to get a broad sense of key benchmarks, but remember the largest investors have their own independent guidelines and can be influenced.

Next, during the off-season initiate brief introductory calls, establishing points of contact and understanding of investors’ approach and priorities.  Depending on tone of such calls, you can evaluate if offering certain investors meetings or calls with directors is appropriate.  Another option to consider is to ask portfolio managers or analysts at targeted firms to invite their governance contact to attend non-deal roadshow meetings with your CEO.  This is something I did with good effect when leading an outreach campaign several years ago.

Another opportunity to build relationships with governance professionals is to attend the Council of Institutional Investors (CII) conferences.  This will give you the opportunity meet with and understand investor perspectives in a more neutral environment.

These basic steps can create a strong foundation if you’re ever in need of a full-court-press on governance matters. To prioritize your efforts, evaluate your shareholder base in view of the matters at hand, your governance strengths and weaknesses, the quality of your investor relationships and the support you need, then schedule meetings accordingly.  Directors, particularly the lead independent director and relevant committee leaders, should be prepped for these discussions.

When it comes to governance outreach, don’t pass the buck.  In my view, Investor Relations is best positioned to provide context around investor perceptions and behavior and “owns” the investor relationship.  Such insights can help secure the space for boards and management teams to execute their strategies.

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

The Beat Goes On …

The beat goes on … the drums keep pounding rhythms to the brain …
Sonny & Cher, 1967

Yes, the M&A beat goes on.  Worldwide M&A activity totaled $4 trillion in 2018, up 19% versus 2017.  And, with more than three-quarters of corporate and private equity executives anticipating the pace of M&A to accelerate in 2019[i], the M&A drums keep pounding rhythms to the brain.

M&A is exciting.  Almost instantly it seems the company becomes bigger with access to new customers, products, brands, services and markets.  Increased industry dominance can produce opportunities to gain scale, leverage efficiencies and create synergies.  No wonder many bankers, reporters and investors seem to egg-on the process.

However, too often M&A deals don’t reach their full potential.  Sometimes merger objectives aren’t well-thought out, are too narrow in focus or don’t anticipate industry/market changes.  Sometimes integration efforts fall short or cultures don’t mesh.  Sometimes underlying business issues aren’t identified until after close.  So not surprisingly, not everyone is thrilled with M&A.

When M&A is successful, its typically because the acquiring/surviving company recognizes the beat goes on.  In other words, both the buyer and target companies know themselves and bring business competencies that complement and expand upon each other’s capabilities and opportunities. Further, throughout the diligence process (not just during the deal stage), the strategic vision for the union is continuously validated.  Importantly, there’s an ongoing effort to develop, refine and execute an integration plan that balances driving organic growth with achieving cost-cutting synergies.

Given the robust interest in M&A, investors will inevitably ask about M&A strategy. Investor Relations should be prepared to respond while keeping the sound of the beating drums to a dull roar.  Often this means repeatably articulating the company’s broader growth strategy and how M&A may (or may not) fit into that.

To that end, companies should have a M&A framework to provide organizational focus and discipline.  Such a framework should be grounded in strategy and consider questions like:  What are the risks and opportunities of growth via acquisition versus organic growth? What are our strengths and weaknesses and how does an acquisition/divesture address such? What options are most viable in view of our current situation and desired strategic direction?

When the hypothetical becomes real and a deal is announced, Investor Relations should be cognizant of disclosure limitations and work to ensure internal and external messages are aligned.  At best, everything is preliminary until close so when it comes to setting expectations “less is more” should be your mantra.  This is particularly important because not everything gets revealed during the due diligence process and confidentiality agreements may limit what is discoverable until after close.

During this time, think about what your investors will most want to know, what metrics and milestones will be most important for measuring integration progress and merger success, how you will breakout the reporting of same and how your guidance practices will or should change.  Inasmuch as deal structure or size may impact the company’s financial flexibility and go-forward growth strategy, consider how your investor base may change.  For the next 1 – 2 years, your answers to these questions will serve as a roadmap for managing this change because, of course, the beat goes on.

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

[i] Deloitte, The state of the deal – M&A trends 2019

Something in the Air

It all started with a short reply to a National Investor Relations Institute (NIRI) eGroup chatroom just before the holidays.  In the week after this posting, I received a dozen or so calls and emails asking about my experience running an integrated investor relations and corporate communications function a few years ago.  There must of have been something in the air given the variety of companies and industries saying they were thinking about this.

I was little surprised by this interest as investor relations is often siloed within the finance department with limited involvement with other audiences.  This largely reflects the specific information needs of investor audiences.  Yet, the idea of an integrated communications makes perfect sense when you consider the importance of companies speaking with one voice.  Of course, the complexities of the disclosure environment, multitude of information sources and relentlessness of the news cycle are also factors.  Bottomline, everything communicates.

It’s naïve to think what a company says to one audience isn’t heard by another and perceptions aren’t shaped by it.  So integrated and aligned communications are a must.  But this can take many forms, with varying degrees of centralization or coordination based on the company’s industry and product lines, its critical audiences as well as the nature and intensity of the messaging needs and communications channels.

In my case, when due to a company restructuring I assumed leadership for corporate communications, my first step was to define the integrated function’s strategic purpose and functional scope.  This was informed by the company’s broader strategic focus and a prioritization of critical audiences and stakeholders.  We defined our critical audiences as investors, financial and industry/trade media, industry councils/associations, governance/regulatory affairs and our local communities.  A SWOT (strengths, weakness, opportunities, threats) analysis helped define our priorities and pillars for success. As a small industrial materials processing company with little visibility outside our industry and the communities where our facilities were located, combining external-facing communications under one umbrella made sense.

It may be more difficult for consumer-facing, high visibility companies to integrate the functions just given the volume and types of communications and channels involved.  In such cases, I’ve seen a strategic message council approach be effective.  This is where leadership from investor relations, corporate communications, government affairs, marketing and human resources, regularly meet to align strategies, priorities and messages and use that alignment to lead their respective teams accordingly.

Something may be in the air when it comes to combining investor relations and corporate communication, but whether it’s a soft breeze or the strong wind of change only time will tell.

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

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Taking Stock

It always happens at the end of the year – people take stock of the past 12 months and measure what was most important, popular, read or viewed.  Not to miss out, below is Lead-IR’s top 5 blog posts of 2018.

Lead-IR Advisors
Top 5 Most Viewed Blog Posts of 2018

  1. Ahead of the Curve, April 18, 2018
  2. Replay: New Kid in Town, September 26, 2018 (Original post: February 21, 2018)
  3. Face North, October 31, 2018
  4. Long Days, Short Stint, October 10, 2018
  5. Its Personal, Redux, August 1, 2018 (Original post: January 5, 2018)

In reviewing this year’s top posts, three key themes emerged:

Beyond Business Issues
Should CEO’s and companies address public policy, political or social issues? If so, when and how?  In the past, such topics were considered beyond the normal scope of business and companies and CEOs could stay out of the fray.  However, the general public and investors increasingly believe it appropriate for companies take a stand on issues relevant to fostering a healthy business environment. Both the Ahead of the Curve and Face North posts offered perspectives and best practice pointers on doing just that.  The former outlined how Jamie Dimon, Chairman & CEO of JPMorgan Chase discussed public policy issues in his annual letter to shareholders.  The latter highlighted the importance of having a deep understanding of company purpose, values and culture to guide decisions on where when and how to take a stand.  While not in this year’s top 5, the Stay or Go post from early May 2018 also addressed this topic.

C-Suite Transitions
From the sudden passing of Fiat Chrysler’s CEO Sergio Macchione, to Pepsico’s CEO Indra Nooyi’s retirement and the surprise ousting of GE’s former CEO John Flannery, CEO transitions were a hot topic in 2018. So, it’s no wonder readers found It’s Personal, Redux’s discussion of key disclosure considerations related to CEO health matters and Replay: New Kid in Town’s pointers on introducing a new CEO to investors, particularly relevant.  If you’re working with a new CEO, I suggest reading October 2018’s Just Being post and reflecting on what “becoming” a CEO means in the full sense of the word.

Focusing on Tomorrow
Or rather, there’s not enough of it – focusing on the long term, that is.  Everyone and their brother complain about the short-termism prevalent in the markets today.  Yet, as discussed in the Long Days, Short Stint blog post, it seems every solution to counter this is focused on what companies should or shouldn’t do.  Certainly companies can do some things to counter this as suggested in the Give No Quarter post.  But, as outlined in the Easter Bunny blog post, the current market structure is designed to support investors who drive a big chunk of trading today and have short-term investing horizons.

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

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Who’s Got the Power?

The most powerful person in the world is the storyteller.  The storyteller sets the vision, values and agenda of an entire generation that is to come.
                                                            – Steve Jobs

Are you a storyteller?  Can you create a compelling narrative about your company, its strategies and results?  If you’re in investor relations (IR), do you think it even matters?

I know some will say NO – investors are rationale beings and only (expected) results matter.  Others will point to the rise of passive and quant investing strategies or increasing use of big data, analytics and artificial intelligence (AI) to guide investment decisions as evidence a company’s story doesn’t matter.

But, the idea of being data-driven cuts both ways as investors don’t just look at financial results.  For example, some are using nascent AI applications to mine linguistics and behavioral analytics to explain, describe and potentially predict future outcomes or evaluate a speaker’s level of cognitive dissonance or truthfulness.

Then there’s the increased investor scrutiny of environmental, social and governance (ESG) factors.  In my view, this ESG focus is really about investors wanting to know the “how” of a company:  How does the company manage risk (environmental, social or other) … how does the company source/produce/operate and the impacts thereof … how does the company interact with key stakeholders (employees, customers, communities, etc.)?  In short, how does the company conduct itself?

It’s in answering the how that a company’s story is told. When it comes to financial performance, the story puts context around how results are achieved:  Was it great strategy … fabulous marketing or customer relationships … disciplined execution or operating efficiency?

So, in every earnings release and call, investor presentation or roadshow meeting, a story is being told.  With that in mind, here’s some tips:

  • Be clear and concise: Establish context and convey results via effective headlines with supporting bullet points – this is something IR practitioners are well-versed in doing.
  • Master the narrative structure: Most stories have a story arc consisting of a main character who faces a journey or challenge which leads to an outcome. In business, the story arc goes something like a company with a business opportunity/problem executing strategies to address that opportunity/problem which creates operating and financial results.
  • Engage the eyes: A picture is worth a thousand words, or rather graphs, charts and infographics can get your point across with few words.
  • Make connections: Use examples to make your business narrative resonate. Highlight customer benefits of your products, innovations that create new market opportunities or employee initiatives that enhance productivity and efficiency.
  • Build on outcomes: Offer some direction on how the company expects to build on, extend or sustain performance long term in a given environment.

A memorable and credible business story can build confidence in a company, its management and strategies, thereby breaking through the clutter, attracting investor interest and potentially enhancing valuation.  Indeed, storytellers have the power.

Tell me a fact and I’ll learn. Tell me a truth and I’ll believe.
But tell me a story and it will live in my heart forever.
                                                         – Native American Proverb

 

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

Laser Focus

You know that uneasy feeling that gnaws in the back of your head?  Well, I’ve got it bad right now.  I talk with a lot of people and what I’ve been hearing over the last several months has contributed to a growing sense of unease about the future of the investor relations profession.  Of course, the National Investor Relations Institute’s (NIRI) Think Tank survey on the future of investor relations did nothing to allay those worries.

Change is nothing new.  IR has weathered changes and evolved over the years and I believe has come out stronger and more influential as a result.  However, from the rise of private equity, the dearth of IPOs and decline in number of public companies … to the pressures of short-termism and growth of algorithmic/robotic trading … to the impact of MiFid and the secular decline of the sell side … it somehow feels like we are on the cusp of a paradigm change.

Will these changes further elevate IR as a strategic function or will IR become more tactically focused? Anecdotally, I’m hearing companies are upping their focus on financial disclosure, analyst projection models/estimates and capital allocation.  The notion is to focus on the same things analysts and investors do and use the quarterly earnings process as the milepost for driving valuation.

What I’m not hearing is a focus on communicating about company purpose, market opportunities, strategy, operations or reputation – factors that create value – with analysts and investors.  Nor does there appear to be any priority being placed on developing relationships or having a dialogue with analysts and investors.  Maybe this is because this is the easy part and it’s all been done.  Maybe it’s because “soft” subjects are hard.  Maybe it’s because investors aren’t interested.  Maybe its all of this, or none of this.

What worries me is the laser-like focus on the financials may narrow IR’s sphere of influence.  When there’s a matter related to strategy, operations or reputation, will the C-Suite seek counsel from IR?  Will IR have a seat at the table or simply serve as the messenger?  Will this laser-like focus limit IR’s ability to sense a shift in investor perceptions or develop the supportive long-term investor relationships important during challenging times?

I have no crystal ball to answer these questions. IR as a profession has proven resilient in the past and may continue to prove such long into the future.  But as we look ahead, I want to paraphrase something I recently heard: “Facts (i.e., financials) are like bones, but there’s a lot more to life.”

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

Look Who’s Talking … Again

Increasingly, its corporate directors.  That’s a key highlight from a snapshot summary of the National Association of Corporate Director’s (NACD) annual Public Company Governance Survey, which reported that 58% of respondents said a representative from their board(s) met with an institutional investor over the last 12 months.  This is up from 50% reporting same in the prior year.

Driving this is an environment where expectations for transparency and board engagement are much higher.  Also contributing is a recognition among many boards of the proxy voting power of certain institutional investors and their ability to effect governance changes (think majority voting and proxy access).

Shareholder engagement is no longer an event-driven, proxy-related process.  Boards increasingly approach shareholder engagement strategically – as an opportunity to gather constructive input, foster trust and support and dialogue on issues meaningful to the creation or protection of shareholder value.  But, this doesn’t mean boards are involved in day-to-day investor interactions – that responsibility still resides with management.  Rather, boards are exercising more oversight.  For example, boards are looking for more information about the company’s:

  • Governance team: Who is on the team?  Does it have the right set of knowledge, competencies and skills?  Can it effectively represent the board’s view?  Can it articulate the nuances of the board’s perspective vs. the company’s position where applicable?
  • Shareholder monitoring and engagement plans: Who are the company’s top investors and how has this changed or is expected to change?  In view of this, what are the top governance areas of strength or opportunity?  Are any investors (or advisors) more influential than others and should be prioritized?  What is the engagement plan and when does it makes sense for directors to engage directly? (See the post republished below for some thought starters on the latter.)

Shareholder engagement is an opportunity for companies to build better understanding, relationships and alignment with long-term, stable investors.  Forward-thinking boards are embracing this opportunity.


 

LOOK WHO’S TALKING

March 21, 2018

It’s fun to be popular.  Everyone wants to talk to you. Investors big and small with long- and short-term horizons seek opportunities to meet with and speak to company leadership.  Today, even passive investors – index funds, etc. – expect to occasionally engage with companies on relevant issues.

Now, who should do this talking?  Company management.  With, of course, investor relations leading the day-to-day.  However, it’s naïve to think Boards do not or should not talk with investors.  While I believe board-shareholder engagement should be the exception and not the rule, if done for the right reasons with the right people it can be extremely valuable.

To that end, you should have or develop a communications policy that encompasses the potential for board-shareholder engagement.  A well-crafted policy will provide a framework to guide the engagement decision given the specific circumstances and needs of the company.  Let’s start by considering what topics are best addressed by management vs. the board:

Example Management/Board Engagement Topic AllocationDirector-shareholder engagement topics

Next, consider with whom and when board-shareholder engagement makes sense.  Any decision will be a judgement call based on myriads of factors and the specific investor(s) at hand. Things to think about when deciding include the company’s strategies, results and relative performance, the nature of the investor’s issue(s), general investor opinion/perception about the matter(s) as well as the size of the investor’s holdings and influence within the investment community.

Here’s some thoughts for when it comes to the actual meeting or call:

  • Agree to an agenda upfront
  • Select directors for engagement based on board roles or prior experience
  • Prep participating directors on the issue(s), company messages and investor background
  • Provide directors a Reg FD refresher and a brief on company information in the public domain
  • Focus on active listening
  • Consider including a company representative such as the IRO or corporate secretary in meeting but allow for a private conversation for part of the time if requested
  • Capture investor feedback; ensure follow-up as necessary.

Board-shareholder engagement is an opportunity to gather constructive input and engage on issues meaningful to the creation or protection of shareholder value.  Approach the process with an open mind.


 

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

In a Clutch

In a clutch … that is being in a tense, difficult or stressful situation or crisis.  A clutch player is someone who can be counted on to perform (or outperform) in such situations.

Clutch players possess common leadership qualities[1] including:

  • Focus – It’s more than concentration, it’s knowing and staying fixed on the ultimate endgame
  • Discipline – Maintaining your center, avoiding distraction and being rooted in the fundamentals
  • Adaptability – Flexing and responding given the situation, pressure points and vulnerabilities
  • Being Present – Being in the moment and mindful of situational nuances, impacts and context
  • Constant Striving/Fear & Desire as Motivators – Complacency is the enemy of greatness and friend of the mediocre.

Why bring all this up?  Because these qualities are essential to confronting a corporate crisis … when clutch performances are required.  The good news is these qualities can be developed and programs focused on embodied, mindful or centered leadership can help.

But equally, if not more, important to navigating dynamic, chaotic crisis situations is to actually have a crisis plan, know it and practice it.  Crisis management plans need to be an integral part of a company’s enterprise risk management process and should be informed by and evolve with the company’s strategies and risk tolerances.

Now, what does a crisis management program look like?  Most experts indicate such a program should:

CompassIdentify Risks and Priorities:  Its essential to identify key operational and reputational risks, but nearly impossible to anticipate everything. So, establish guiding principles to guide the risk assessment process.  Such principles could be centered around priorities like protecting people (employees, customers and communities), preserving corporate reputation, minimizing operational disruption or preserving assets, etc.

PencilDevelop the Plan:  The crisis plan should include well-crafted decision matrices robust enough to handle an array of contingencies as well as contain escalation protocols, key communications templates and an outline of roles/responsibilities and work flow.

Team tableForm the Team:  The crisis team should encompass a variety of disciplines and expert resources (both internal and external) to guide and execute the response.  The people involved may be different depending on the type of crisis and decision matrices can help identify this.

ArrayPractice the Plan:  Practice enables crisis team members (internal and external) to build relationships and trust with each other.  Whether it’s a table-top simulation or a robust fire drill, practice will make you faster and nimbler when the need is real. It can also help identify areas where additional training, support or resources may be needed to reduce risk.

Danger signKnow How to Deploy: Work the plan. Gather information and stay focused on guiding principles.  Leverage the plan’s communication process and regularly share information as appropriate with key internal and external stakeholders.  After an event, let your guiding principles prioritize an integrated recovery plan.

Magnifying GlassReflection: After a crisis, conduct a post-mortem of root causes and what went well and what didn’t during the response. Reflect on underlying factors and take action to correct, mitigate, improve. Communicate key findings to stakeholders such as employees, customers, suppliers, communities or regulators as appropriate.

In a clutch, investor relations officers will be talking with investors nearly non-stop during a crisis.  So, think through the best ways to communicate with investors, who the key influencers are and who may need to be prioritized for outreach whether by you, your management team or board post-crisis.

Other Practical Tips for IROs:

  • Crisises aren’t always a surprise. Warning signs often abound. Develop a bullet-point outline for top of mind issues. Yes, there will be holes and you can’t anticipate everything, but it will be faster than starting from scratch.
  • Keep a key contact list with you – at home, the office, your briefcase. Even better, save a PDF copy to your phone, tablet and laptop – you’ll almost always have one of these with you.
  • Be prepared to handle a crisis remotely. Develop a process checklist or reference sheet (see sample) that contains emergency contact information and login IDs for key vendors such as your newswire service. Again, keep a copy with you and on your electronic devices.

 

Lisa Ciota
President/Founder
Lead-IR Advisors, Inc.

[1] Sullivan, P., Clutch: Why Some People Excel Under Pressure and Others Don’t.