On the evidence of many corporations around the world, public relations and investor relations are characterized as oil and water. Which is which depends on the viewpoint of the observer, but it’s all too often accepted that the two cannot be safely mixed together. The exact reasoning varies but it is often linked to a finance department fear of PR; and a lack of understanding among PR folk as to what the figures are all about. Getting the two to mix is often a troublesome task.
And yet there are a good few companies which, through choice and necessity, decide to bring the public relations and investor relations functions together. In Asia the role of in-house investor relations practitioner is fairly new – never mind a combination of the role with public relations. But in some instances, the combination of the two is tangible recognition by a company of the growing importance of corporate communications generally.
Chuck Newton, managing director of corporate relations at DBS in Singapore, is now combining these two disciplines at south east Asia’s largest bank. He doesn’t see any inherent conflict at all between the public relations and investor relations functions – there just has to be a good understanding in each as to what the other corporate communications function is trying to achieve.
‘The professionals doing the job have to be able to walk both sides of the street and understand the needs of the financial community as well as the other audiences that traditionally fall under the public relations umbrella,’ he comments. ‘In fact it’s far better to have the two in one place because it enables a company to ensure that it is giving consistent messages to all audiences.’
There is an element of optimism on Newton’s part because DBS is still in the process of making the links between the two disciplines and he has only relatively recently taken up the new post (see Investor Relations, December 1999). ‘We’re really taking responsibility for making sure that what I like to call the formal communications are consistent with what my people are saying on the telephone so that we are seen to be speaking with one voice.’
Right look
For Kate Sturgis-Burnham at Summit Technology in Massachussets the demands of both media and clients make it straight-forward common sense to combine the public relations function with investor relations. She is director of investor relations and corporate communications at a company which designs and manufactures eye-correction technology. Before her arrival, hot foot from Reebok, there was little thought given to marketing support or public relations programs. In the past, when such important news as another approval from the US Food and Drug Administration emerged, the response from the company was pretty low-key.
‘I was hired specifically to get the company focused on all the communications initiatives that are necessary. Investor relations was one of the primary concerns but the message that we deliver to the financial community about our product and how the business is doing, is also important to the general consumer. Having it together is, strategically-speaking, a very smart idea,’ she explains.
For Summit’s particular industry, there can be no conflict of interest between the need to promote the company’s products to its customers and the company’s stock to investors; indeed, there are a number of common issues which are of interest to all audiences. ‘Having the best technology is critical, so all the analysts who cover this business know technology is key because the doctors want the best. The message – whether we are talking to the financial community or making sure that the public knows – has to be the same.’
Sturgis-Burnham has been at Summit for around 18 months and she believes that the effect of combining these two roles has been quite significant. When she started, the stock was $6. It has since risen, and at one point reached $29. Now it’s hovering around $17. From the doldrums of $3, the company can safely claim to have achieved a triumphant turnaround in its fortunes.
‘Having the investor relations and public relations roles together affords the opportunity to raise the profile of the company and our products and our strategy to drive the business. We always communicate to all audiences simultaneously. When we do an earnings announcement, for example, we work with the media to make sure that they get our announcement in their hands; but we also set up a teleconference to talk to the financial community and we include the business and financial media in the calls,’ she adds.
Work with the media is deliberately proactive. For example, Sturgis-Burnham recently helped journalists researching a corrective eye treatment story for Time magazine by providing substantial information and finding people for the publication to speak to. The net result was an article putting the company ‘in a better light’ than a west coast competitor who has greater market share. Fortune magazine also carried a story recently and this was a result of building a good rapport with the journalist over a number of months.
‘At investment conferences it’s a wonderful thing to be able to make reference to these articles,’ she explains. ‘To show the audience that this treatment is becoming very mainstream.’
Limited resource
Hilary Reid-Evans, corporate communications director at UK-based biotech Xenova, has been in her role for the past three years and – being in a majority of one – it’s also been a matter of making a virtue out of necessity. ‘The issue I face in a small company is making most effective use of a very limited resource,’ she explains. ‘However, in this particular situation the two disciplines are highly complementary and must operate in tandem, because if we are engaged in a typical PR activity – such as producing a press release and talking to a journalist – it may well be that a series of investor visits have also been set up. You have to be absolutely crystal clear that the messages you are giving out to both audiences are the same and are attuned to one another in terms of the tone of those messages.’
Reid-Evans wears both public relations and investor relations hats at all times and she is quite comfortable with switching her attention to suit different audience needs. The company reports quarterly, and she spends a lot of her time coordinating the communication of this information. There is also a great deal of emphasis on clinical trials data. The tensions which tend to arise in such a company often concern the precise timing of announcements about particular types of trial, because this can drive valuations.
‘Of the two, it’s investor relations which leads PR because we are trying to maximize shareholder value,’ considers Reid-Evans. ‘Part of that is about optimizing the share price performance by looking very carefully at the structure of the register and the exact timing of announcements.’
Newton, Sturgis-Burnham and Reid-Evans all have different reporting lines into their respective boards. But there are also many companies whose senior management team retains responsibility for communications with a number of audiences. Small-cap Swedish computer company, Trio, falls into this group. Its chief financial officer, Kent Soderstrom, is in charge of both the investor relations and public relations functions.
Since listing in December 1998, Trio’s relationship with the Swedish investment community has been fairly low-key but Soderstrom expects to be spending much more time with analysts in the future to give them a deeper and more detailed understanding of the company. He also hopes to attract more institutional shareholders to reduce the volatility of the company’s stock price.
His desire to increase the number of contacts with the investment community is matched by the need to inform the media about corporate developments. Usually he has to give comments or additional information to four or five journalists whenever a press release is issued.
‘I see no conflict of interest between talking to the press and talking to analysts. They are each treated the same. In fact, this is really the ‘guideline’ which I always adhere to: treat both sides the same way.’
Consistent Colt
In London, meanwhile, Colt Telecom’s director of investor relations, John Doherty, looks after all aspects of financial public relations – including all of the influential major media outlets – but he leaves the marketing communications about the company’s products and services down to his regional colleagues elsewhere in the organization.
Colt has a market capitalization of around £9 bn and is quoted on the London Stock Exchange and on Nasdaq. It operates in nine European countries and provides voice, data and internet services for business customers. Doherty concedes that there are ‘always gray areas’ between the PR he does and that conducted by his marketing communications colleagues, but this has never posed any problem for the organization.
‘The rationale behind the split is that analysts, investors and business journalists all speak and interact with one another,’ notes Doherty. ‘There’s a common audience and so my role is to ensure that they have one single point of contact, so that they get a truly consistent view about exactly what Colt is all about.’
Previously the director of investor relations at Cable & Wireless plc, where the two roles were completely separate, Doherty feels that his present role has helped him to guarantee a greater consistency of message. When there is more than one person involved in the communications process it can ‘sometimes come out slightly differently. I measure its success by the depth of knowledge and the consistency of the coverage that you hear about from the various audiences,’ he adds. ‘There isn’t really one big issue which I can point to as being a particular success, it has just been a case of surely but steadily, and in a relatively low-key way, making sure that the relevant people are properly educated about what the company’s all about.’
Global question
It appears that all over the world, the question of whether or not to combine the two disciplines is one which continues to be debated. According to Ed Belak, US managing partner at National Public Relations in New York, there’s only a 50-50 chance of finding the two combined in any medium or large-cap company in the States.
He has had involvement with the public relations and investor relations disciplines for 20 years and believes that the statistics should be far more flattering. ‘Having a senior person as the ombudsman for communications in the corporate area actually helps to reduce tension between the traditional public relations and investor relations function if that person is given enough authority,’ he explains. ‘Basically this person explains, polices, mandates, educates and informs his more tunnel-vision subordinates about the broader issues of corporate positioning and corporate reputation.’ The public relations and investor relations practitioners are ‘all brethren in the same area’ so it’s nonsensical to keep the two separate,’ he says.
‘We have put our foot in the other guy’s shoes because the net objective here is maintaining the corporate reputation. Without it, good earnings aren’t as much appreciated and bad earnings are really castigated much more severely.’
Belak would clearly not agree that the two functions are as incompatible as oil and water, but he might well accept the analogy of oil and vinegar. Well measured and prepared by a steady hand, the two elements might be combined in order to provide the appropriate dressing for universal consumption.
