Who’s Your Daddy?

"...behind every successful company is a Sugar Daddy handing out the cash."

I must admit that I was not too excited about Chapter 5, “Investor Relations” in Guth and Marsh’s Adventures in Public Relations. Something about the words “investors” and “shareholders” lull me to sleep. But alas, PR professionals have to face the facts; behind every successful company is a Sugar Daddy handing out the cash.

Investor Relations is a seemingly complicated topic, but it ultimately boils down to full disclosure and honesty. Money is the backbone of investor relations–making this relationship even more sensitive than those with other publics. Some of the greatest PR blunders are a direct result of poor communication between a company and its investors.

Enron is a perfect example of investor relations gone awry. The major energy and commodities company provided false information about the company’s financial condition in an attempt to keep investors. When the company filed for bankruptcy in 2001, however, the truth was revealed.

Investors and shareholders were furious about the deceptive practices and took legal action. Enron’s top executives took the brunt of the punishment, including Mark Koenig, who had to serve an 18-month sentence in federal prison. Can somebody get this guy a box of Kleenex?

So how does a company avoid Enron’s and poor Mr. Koenig’s fate?

A recent article in CFO World offers some smart tips on how to maintain relationships and assure stability in a floundering global economy. The article suggests that a C-suite remain a prominent figure when communicating with investors. This gives the information more credibility and will help quell any concerns.

CFO World also suggests establishing a succinct message from the start and sticking to it. I think this is a necessary step in all PR campaigns. Consistent and stable communications convey a sense of reliability. It is important to build this foundation of trust long before any form of crisis occurs. Many professionals make the mistake of waiting until it is too late to form a coherent direction for their company.

The book explains how PR professionals are becoming less involved with investor relations as it shifts to other areas of a company. Should PR professionals step aside and let someone else take over? How many people does it take to make investors happy?

I think investor relations should be a three person job; one person who understands the numbers (Bill from accounting), another who can translate those stats to the general public (PR Guru, duh), and finally a C-suite who can give his/her stamp of approval. A trifecta such as this would not only provide honest information, but offer it in a palatable and satisfying manner for the resident Sugar Daddy.

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