Category Archives: Investor Relations

Rinse and Repeat

"...or else the whole thing will come undone."

I’ve diverged from my usual corny metaphors these last few blog posts, but I’d like to return to my literary roots to discuss crisis communications.

WARNING: Extended Metaphor to Follow

So you have this wool sweater, right? And it’s like your favorite article of clothing, but the knit pattern poses a serious concern. At any given moment you could get caught on something and cause a snag. So what do you do? Obviously you aren’t going to put it on and sit in bed all day, surrounded by the safety of your blankets.

That would be a bit extreme, but chances are you are going to avoid mosh pits when wearing it. You plan to wear it on a nice calm day with lots of book reading, until—uh-oh! You’re friend’s zipper gets caught on the threads when you are hugging. Now you have a giant loop hanging from the sleeve.

You must act quickly and tend to the snag, or else the whole thing will unravel, leaving a gaping hole for all to see.

This, my friend, is crisis communication. It’s all about awareness, preparedness, and action. PR professionals, and all members of a company, must be vigilant before, during, and after a crisis to achieve effective communications.

All to often, a company does not have a crisis plan in place. A lack of crisis planning can have disastrous results. Preparation can greatly decrease the magnitude of a crisis and make it easier to handle. It’s not rocket science folks, but people make mistakes in crisis management every day.

I will admit, that not all crises can be avoided or even predicted. Skittles, for example, is in the early stages of a PR crisis of a very unique nature. Both the New York Times and the blog Spin Sucks have provided coverage on the issue. According to the New York Times, “Trayvon Martin, the teenager who was shot and killed by a crime watch volunteer in Sanford, Fla., last month [was] carrying only a packet of the candy and a bottle of iced tea.”

Since the controversial murder, Skittles’ sales have skyrocketed and the candy has become a symbol for supporters of Trayvon. Some media outlets and consumers are calling Skittles out on the profits made from the tragedy. They feel the candy’s slogan “Taste the Rainbow,” gives the company a perfect opportunity to support racial equality.

Instead. Skittles has only released a broad statement offering their condolences to the Martin family. And in this situation, I think they have done the right thing—for now. If the pressure for a corporate donation continues to build, Skittles’ will be forced to address the public. I am not saying they should donate, but I do think they should at least make a statement.

I don’t think they should concede to the public’s pressure—they did not encourage purchase of their products for the cause—it happened organically. I do, however, think they could highlight other ways people can contribute to the Martin family.

It may not be possible to predict all tragedies, but organizations can still prepare on a broad level. An overall understanding of risk factors can help avoid crises or at the very least make them easier to manage. The lessons are right there in my sweater story:

  • Avoid Mosh Pits = Avoid Risky Situations
  • Plan = Uh…Plan
  • Uh-oh! = Recognize Crisis
  • Tend to Issue or Leave a Gaping Hole = Action
  • Rinse and Repeat = Apply in the Future

Whatever you do, don’t ignore the crisis, or else the whole thing will come undone!

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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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