Posts Tagged ‘Trust’

Investor relations for the USA?

August 8, 2011

The President has pulled into the lead, ahead of a three-way tie among the Treasury secretary, “Other” (write-ins Ben BernankePaul Volcker, Bill Clinton and “Someone who’s fluent in Chinese“) and “Oh, never mind!” What do you think?

Not a political comment … just a little comic relief amid wild days in the markets.

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Want respect? Get strategic!

June 14, 2011

To gain a seat at the table with senior management, investor relations people must talk their way into helping their companies formulate strategy, George Barrett, chairman and CEO of Cardinal Health, told several hundred IROs today in a keynote address at the 2011 NIRI Annual Conference in Orlando.

“I really do feel that you’ve got to be a part of the strategy process. It’s very difficult for you to just be a voice for it. You need to feel it in your bones,” Barrett said. He urged IROs to “assert yourself,” perhaps by suggesting to the CEO that you can better communicate strategy if you sit in on the team formulating it.

“I view IR as an extension of my ears and my eyes, and this requires strategic fluency,” said Barrett, who joined Cardinal in 2008. “Investor relations must serve as a strategic partner, not just a voice to the Street.”

Barrett said he looks to Cardinal IRO and Senior VP Sally Curley to frame the context for company strategy, convey investors’ perspectives internally to management, and help separate the noise in the market from what’s important to the company.

One question some investors love to ask is “What keeps you up at night?” As CEO of a multifaceted $99 billion healthcare company that distributes pharmaceuticals, medical equipment and other products, Barrett tells it straight …

Here’s the real answer: pretty much everything.

And that’s true of a good IRO, as well.

© 2011 Johnson Strategic Communications Inc.

Raising your profile as an IRO

June 10, 2011

Gaining access to the C-suite is critical for investor relations professionals, both to know what we need to know about the company for effective communication with investors – and to build personal success in our own careers – according to NIRI‘s June/July 2011 issue of IR Update.

The tips and ideas on raising your professional profile apply equally to IROs working in-house and consultants helping from the outside. Pick up your copy from NIRI and read “How Suite It is” (so far, the piece hasn’t appeared online).

Three qualities stand out to me among the several offered as keys to the C-suite:

Contribution. Several IROs and other execs say the key to gaining access to the corner office is to contribute to the business – in more than one way. Beyond doing your IR job well (which is fundamental), get involved with people and projects across various functions that are building value for the company.

Ruth Cotter, VP of IR for Advanced Micro Devices, urges IROs to be proactive:

At that level within the corporate world, they’re not looking for people waiting to be asked to do something. … Look beyond investor relations to garner the attention of your CEO and CFO.

Taking on a formal role in corporate strategy, business development or finance may be a remote aspiration for IROs in large, hierarchical companies. But look around. Often an IR person can informally volunteer to help people in other functions or serve on project teams that reach further into the business. Word gets around, and management recognizes contributions.

Courage. Jeff Henderson, CFO of Cardinal Health, says IR people can earn respect from their CFOs and CEOs by displaying the courage of their convictions:

Perhaps more than most positions in the organization, the IRO must have a certain level of courage – the courage to disagree with senior leaders and challenge their thinking and to say no to constituents at the appropriate time.

IR people can be confident in bringing investors’ feedback to management -after all, saying what will or won’t fly with the owners ought to carry some weight. In addition, the IR professional often brings counsel based on experience and training in communication skills more specific to IR than to the CEO or CFO’s backgrounds.

Credibility. This one, admittedly, is circular. IROs need access to the corner office to build credibility with investors. And IROs need to earn respect among investors to be credible with CEOs and CFOs – because word gets back on how IR is doing.

Charles Strauzer, an independent small cap analyst, suggests IROs have a heart-to-heart talk with their CEOs if they’re not getting ample access. If an IR person has to say “I don’t know” too often, he says, the IRO loses credibility:

Credibility comes from IROs’ access and their willingness to communicate. If they can’t get the access and information, they can’t communicate, and they won’t get the credibility.

A little self-evaluation is a good thing for the IR professional. Do I contribute to the business? Do I have the courage to speak my convictions? Have I built credibility with my main stakeholders, internally and externally? How can I get there?

Recently I heard an institutional investor ask a CEO on a conference call for a self-evaluation of his performance after one year on the job. Then the investor asked the Chairman for his assessment of the CEO and his team. An interesting – and positive – discussion ensued.

Comparing where we are today with where we need to be is how we grow.

© 2011 Johnson Strategic Communications Inc.

We’re Goldman Sachs. Trust us.

April 19, 2010

The Securities and Exchange Commission lawsuit against Goldman Sachs strikes deeply at the issue of trust in the capital markets. Both the firm and the markets as a whole suffered yet another blow in the SEC suit. And it will not be the last.

My Monday-morning question on this latest Wall Street scandal: If you managed billions of dollars for a big pension fund or cash-rich Asian or Middle Eastern government, what’s your reaction the next time a Goldman Sachs institutional rep comes in with a deal that can’t miss? Attractive yield, triple-A rating, assets assembled by the smartest guys on Wall Street, selected just for you?

Well, you will think twice. You’ll remember caveat emptor. You will wonder what toxic dregs the packagers of this deal have chosen to sell to you – and whether they’ve already lined up short sellers to bet against you. Maybe the shorts actually designed the deal. You will think about i-bankers’ commissions and bonuses.

You will not trust.

This is the upshot of the financial crisis, particularly the episodes when someone has failed to disclose what later proved important – when transparency has been lacking and people we assumed were trustworthy proved not to be.

The “Heard on the Street” column in today’s Wall Street Journal makes this point about trust waning in the marketplace. It goes on to note that, beyond the details of the 2007 CDO sale, Goldman Sachs did not disclose the SEC subpoenas in August 2008 or the July 2009 Wells notice of a potential SEC enforcement action. Were these items not material, not worthy of disclosing to Goldman Sachs shareholders? When the suit became public Friday, shareholders lost $12 billion.

I won’t try to dissect the controversy over who knew what about the original CDO. Goldman says it did nothing wrong, the investors were sophisticated and should have known another client was betting on the failure of those securities. Maybe caveat emptor is always the rule. Maybe Goldman is just like everyone else, hustling to make a buck (or a billion).

What I will say is that the financial crisis – and the ongoing collapse of trust in capital markets – should drive every company to rethink what it values.

In investor relations, we understand how valuable it is for a company to have earned the confidence of the capital markets. Trust is a long time coming – built by doing what you say, being open, disclosing problems, addressing issues head-on, underpromising and overdelivering, and doing it over and over – for years.

Trust is lost in a moment.

To be clear, the SEC isn’t the one that destroyed trust in this case. Goldman Sachs, if in fact it assembled the junk of the market for hedge funds that were betting against that junk – and then peddled those deals as jewels – destroyed trust.

The pundits think the SEC’s slap at Goldman Sachs will add momentum to the push in Congress for tougher regulation of Wall Street. No doubt. Ever since the market’s collapse in 2008, “transparency” has become the popular buzzword.

In my experience, trust isn’t legislated. Transparency doesn’t come about because lawyers cite chapter and verse of some law, and companies say well, OK. The laws cited in the SEC complaint against Goldman have been on the books all along.

Rather, trust grows out of an impulse for honesty among people making decisions. In investor communication, trust is built upon CEOs, CFOs and IROs asking what information matters, what do investors want to know? What do we know that the investors need to know in order to make informed decisions? And acting upon it.

Every company going into the capital markets now lives with the loss of trust created by failures of transparency over the years. We must rebuild, step by step.

The job of IR is, above all, to provide the transparency that leads to that trust.

What’s your take on Goldman Sachs, transparency – or regulatory reform?

© 2010 Johnson Strategic Communications Inc.

The rising value of trust

August 11, 2009

As the pace of change accelerates – economically, culturally, personally – people are being overwhelmed with too much information to fully process, authors Tom Hayes and Michael Malone opine in a Wall Street Journal commentary on August 10, 2009. And that overload, they say, places a premium on the value of trusted sources:

Without the luxury of time, trust will be the new currency of our times, whether in news sources, economic systems, political figures, even spiritual leaders. As change accelerates, it will remain one true constant.

We should add investment information to the spheres of life where we’re in need of trust. In a time when credibility in the markets has been bruised, we might ponder the question, How can investor relations professionals enhance the quality of disclosure and news flow to create and sustain trust in our companies?