Investors undertake risks on the basis of a company’s capacity of attaining goals and objectives. In the light of the ongoing global crisis, the importance of corporate management has turned out to be extremely crucial in the implementation and handling of plans, access control, and proper communication between the investors and the company.
Under the critical circumstances of the coronavirus outbreak or other past examples like the 9/11 or mortgage crisis, traditional guidelines of communications are rendered paltry. Investors also face the same disadvantages under such circumstances that in-turn pressurizes the management and the investor relations team of the company to make viable changes in the area of unhindered information supply.
Investors of companies that are facing crisis focus on viability. Whether the company can accumulate a certain capital to continue their operations leads to the emphasis on metrics like debt maturities, cash-on-hand, cash flow, burn rate, alternate options in finance, covenant triggers and more along with government programs which usually take a backseat during other times of a fiscal year.
Both exponential increase and decrease in a business’s revenue directly depend on cash flow. As a result, during such times, companies and their management teams should be in a position to explain plans of liquidity, financial cutbacks, funding strategies, and more. IR teams, on the other hand, should shoulder the responsibility to inculcate strategies ensuring an eventual recovery of the company.
The following focal points should come in while reviewing IR communication plans in the backdrop of a global crisis:
• Accessing a Situation Frequently
The extant state of operations within the company should be the main focus of the review. From operational aspects to continuity plans, everything should be minutely measured and reviewed. Protection and management of employees, clients, and partners and the efficiency of sale, supply, and distribution framework, everything should be a part of the internal review.
Short-term needs must be put together in a chain to pave the way for long-term planning. Disruption can increase sales of certain businesses. Depending on the current state of affairs, the plan for IR communications should be strategized and implemented.
• Planning
The communications strategy should be a unanimous decision by the management and IR teams. Only do your part which you can control without external influences as variables and factors in a company can disrupt the entire plan. Environmental considerations should be another important point in managing a situation of crisis. Plans should be executed right away because of the unstable, volatile market. Timing is another factor.
Many companies issue earnings releases earlier so that the market can get accustomed to the new content. Some calls are also going into long hours to eradicate any opportunity of miscommunication across to the analysts. Live calls are being discouraged by many since the impact does not hold well under the currents of a health crisis. These diverse options are projected at companies with different requirements and situations. That is why planning is necessary before any practical step is taken.
• Guidance
The decision of withdrawing or suspending guidance depends on the state of the company and its uncertainties that can wage a significant amount of danger in the future. If such a decision is taken, be prepared to explain the various windows of opportunity and unpredictability that paved the way for the decision.
Investors must also be educated about the various indicators during the course of the business’s restoration to normal circumstances. Open dialogue before the investors is another important tip. Overall, the IR team should be participating in these measures the whole time.
• Crafting a Message
The message that you want to send out should depend on the circumstantial state of the business and the decisions that were taken during planning. In simple words, transparency and sagacity should be in balance. Measurement is another aspect because, under an unprecedented crisis, surprises are a very common interfering factor.
Other areas that should be considered in the addressing may include expense control strategies, metrics of operating expenditure decisions, metrics for recovery, and the future the recovery holds. Test cases must be studies and conclusions should be drawn and presented accordingly.
• Technology in Communication
In this day and age, technology has bridged the gap of communication and is an advantageous point during a crisis. Try maintaining an open dialogue with the investors through virtual and digital options allowing the bidirectional flow of information. Phone and video conferences through phones, computers, and other electronic devices act as mediums of communication.
However, before the implementation, testing the technology is a must so that the management team does not suffer any technical hindrance during remote calls. Not every stakeholder will necessarily attend the call together. So making sure that the understanding of the connection, device, and application is proper on both sides.
• Maintain Your Side
A situation of crisis often exposes a business or a company to the opportunistic actions of stakeholders. Always be wary of the words being said and try to understand any apparent treats or motives. Investors have a way of speaking in riddles. So make sure to understand where a statement is being made out of genuine interest or curiosity or there is a request to speak with the management. Learn about their background, history, and strategic corporate ideas.
Also, make sure that proper review of corporate defenses of the company is done along with communication strategies so that the right answers can be conveyed during a moment of heated activism between parties.
Although the above plans should be the main focus, envisioning recovery is extremely crucial. Always consider the implications of your planning because after the crisis eventually wears out, your actions during this time will be put under scrutiny. If proper planning is done and the focus is intact, your company will definitely emerge victorious at the end of it all.
