A company's shareholders are engaged with its performance in a number of ways. While the business's financial performance might be seen as the sole focus for this relationship, there are other concerns that can have an effect on investor relations.
Along with the aforementioned financial performance, investors expect a degree of stability at the executive level of a company, and unexpected changes can shake confidence in a company's ability to grow.
Executive recruitment in particular has a noticeable influence on the company's perception, both for the general public and investors, with these people usually a visible figurehead for an organisation.
Recent events illustrate executive influence
The way CEOs perform their role has a significant effect on a company's public perception and financial performance. This was illustrated by a recent example where a CEO's departure saw their former company's share price take a negative turn.
According to an article published by the Sydney Morning Herald, Genworth CEO Ellie Comerford's resignation came at a time when the company was already struggling financially.
Ross Curran, an insurance analyst at Commonwealth Bank who was quoted in the article believes the decision will create further challenges for Genworth, straining investor relations further.
"We expect the market to react negatively to the group losing what we consider a talented executive a little over a year since the group listed," he said.
What type of communication is best for investors?
The above example provides a number of valuable insights into the communications that are valued by investors. In Genworth's case, these shareholders weren't informed of the CEO's departure as early as they desired, shaking confidence in the firm.
However, this is only one element of the information investors are seeking. According to a report from McKinsey & Company, executives need to prepare unique communication strategies for their investors if they want to inspire confidence.
The organisation found there is a notable difference to the way shareholders can be approached. Because these individuals have a financial interest in the company, there is room for reports to be more complex than communications aimed at the general public.
A portfolio manager McKinsey & Company interviewed highlighted that transparency is incredibly valuable to investors.
"I do want management to look me in the eye when they talk about their performance," the investor said. "If they avoid a discussion or explanation, we will not invest, no matter how attractive the numbers look."
The Genworth example reveals that, while financial performance is a key feature of the investor relationship, there are also other dimensions that should be factored into a communication strategy.