Megan Hjulfors, ARC Resources Ltd.
In an unpredictable world, change is something we can rely on. As IR practitioners, it is our job to communicate important changes about our companies to shareholders. Whether your organization is facing change in the form of a merger or acquisition, leadership or strategic direction, how the event is communicated can influence how the market reacts to it. It should be the goal of the IR department to help shareholders understand the scope and scale of the change as well as how it will affect the business and direction of the company. As in all communications during an organizational change, clear, direct and transparent communication is essential in building investor confidence in the change itself and in management’s ability to lead through the transition. Social media can effectively augment traditional methods of communication to present a message in a compelling and strategic way. Here’s a look at how social media can be used to humanize, reinforce and broaden the message.
Humanize the Message
By nature, social media is a personal and engaging medium. Its ability to enable connection on a more personal level can be extremely advantageous in situations such as the introduction of new management or dealing with potentially contentious change where investor confidence in management is paramount. Strategies like a video message or interactive Q&A sessions can go a long way in building management credibility, as they showcases management’s expertise and can provide greater explanation regarding changes taking place. Additionally, corporate video allows many investors who may not have the opportunity to sit down with management to hear people speak and gain a sense of what kind of leaders a company has.
Another advantage of social media in communicating change is its capacity to create dialogue. Although this is often scary territory for IROs, by showing you are open to publicly engage in dialogue and answer questions you demonstrate conviction in your decisions, and that you value the concerns and opinions of your shareholders. A company can have a bulletproof strategic plan, but if the Street does not believe in management’s ability to execute, that plan may be undermined.
Reinforce the Message
One of the major benefits of social media is its capacity to reinforce and expand the primary message. Perhaps there are areas of the change that you feel the market is not recognizing and should be. Social media could be used to highlight such topics and provide a more detailed discussion of key facts. One approach could be to create a FAQ section on the corporate website and link to it through related posts on Facebook and Twitter. In this way, social media can help take the words off the pages of the news release and put them in context in a controlled and well thought-out manner.
Active use of social media throughout a transition aids IR teams to be more nimble communicators. Not only does social media help broadcast the primary message, but monitoring sites such as Twitter, Stocktwits or investor blogs can help IR readily identify rumours or misinformation and take appropriate action. Social media provides a tool for a fast response in such cases, helping to ensure the dialogue stays focused on the right information and ultimately quell rumours before they become an issue.
Broaden the Message
Reaching broader audiences and packaging the message to suit different investor demographics is another advantage of social media. Most companies have a diverse investor base and we know that (in most cases) the way an 80-year-old accesses information is different from the tools used by a 30-year-old. By thoughtfully expanding communications networks, the IRO is providing options for how information can be digested. Expanding platforms builds inclusivity and accessibility across the investor base.
Additionally, social media gives IR teams a way of taking control of the message beyond the initial announcement. This encompasses the period when crucial opinions are often formed. In many cases, the nature of the change communicated may be slow or multidimensional; therefore, supplementing the initial announcement with additional details can help a company better explain the transition, as well as manage investor perceptions. Similarly, for changes that unfold over time, social media can be used to provide relevant updates on the situation.
During periods of organizational change, stepping beyond traditional disclosure and getting social with shareholders can assist in building management credibility, gaining understanding regarding the transition and why it matters, as well as reaching a broader audience. The ultimate litmus test of IR communication during an organizational change is the team’s ability to anticipate, understand and address shareholders concerns. Strategic use of social media can assist in delivering on all three.
Megan Hjulfors is Investor Relations Advisor at ARC Resources Ltd. in Calgary.