Whole Investor Relations – Allowing Your Company’s Culture to Show
May 4, 2011
I recently had the pleasure of speaking to the Austin chapter of the National Investor Relations Institute about the intersection between academic theory as taught in business school and the real life practice of investor relations.
It is perhaps my favorite topic to speak about. I am fully convinced that there are quite a number of disciplines – finance, capital markets, marketing and communications that get taught in a business school, but are often not well understood in an investor relations context.
Prior to my talk I had the opportunity to chat with the investor relations officer for Whole Foods, which is headquartered in Austin, Texas.
When I returned home, as I often do when I meet a company representative, I took the opportunity to check out the Whole Foods investor relations site. I must say that I was impressed by what I saw.
There are a number of things that a company investor relations site is supposed to do. First, of course, it must convey the required information to investors. Most companies do this, with varying degrees of success. That success is mostly predicated upon how clear and compelling the data is and how well organized the site is. I’ve spent quite a bit of time and energy writing about how to do this effectively on this site.
Another thing that sites can, but rarely, do, is to give the reader a sense of what underpins the company; the corporate sense of identity or culture that gets a diverse set of individuals to work towards a common goal. This requires that the company go beyond the standard disclosure requirements and talk about itself in a way that describes how they think about their business in more than financial terms. This is where the Whole Foods site stands out.
Set forth below is a screen shot of Whole Foods main investor relations page. There are a number of things on the page that I think are well done, such as a link to Conference Call Scripts, a section on Beyond the Numbers, a link to Interactive Data and links to Industry Resources. However, what I found compelling about the page is that it leads with a link to the company mission page and at the bottom of the page has links to Product Quality Standards, a number of blogs and values statements. After reading the page and following links of interest, one clearly has an understanding of the culture that drives Whole Foods and insights into how they do business. More companies should be as forthcoming.
Click to see a bigger image
What Makes for Effective Investor Relations Sites? Part 42: Periodically Hit the Refresh Button
March 31, 2011
Every now and again, something happens that drives home to me generational differences. Usually, I wind up feeling really old when they occur, and just as usually it is my children that make me feel that way. And trust me, they are merciless in reminding me that I am no longer the slim, dark haired go-getter I remain in my mind’s eye.
Today, however, I was brought up short by one of my students. We were discussing a case in class and how to improve a company’s visibility with investors when one of my students suggested that one thing the company could do was to improve its web site. As the case occurred in 1993, I suggested to my student that most companies did not have web sites back then. She looked at me as if I were from Mars. The concept of a company not having a web site was utterly foreign to her.
Generational differences are fun to poke fun at, but I bring this up to make a slightly different point. That is, things can go from being considered an uncommon luxury to being to commonplace and essential in a very short period of time. So it is with investor relations web sites. Those of us that began our careers before the growth of the world wide web tend to think of such sites as adjuncts to ‘real’ information, which comes on pieces of paper or by talking to somebody. Consequently, the web site is often pushed down the chain of command as almost a clerical function or it is outsourced and forgotten about. Either way, the information content tends to languish.
However, if you have almost always relied upon the internet to feed you data, it’s your first default option to get information and it’s sure real to you. Everyone below the age of 25 that I’ve talked to feels this way. And these will be the analysts and portfolio managers of tomorrow.
So today’s thought on how to make your investor relations web site more effective: to look at the information you are providing to investors on your site with a critical eye at least once a year. The scope and pace of change on the internet is such that good companies have to regularly take a fresh set of eyes to the information they are providing to investors to make sure they are meeting the expectations of internet savvy younger investors.
And trust me, they’re getting younger every day (or at least it sure looks that way to me).
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What Makes for Effective Investor Relations Sites? Part 41: Dealing With Shareholders’ Frequently Asked Questions
March 14, 2011
In the old days, before the internet, investor relations departments operated with the telephone and paper based communications. (You remember getting letters with stamps on them, don’t you?)
If you were a large corporation with a significant shareholder base, this meant that at certain times during the year, the volume of phone calls and letters would spike. Usually these increases would be around the issuance of dividend checks (When are they coming? Why haven’t I received mine? How do I replace a lost check?), and the annual general meeting (When is it? Where is it? Can my Aunt Sophie come too?), but certain other types of calls would occur with great regularity as well.
Around tax time, for example, many calls would come in trying to find out how much the shareholder had received in dividends over the past year as they had mislaid the tax reporting form mailed to them in January. Or the shareholder needed to figure out the tax cost basis of the stock they sold in the prior year. Or they had lost their stock certificate. The list goes on, but I will spare you.
The resulting quantity of calls and letters meant that the investor relations staff was stretched, response times slowed down and shareholders were not given the prompt attention they would normally receive. Authorizing more payroll to fix the problem was not considered a good fix as companies do not staff to meet peak demands. So we muddled through and breathed a sigh of relief when things calmed down.
Fortunately, the advent of company investor websites means that it is now possible to allow shareholders to look up much of this information for themselves. Further, they can do this whenever they want to, as opposed to being forced to call during business hours. Well designed Frequently Asked Questions sections (FAQs) can be very helpful in getting information to shareholders before they get frustrated. Set out below is a nice example of a FAQ section by Kingfisher, the home improvement retailer. They appear to have looked at their incoming questions from shareholders and attempted to design a page that answered many of them. It is a good example of using the web to help shareholders help themselves if they want to, but you will also note that at the very top of the page, shareholders are given a link to company contact information.
A lot of heartburn by both shareholders and investor relations departments can be avoided by following this example.
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What Makes for Effective Investor Relations Sites? Part 40: Key Performance Indicators
March 4, 2011
There is an old saying in business, “If you can measure it, then you can manage it”. 
The corollary to this is that if management thinks it is important enough to measure closely then investors ought to know about the measure so they can make their own assessment about how important it is to their ownership of the stock.
Unfortunately, this is rarely the case. There is a whole raft of business literature about using key performance indicators and dashboard techniques to run your business, but when you go looking for them on company websites, they are few and far between.
I am not advocating that investors need to be informed of every operating metric the company generates. This, in addition to being overly intrusive, would result in information overload, as the best companies produce many key performance indicators at all stages of their business. Further, too much detail would result in the revealing of proprietary information to competitors. But often there are five or six key data points that a company watches extremely carefully. These are the criteria that they often base performance reviews and compensation upon. And people will do what they are compensated and rewarded to do.
One company that does discuss key performance indicators in their online annual report is Standard Chartered. They do this first with an overview of the areas they wish to highlight, which I’ve set out here (click image to see a bigger view).
When you click on one of the sections such as “Building long-term, deep relationships with our clients and customers”, it opens up to specific KPIs, a portion of which is copied below. The result is a good, quick look at both the measures Standard Chartered thinks important and how they are performing against those measures.
Now if we can just get companies to do more of this and feature it someplace where it is easy to find, investors will more readily understand the way the business is being run.
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What Makes for Effective Investor Relations Sites? Part 39: What Makes You Unique?
February 24, 2011
When most people are children, they want to be someone special when they grow up; nobody ever wants to be just another anonymous person. So growing up and even later in life, we all foster a belief in our unique combination of talents and characteristics that make us a special person (at least to our spouses, children and dogs).
And so it is with companies as well. Every company strives to be unique. In business school they give it the fancy name of differentiation, but the concept is clear: your product or service offering needs to stand out from the competition. Even if your product is simply a ‘me too’ offering, there needs to be something that makes it more attractive in some aspect, whether that be price, delivery mechanism or simplicity of use, that will cause the customer to part with their money.
To take this analogy one step further and apply it to investing, if investors can be shown that a company occupies a unique position in the marketplace, they are more likely to understand the underlying investment thesis of the company and buy the stock.
Take for example Burberry, the British apparel company. The firm has traditionally been thought of as a manufacturer of traditional trench coats, but more recently has pushed into fashion. How is an investor supposed to think of this?
Burberry addresses this in their corporate profile page, which I’ve set out here. After reading the page, an investor has a pretty good idea of why Burberry thinks of themselves as unique, and how they plan to use that attribute to grow the company.
So the takeaway here is clear: by telling investors why your company is special, you can help them focus on the reasons to own your stock.
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