It’s actually great news that the economy continues to improve with lower unemployment, higher consumer spending, etc., etc. But that great news is creating a communications challenge for companies across a variety of sizes, industries and geographies.
For the first time in almost a decade, it looks as if a significant driver of C-suite job changes is a positive — top-tier executives being offered opportunities to move forward with their career at new organizations — rather than a negative — change brought about by poor performance or corporate difficulties — the proverbial “pursue other interests.”
Nonetheless, investors have become conditioned to reacting with concern when an executive – potentially perceived to be admired and competent — tenders their resignation. It is possible that many investors cannot remember an environment when executives would expect to see better offers. This unexpected outcome is creating communications challenges for both public and private companies – challenges that Lambert’s financial communications practice has had extensive experience addressing with clients.
So what can companies do to minimize the fallout from resignations? In fact, what can be done to use these announcements to strengthen overall messaging to employees, customers, bankers, among other audiences, who also may have concerns about management changes?
Lambert offers the following ideas for consideration:
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- · Start exposing a deeper bench to Wall Street and other audiences This is a simple, proactive step that recognizes the environment is changing. It should come as no surprise that investors are much less concerned when familiar faces can step into a role on an interim, or potentially permanent, basis. Introducing investors to the No. 2 from an operating or finance team is a great way to help investors gain insight into a company’s depth of expertise. It also exposes less experienced executives to this facet of public company life, so this is one tactic that can be a pre-emptive win-win.
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- · Provide those Tier 2 executives with Regulation FD training in advance of their first interactions with Wall Street. This is good advice under any circumstances, but proactive training means this tier of your team can be ready to step up to the plate on short notice.
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- · Let the news release on the announcement display the company’s respect for the departing executive. While investors often take a cynical view of published quotes in news release, many are able to accurately distinguish between true best wishes and pro forma politeness. If you have nice things to say, then say them.
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- · Find time for an investor communications/Regulation FD training session (or “refresher”) for anyone who will be interacting with Wall Street in the wake of a transition announcement — This is important whether the role is moving to an internal person on an interim or permanent basis, or if someone new is stepping in from the outside. Two or three hours reviewing best practices in this realm could be one of the most valuable uses of that person’s time in the run up to the announcement.
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- · Selectively include the departing executive in on post-announcement communications with investors and analysts. For investors and analysts who had a strong relationship with the departing executive, there is nothing more reassuring than hearing (or seeing) the banter between corporate individuals expressing “sorry to be leaving,” “wishing xxx the best,” or similar sentiments firsthand. If this is the true state of affairs, let this smaller group experience it.
- · Give new executives permission to “be new.” Investors will allow “new to the team” executives a grace period, if the newcomer makes it clear that is appropriate. Talking points prepared for new team members should make appropriate use of phrases such as: “that is an area I want to assess before I draw any conclusions,” or “XXX and I have discussed how important that area is to achieving our performance objectives and I want to study it closely before I comment on any changes that might be needed.”
Proactive planning, and careful consideration of the information needs of all corporation audiences – investors, employees, customers, bankers, etc. – certainly can mitigate concerns about management changes. Under many circumstances, careful preemptive planning can even turn the messaging into a positive for all.
Heather Wietzel is a senior director at Lambert