If we break down the term “Investor Relations”, the “relations” part is key. Not to say that “investor” is less important – the point is that maintaining relationships is the most important aspect of this role.
Who Are These Stakeholders?
It’s a mix of internal and external stakeholders. Internally, the investor relations manager needs to build and maintain a trusting relationship with senior management.
Internal relationship building is a two-way street, requiring unhindered communication from all sides.
It is only through good internal relationships that the investor relations manager receives the right information, and can share the honest truth with external stakeholders.
External stakeholders include investors and analysts. Some analysts might have already written about your company, while others are tracking it and waiting for a corporate event to go ahead with their analysis.
How Does Investor Relations Build Relationships?
With Existing External Stakeholders
Investor relations teams diligently share updates through regular emails, phone calls, and conferences. These are some ways in which they typically manage their relationships so they can build stakeholder trust and demonstrate transparency, in addition to the disclosures they share during these interactions.
With Potential External Stakeholders
This is a bit trickier, as there are at least three steps that go into building a relationship from scratch.
- First, investor relations teams need to identify who could be a good fit.
- Then, find a way to bridge a connection with these prospects.
- And finally, convince them that their company is worth the analysts’ time or investors’ money.
Hold on to that thought.
What Is a Relationship and Why Build One?
As part of relationship building, stakeholders feel more comfortable with corporates who make the effort to be more open and communicative. It gives the impression that a company is transparent and honest in its dealings.
There is no downside in building a relationship. However, there is a downside in failing to build one with relevant stakeholders. It’s even worse when unfortunate events impact your company.
For instance, suppose your company gets thrust into the limelight because of a rogue employee who has embezzled funds. If external stakeholders do not share a relationship with the company, they would be less inclined to believe that the incident is an isolated case.
This is how one rotten apple tarnishes the sterling reputation of the whole bunch (employees and management), potentially leading to a drop in the share price and the company’s value.
Such unfortunate events can give rise to misconceptions as stakeholders have no understanding of the company’s management and how forthcoming it is at a time of adversity.
So what happens when external stakeholders want to form a relationship with your company, but can’t get in touch?
This comes back to the three-step process in building relationships with Potential External Stakeholders. Aside from the ones you might have targeted and want to reach, there might be some that want to proactively approach you.
But if they can’t get in touch directly and the only way to engage you is through your website, they might refrain for fear that their contact details might be compromised.
Are there other ways to capture inbound requests from relevant potential stakeholders in your company and build relationships with them? There are indeed! Our Global Investor Relations Directory enables potential stakeholders to reach you and allow for the beginning of an earnest, transparent, and lasting relationship.
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