Competing for the Investment Dollar !!!

Today, after the Corporate Comm class, I immediately rushed home. Didn't go to Harvey Nichols to make sure those Miu Miu shoes were still there. Didn't go to check out the new Vanity Fair exhibition at the Portrait Gallery. I simply couldn't wait to get home and read more about investor relations!

Some of you might assume that, by writing in this manner, I am sucking up to my tutors. How wrong and how pathetic !

Anyway, let's get down to business. Today I learned that one of the main objectives of Investor Relations (IR) is helping reduce stock price volatility. Typically, cost of debt capital is lower for companies with the stable stock price. Thus, IR managers can help that price stay stable by

'optimizing the company's shareholder structure to include primarily long-term
owners of the stock.'

So, the geniuses of financial PR should be expected to devise an effective communication strategy targeted at their company's shareholders and, when necessary, prevent them from running off by the power of word;)

Another simple & helpful recommendation:

Do not spend time communicating with uninterested investors.

Just like in marketing, our audience (investors) should be divided into smaller segments: by style (growth seekers vs. value seekers, index, income, etc.) or by turnover (high, moderate, low). They need to be approached differently. However, sometimes segments merge. For example, in order to minimize risks and diversify the portfolio, some investors have more than one style: they might buy both the value stocks and the promising growth stocks, etc.

Then, there are our intermediaries: the financial press, the analysts, and the rating agencies. All seem to matter greatly.

A lot of attention has been paid lately, at least in the USA, to the conflict of interest in the job of a sell-side analyst working for an investment bank. In the past, some reputable american analysts were encouraging public to buy certain stocks, while, in narrower circles of their employer-investment banks, calling the same stocks "junk". This lucrative co-op came to an end with several loud scandals and a new set of regulation, prohibiting tight links between analysts and investment banks.

Finally, I was really surprised to learn that in 70% of companies (mostly USA)

Corporate Communications departments still report independently of the Investor Relations

How come they do not see the connection?

References: Argenti P. Corporate Communication. Fourth Edition. McGraw-Hill. New York. 2007

David Hill: "The one thing you should never do is lie to media "

David Hill, former communications director for Tony Blair, spoke to us last night.

By saying "us" I am referring to about 40 students and faculty of the University of Westminster who, I hope, enjoyed the event as much as I did.

The lecture was well-structured and interesting (specifically, during the whole speech I never felt my usual urge to grab a coffee, walk around the hallway for a little, check my text messages or take a trip to the closest mirror).

According to Mr.Hill, political communication is all about two things: 1) strategy and 2) delivery of your message. "Sense of direction" is vital. And government's relationship with media is the key priority.


Describing his challenges of working with national media, Hill mentioned the tendency of not giving enough coverage to good news, not reflecting improvement, but mostly focusing on drawbacks instead. While the word he used to describe the relationship between Downing Street and journalists was "combative", Hill still believes the change is to come.

Among the effective ways to deliver the government's communication strategy, Hill named a series of consistent themed speeches to the Lobby "to serve as catalyst for public debate", as well as wide use of e-petitions.

Besides, much change in the society has taken place, and segmentation is a part of it. Hill noted that in the old days 90% of population could be reached via 12 strong media outlets. Today, in contrast, thousands of various media channels would be required.

Personally, I completely agree with David Hill on his belief that public interest in good news is just as strong as it is in bad news.

A nice dose of genuine good news always makes a day look brighter, don't you think?

Choose your PR ethics!

Yesterday in class we had our ethics debate.

A recommended ethical framework for us to use was Cultural Relativism: "moral truths are subjective, dynamic, changing, constructed by society." This philosophy claims there is no universal right or wrong, no such thing as ultimate truth. So, basically, our PR actions depend on social customs, own moral beliefs, and stakeholders' virtues.



This approach is extremely popular in all aspects of today's society, and I admit, I do find it reasonable as well. But only to some extent.

Cultural Relativism does not give clear answers or guidelines (are goodie bags ethical? is paying for access ok?) Everybody will have their own, very subjective truth.

By the way, talking about goodie bags and other treats for journalists, there is a very interesting article I found in PR Week, it's called Freebies and the Moral Maze.
(here is the link: http://www.prweek.com/uk/search/article/541218// )




However, one can adapt the values of Cultural Relativism so that they actually work well for everybody. Anne Gregory suggests: when making your decision, look at the folowing aspects that "will lead towards sound results and peaceful nights":


1) The individual (does it feel right or wrong to you?)


2) The external guides (the law, professional codes of practice)


3) Decision making models


for ex. Parsons decision-making model quoted by Anne Gregory. Ask yourself:


1) Is there harm involved?

2) Is there a missed opportunity to do smth. good?

3) Could anyone be misled?

4) Will anyone's privacy be invaded?


5) Is it unfair to anyone?

Easy. Don't you think?


References:


1) http://www.gotquestions.org/cultural-relativism.html (ok, a really pro-Christian view, but the authors make excellent points calling on our conscience, especially in examples with fascism movement and "Aryan superiority" values in Hitler Germany

2) http://www.allaboutphilosophy.org/cultural-relativism.htm to me, personally, this sounds merely extreme (according to the authors, the Darwin theory of evolution also stems from Cultural Relativism)

3) Gregory, A., (2006). The Truth and the Whole Truth? In: Hopsbaum, J. (editor) Where the Truth Lies. Trust and Morality in PR and Journalism. London: Atlantic Books, pp.98-109.