When it comes to companies reporting performance, it used to be that the more stonking results you could announce to the market, the better. In the current cost-of-living crisis, however, that position has changed dramatically.
Companies moving away from a pure shareholder returns approach to financial communications, to a more purposeful stakeholder approach, has been in the making for years. However, with the unrelenting focus on cost-of-living by both media and politics, a looming recession and higher unemployment, the emphasis on businesses needing to operate with a conscience has never been greater.
In fact, certain companies which have reported a stellar performance – from oil and gas companies through to banks – have been chastised as a result.
There is of course a balance to be struck, not least because companies are managing a ‘cost of doing business’ crisis, where inflation is eroding margins and price-hikes and cost-cutting can be a necessity. With many stakeholders, including the media, detailed financial interrogation has to some degree been less prevalent. However, the narrative within which financial performance is delivered has become even more important.
Whilst there is not a one-size-fits-all approach – and in fact it is fundamental that businesses don’t try to replicate each other – there are certain considerations that should be front of mind.
Narrative: having a clear narrative that moves beyond the numbers, and resonates with a wide-ranging stakeholder group from customers, suppliers to employees is critical. Where a company has performed particularly well, the tone of the announcement should be confident but not boastful, and mindful of the context. This means addressing head-on the impact the external environment is having on stakeholders, while sharing a clear commitment or plan to give back and support those in need. What a company must avoid is being perceived to be profiteering from the consumer, when they are seemingly on their knees.
Action: it is not just the media that want to know that companies are doing something to support people through the current cost of living crisis. Investors increasingly need to see that businesses are taking material action to support their customers and employees. This shouldn’t just be a media stunt. For instance, some companies have announced commitments to not increase prices for a period of time, or to offer more affordable lines or product ranges as a way of addressing current consumer needs.
Transparency: trying to bury items which could pique negative media interest in the context of the current backdrop, such as large dividend payments, executive pay, job cuts etc. may well delay attracting scutiny, but ultimately will be exposed. The media are far more receptive, and generally less critical, if they see a company play a straight bat and be upfront about what is going on. Needless to say, social media has given members of the public a voice too, and these stories will often come out in a more public and less sympathetic arena if not dealt with through a company’s own results disclosure.
Spokespeople: do not underestimate the power of the CEO quote in a results announcement, or similarly, the broadcast interview. This provides a useful way to convey the company’s commitment to support their stakeholders, contextualise a positive company performance and humanise the elements of business strategy that can otherwise be overshadowed.
Digital: in a similar vein, CEOs should use LinkedIn to dovetail with results day efforts to add a personal touch to seemingly benign company results. LinkedIn not only provides a powerful channel through which to connect with colleagues, but also enables an executive to demonstrate their human side more easily than through traditional media.