What PR Pros Can Learn From their Cousins in Investor Relations

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By Tom Corfman

Investor Warren Buffett disdains stock analysts.

He has mocked the people who make financial predictions about public companies, calling them the “high priests of finance.” He has accused them of “fuzzy thinking,” “propagating misleading numbers” and obsessing over “quarter-by-quarter gyrations” in earnings.

“I don’t use analysts or fortune tellers,” he quipped to The Wall Street Journal in 2005. “If I had to pick one, I don’t know which it would be.”

Not all analysts are guilty as charged by the Oracle of Omaha, as he has come to realize during his long career. If Buffet’s frustrations sound familiar to public relations pros, it’s because we sometimes feel the same way about reporters. Reporters and analysts are more alike than some might think.

“There is no doubt that equity analysts, like skilled business journalists, go after a good story and seek to uncover matters no one else has touched before,” a former analyst and a communications consultant wrote in a book about investor relations published last year.

The task of dealing with annoying analysts falls to Investor Relations, which in recent years has adopted some tactics from public relations. But comms pros could copy a few pages out of the IR playbook, too. Here are three:

1. Don’t slant the facts. Bill George, former chair and CEO of medical device company Medtronics, once gave this advice: “The baby boomer generation of leaders were trained in the 1980s and ’90s in an era of spin. The only thing it accomplishes is to create more pressure on the investor relations team and CFO.”

Reporters have highly calibrated B.S. meters. They don’t like to be told. They like to ask questions, find out for themselves. They need to understand.

When you push reporters, they drop down on all fours like a dog that doesn’t want to go out in the rain. This doesn’t mean you don’t make your points. You can and should. But it changes how you do it.

“A dialogue that focuses on identifying the gaps in perspectives on fundamentals and opportunity sets—the things that drive valuations—and discussing them directly, in a fact-based, well-supported manner, is very effective,” the vice president of Investor Relations at Kraft Foods said in 2014.

2. Develop relationships. Many PR people and their bosses don’t like talking to reporters. They’re understandably worried something bad will happen. They’ll be misquoted, they’ll make a mistake, or they’ll be embarrassed.

As a result, the relationship part of “public relations” is often very formal. But IR executives are increasingly learning to open up.

“Modern IR professionals are actively cultivating mutually beneficial relationships with analysts,” Bloomberg reported in 2016.

What should Investor Relations do with analysts?

“Spend a few hours with them,” a former analyst turned IR executive told the business news outlet.

PR people should do the same with reporters. Build connections bit by bit. Company spokespeople tend to think they’re on a one-way street. The information flows from them to the reporters. But you can learn a lot by talking to reporters: their interests, their motivations, their strengths and weaknesses.

But be patient, the IR folks advise.

“Creating a relationship with an investor takes time—and you want to solidify it before you need that party’s help,” according to an article co-written by Bill McNabb, the former chair and CEO of Vanguard, in the Harvard Business Review in 2021. “We believe regular meetings are key.”

3. Start with what reporters want. IR and PR have long been hampered by the same “it’s all about me” approach.

“In the traditional model of corporate investor relations, managers unwittingly focus more on what they want to say than on what the audience hopes to hear,” two management consultants with McKinsey & Co. wrote more than 20 years ago.

Their recommendation: Study investors’ track records, interview them and then give them the information they want and need.

On the PR side, the structural flaw in the news release is a case in point. The story is about us, communicators say, so let’s make the release all about us. Instead, don’t assume reporters (and their audiences) care about you. Put yourself in their shoes. What do they want to know?

Activist investors can be an IR nightmare. They demand information and board seats. They often seek to make major changes in strategy. They’re worse than reporters who’ve made up their minds already, which PR people try to avoid.

It’s a mistake to ignore activist investors, according to the vice-president and treasurer of Mondelez International, the parent of Nabisco and Cadbury.

“Instead, try to have a discussion with them as soon as possible, to understand how they perceive the company, what they are looking to have the company accomplish that the company isn’t doing or is not communicating well to shareholders, and why,” he told Deloitte in 2014.

Buffett’s sisters
We’ve only scratched the surface of what we can learn from Investor Relations. At smart companies, the communications team works closely with IR.

Because of his gripes about analysts, perhaps Buffett isn’t the best source for advice on Investor Relations. Analysts have complained about inadequate financial disclosures of his sprawling conglomerate, Berkshire Hathaway, with revenue of $302 billion last year and subsidiaries spanning insurance, utilities, railroads, manufacturing and more industries.

But the company’s chairman and CEO has told this story about his process for writing the annual letter to his shareholders, which is an annual news media event. He begins by writing a letter to his two sisters, who are also shareholders.

“I don’t want to give so much information that obfuscation sets in. I want to talk to them about what’s important to me, what I’m thinking,” he says. “When I get all through, I take off the ‘Dear Doris and Bertie’ and I mail it out to the shareholders.”

Tom Corfman is a senior consultant with Ragan Consulting Group. Before joining RCG in 2021, he was director of communications for the Cook County Treasurer’s Office for five years. He has been a reporter and editor for Crain’s Chicago Business and the Chicago Tribune.

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