How do you define financial public relations?

1. In common with the rest of public relations, financial public relations people suffer from an inability to define their jobs. Some simply like to state that financial public relations all comes down to money – but that could be said for the vast majority of public relations activities. Whether spent in-house or with a consultancy, why should a significant amount of money – an estimated ₤ 1/2 – 1 billion in the UK, and many times this amount in the US and the rest of Europe – be spent every year on public relations activity if a return on that investment is not merely hoped for but expected ? Financial public relations is no different in having to demonstrate that it adds value.

2. It is difficult to discuss any subject without some sort of definition. At its most basic the scope of financial public relations can be defined in simple investment terms as: ‘all communications activity is based around the simple fact that money only has real value as an investment and that investors are people’.

3. Share buyers may be investing their own or other people’s money but in the end investment decisions are made on the basis of the quality of people. In a world of constantly moving money, the clear communication of objectives, achievements and potential is not an optional extra, it is an absolute necessity.

4. More specifically, the skills of financial public relations people is primarily focused on the need for publicly owned and listed companies to communicate consistently and positively with those that own them directly or indirectly, through the media or through City analysts. The majority of the effort put into this specialist area of public relations surrounds the biannual issuing of results by companies.

5. For many millions of companies, large and small, around the world, the prosaic necessity of getting a proper understanding of their full year and half year figures is the most important part of any financial public relations strategy.

6. The hectic activity that surrounds major bid, deals and financial disasters is more dramatic, more newsworthy and more likely to be the subject of airport paperbacks, but it has much to do with crisis management activity as it does with financial public relations. Happily for those who enjoy working in the financial public relations area, the opening up and deregulation of world stock markets and the freeing up of international capital has made merger and acquisition work a significant part of financial public relations, a situation that seems likely to remain for many years to come.

The basic task

Real financial public relations, as opposed to the fizzy and more dramatic takeover bid, is a steady, long-term business dealing with a set calendar of events, the patient explanation of results, and what a company does and does not do.

However, as with any other piece of detailed information, a company’s results are only meaningful against a background of understanding and an idea of what they mean for the future. If financial public relations were to be defined as simply the communication of sets of numbers to a highly specialized audience, it is difficult to explain how a significant number of companies in the UK magazine PR Week’s Top 50 Consultancies are entirely or significantly dedicated to financial or City public relations.

As the majority of shareholders are the major stock holding institutions rather than individual shareholders, it has become accepted that shareholders are talked about in inanimate terms of ‘institutions’ or ‘funds’ or ‘computer programmes’. But even institutions are run and managed by mere mortals, and their computer programmes written by people with still a shred of humanity left: financial public relations has to recognize that the managers who populate the investment institutions are affected by everything they see, read or hear about a company, its management, its reputation and its products. Financial public relations could, therefore, be taken to cover any aspect of public relations for commercial organization.

For large and truly international companies such as Hanson PLC with a range of major businesses in their portfolio the presentation of each set of results requires a tremendous amount of carefully hard-work and planning. Even a company that is as closely followed and well known as Hanson has to be very focused about the messages it puts out with results to ensure those who follow the company understand the full significance of the numbers.

In particular this involves very careful preparation of the presentation to be given to analysts. It is the views and the number crunching of the analysts that will influence the views of the other key audiences, including the financial press and the institutional shareholders.

Such presentations cannot be given in a vacuum and are prepared in response to feedback on what are the analysts’ major concerns and areas of interest. By researching the analysts’ concern in the period leading up to announcements the company can ensure it makes maximum use of the opportunity of its results presentations. The tightening of rules on selective disclosure of information has made set piece presentations even more important to a company’s communications programmes. Hanson, with a significant shareholding in the US, also goes to great lengths to teleconference its briefing to the US so that analysts and shareholders there receive company comment and information at the same time as those in London.

It is pointless to give people detailed information if they do not have the necessary background knowledge about a company’s activity and Hanson, as an international conglomerate, puts together a series of high quality teach-ins throughout the year on their core business areas. While these do not contain significant new information they are extremely popular with Hanson followers who are required to develop a real understanding of a range of companies in order to analyze the company accurately.