Corporate public relations

1. The twin areas of corporate and financial communication are, in most people’s view, inseparable. Corporate public relations and financial public relations are not merely close bedfellows, they are Siamese twins sharing the same vital activities.

2. Corporate public relations is usually defined as the reputation of the entire company, although more often it is the reputation of the head of a company rather than the entire body. It is not that the reputation of some obscure subsidiary cannot affect the much larger corporate body, more that the corporate reputation should be robust enough to cope with the ups and downs of individual parts. Corporate public relations is all about enabling a company to succeed and success cannot always be defined in simplistic financial terms.

3. The extremely high corporate reputation of British Airways in the UK, Europe and the US is based on several key factors: the contentment of its passengers with the quality of its product; the admiration of investors for its management; the financial performance of the company; and the strength of its share price. At different times the relative importance of these factors may vary a little but they are all essential.

4. Those who doubt the importance now given to corporate public relations by the key players in the City need only to consider the example of British Gas. A much respected City commentator, writing in The Times about British Gas following an acrimonious annual general meeting in June 1995, concluded: ‘The failure, as institutions perceive it, is not strategy but public relations. Fund managers have given the Board a few clear pointers about how this might be addressed.’

5. It is one of life’s universal truths – along with the fact that nobody thinks they are a bad driver – that most people, whatever their profession, regard themselves as a public relations expert. Fund managers giving companies tips on their public relations will probably be relieved to hear that public relations people seldom seek to give advice on fund management.

What contribution does financial public relations make to the success of a company?

Some would argue that there is only one – albeit crude – measure of the success of financial public relations: share price or bond price or credit rating. There is no doubt that the majority of financial communications activity is aimed at creating more demand for shares in a particular company. Stimulate more buyers than sellers and share prices tend to rise.

There seems to be no reason why financial public relations should not be regarded as public relations support for a simple financial product – an equity stake in a company. However, although short-term success in increasing a share price may be welcome, ensuring that the City and City journalists have a clearer understanding of a company’s strategy is far more important. The real contribution that good corporate and financial public relations makes to a company is in gaining a clear understanding among financial audiences – what a company does, what it is trying to achieve and then making sure everyone knows when it meets or beats those objectives.

Keeping a company well understood and well thought of can only make a positive contribution to its share price performance. A company’s reputation also helps determine what a company can do: acquisitions, disposals, mergers, share issues. All major changes, whether of strategy, management or simply style, become more acceptable or even possible because of the market’s confidence in a company. In particular, this means confidence in its management and in its financial strength. It is in these areas that much of the hard work of financial public relations and its achievements is concentrated.

If we take the example of a business joining a stock market, good financial public relations is essential to a company’s ability to float and to cope with the intense public scrutiny of its activity and in particular of those who manage the business.

Alongside this, financial public relations has a role to play when a company does nor achieve its objectives. Whether perceived failure is due to external factors, a need for more time, failure to manage expectation or simply getting it badly wrong, clear explanation of what is to be done to put the situation right is a far better response than hiding behind closed doors and refusing to talk.

Managing expectations is clearly a key part of avoiding the perception of failure. However, the rules and regulations surrounding the dissemination of information about a publicly quoted company have made the whole area of managing expectations a public relations minefield.