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Remember a while back when we were talking about how employee-investors are the key to unlocking shareholder value? (I didn't think you did... that's why I'm bring you this sequel.)
PR Week was kind enough to ask us to create a three-part series on this subject for their blog... the first post makes the argument in support of expanding your IR program to include your internal owners; the second post focuses on steps you can take to reach your employee-investors; and the third post provides some examples of companies that are already courting this investor population (yes, there are companies that actually do this).
Would love to hear your thoughts on this... specifically, what downside do you see to including employees in your IR program?
It both surprises me and doesn't surprise me that when discussing the role of employees on shareholder value, most folks immediately think "Well, happy employees make happy customers and happy customers spend more money, which makes for happy investors."
That relationship is certainly true. But there is more to it.
Employees are investors - long term ones at that... and they typically support management so they can represent an important voting block during proxy season (particularly if it is contested). So this adds a meaninful multiplier to the "happy" formula above.
This, then, begs the question: why don't more companies include them when developing their IR program?
Well, institutional investors - who have long dominated the investor relations agenda because of their ability to buy large “blocks” of equity - have become an ever-illusive target. Today, a “long-term” institutional investor is one who holds for multiple quarters rather than multiple years. It takes a lot of time to find them and keep them. Also, they've also become more demanding. The mounting pressure facing portfolio managers to deliver meaningful returns has caused institutional investors of all types to aggressively assert their own “value-creation” agendas upon management and Boards. In other words, it takes a lot of time to keep them happy. In other words, they are the squeaky wheel that gets the grease.
That said, adding your employees to the IR program is not difficult to do and the benefits that come from it more than outweigh the any negatives (perceived or otherwise).
This whitepaper outlines three basic steps to help your IR program reach your employee owners. Are you employing any other strategies to engage this constituency on IR matters?