Common Pitfalls In An Investor Relations Meeting

Miscommunications occur in all relationships. In the arena of speech these miscommunications arise when “nominalizations” are used in place of the “concrete.” Concrete words are specific and definite, while nominalizations are words that are abstract, vague, unspecified, and cause the listener to search for meaning. Here are some concrete words: wood, nails, car, or “Thursday, January 1, 2010, at 8:00 a.m. E.S.T.” Now, look at these nominalizations: love, trust, patriotism, terrorism, loyalty, friendship, tomorrow, next year, someday soon. Let me provide a few examples of how nominalizations can cause confusion:

As IR advisors we consider it one of our most important jobs to help sort out such vague nominalizations. We do this by getting feedback from meetings arranged for our companies or from their current or potential shareholders. When we begin working with management, we often remind our companies not to “shoot the messenger.”

Every day, as we work with management on their verbal and written presentations or press releases, we help them concretize vague or subjective words. Left unchanged, these nominalizations can ultimately cause a stock to tank or flat-line, with management left clueless as to how this could have happened.

If you work without an outside IR firm or consultant, or do not have a skilled in-house IR professional, it becomes your job, and yours alone, to listen carefully. The key to preventing miscommunication is to be well prepared for all presentations, listen carefully to others (and to yourself!), speak clearly, and use concrete words and expressions rather than nominalizations. 

Other Miscommunications
Here are a few other areas of miscommunication that can cause confusion and disappointment. The “you” in each example is of course generic.

Explaining Too Soon — You begin to justify your company before the IP finishes saying everything he wants to say. This comes from natural defensiveness. Remember that the IP did not have to take time out of his busy day to meet with you. He wants to know more. Allow him time to relay his complete thoughts before you start giving him yours. He may even already be sold.

Interpreting — You start to imagine the reasons the IP is hesitant to invest and then respond based on your insecurities rather than the real content of his message. Remind yourself to keep an open mind and really listen. Most people do tell you their concerns if you are listening.

Passing the Buck — This response to an IP's communication means you are unwilling to accept responsibility for your actions. A common tactic in passing the buck is trying to put the responsibility on "the market," "traders," "market makers," or "someone else." From feedback we have received, it is clear that the CEOs who are well received are those that take responsibility, clearly defining the obstacles encountered and obstacles overcome.

Changing the Subject — This can derail the IP, causing him to lose his train of thought or focus. For example, you might suddenly suggest an entirely different topic. Or, you might shift from a feelings-level conversation to an intellectual discussion by replying specifically to the content of the communication rather than to its underlying emotion. The result of any of these types of redirections, whether conscious or not, is that the IP may feel he or she is not being taken seriously. Take your lead from the person in front of you. All communication is a way of dancing with a partner, so, in this analogy, let the IP lead. Also, meetings are about people, so naturally each meeting will be different. Always be flexible in your presentation skills and keep the tone consistent with that of the listener.

Turning the Communication into a Joke — You tell a joke or make a sarcastic remark when the IP is being serious. When you get caught, you say, "I was only kidding when I said that. I didn't expect you to take me seriously." You may have made light of an IP's concerns, which may leave him with the feeling that none of the discussion should be taken seriously or that you fundamentally do not respect him or her. 

Condescension — Communication occurs most effectively between equals, or people who are more or less equals. One way to impede communication is to pull rank or remind an IP of his shortcomings. The person who resorts to one-upsmanship is distancing himself in the interaction. Turning communication into a joke or being condescending, incidentally, are frequent faux pas at meetings with brokers and other IPs, and can be costly mistakes.

Becoming Frustrated by Questions — Try not to become upset if the IP keeps interrupting you to ask questions. I know you are going to tell him everything he wants to know, but he may know more than he’s letting on. His questions may be his way of getting directly to the issues that cause him concern, or he may even want to see how you handle disruption! Think of it this way: If questions are being asked, especially a lot of questions, it means you have a hot prospect in front of you. Otherwise, the IP would simply listen for a short time, thank you politely, and leave.   

Being Long-winded — The longer it takes to tell your story, the greater the possibility for too much interpretation. I know this is another of our recurrent themes, but I cannot over-emphasize the importance of keeping your presentation brief and to the point.

Too Much Voice Mail — In this electronic day and age, it is sometimes difficult to get through to a company executive who can answer an IPs questions in a timely fashion. Markets move quickly. If you are not going to be around, make absolutely sure that there is a contact person at your IR firm who is well prepared to be on the line immediately, answering any and all IR calls.