Features
29 Feb 2012

Career path

Mark Freebairn shares his advice on work inside the finance sector. This month he shares some secrets for keeping your shareholders happy

For those of you familiar with my column in accountancy, welcome back. For those who are reading it for the first time the purpose is to give you an overview of what the finance community is thinking and telling its headhunters. And, on the other side of the coin, what the market is telling a headhunter it is looking for from the finance community.

Around this time of year I always tend to do a tour of the senior finance community to see what is keeping them awake at night. And perhaps unsurprisingly this year, it turns out that there is quite a lot keeping them from sleep.

I’ve been told so much that I could fill this magazine several times. However, one topic has come up time and time again. That is, “How do I communicate with shareholders at a time of such incredible uncertainty?”

There is a roll call of company names that are making most CFOs quake in their boots. Thomas Cook, Chemring, Tesco, Logica, RSM Tenon... The list goes on.

Worse, I suspect by the time you read this it will be longer still. All of these companies are businesses which have had to give the market a degree of bad news. And most people would say that in many instances the market has over reacted (please do not buy shares on the  basis of this advice).

So the question I have asked people is, “How on earth do you manage your shareholders and their expectations at a time like this?” And the answers have been pretty much unanimous:

 

  1. Always tell your shareholders the truth.
  2. Keep it very simple.
  3. Communicate with them regularly – more than you would do usually.
  4. Keep the communication fact based and remove the emotional and intuitive wherever possible.
  5. Set out your strategy, ensure investors understand it, and don’t change it if you believe it is still the right strategy.
  6. Appreciate that the long-term outlook has reduced, but keep educating your market that a short-term-only view is ultimately detrimental to your business.
  7. Make sure you hit every number you say you are going to hit.

 

And as one CFO said to me, “If you want to see who is really good at their job, look at everyone’s forecasts two years ago. The great CFOs are the ones who have come in under those forecasts this year, but have never put out a profits warning or a downgrade.”

Mark Freebairn is partner and head of financial management practice at recruitment consultancy Odgers Berndtson