Integrating Investor Relations Internally - ABF Investor Relations Conference

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Integrating Investor Relations internally
*Importance of involving employees’ participation in the Investor Relations programme
*Management’s leadership and transparency in promoting and enhancing employees’ cooperation in building corporate values
*Constant interaction as continuous improvement and enforcement in creating shared corporate values

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  • Integrating Investor Relations Internally - ABF Investor Relations Conference

    1. 1. INTEGRATING INVESTOR RELATIONS INTERNALLY Case Study, Concepts, and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com
    2. 2. About: CNI <ul><li>18 years old </li></ul><ul><li>Core Business: MLM </li></ul><ul><li>Others: Contract Manufacturing, Export/Trading, eCommerce </li></ul><ul><li>Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan </li></ul><ul><li>Staff force: ± 500 </li></ul><ul><li>Distributors: 250,000 </li></ul><ul><li>Products: Consumer Goods and Services </li></ul>www.myCNI.com.my www.OOBEY.com
    3. 3. IR and its problems Overview of Corporate Communications and Investor Relations problems www.myCNI.com.my www.OOBEY.com
    4. 4. How to please Investors (the Dilbert version) © 1998 United Feature Syndicate, Inc.
    5. 5. How to please Investors (the Dilbert version) <ul><li>Buy back shares </li></ul><ul><li>Announce massive cutbacks </li></ul><ul><li>Spin off New Divisions </li></ul>Ironically and Unfortunately, the above prescription is true in real life… www.myCNI.com.my www.OOBEY.com
    6. 6. Why is UMW favored by Analysts? <ul><li>high dividend yield, </li></ul><ul><li>low price earnings multiple, </li></ul><ul><li>buoyant growth outlook; </li></ul>
    7. 7. Challenges of Investor Relations <ul><li>Stock- vs. Share-holder* </li></ul><ul><li>Public Opinions </li></ul><ul><li>Global operations – difficult to explain </li></ul><ul><li>Increasing focus on ecological, social, ethical issues </li></ul><ul><li>Diverged expectations for same issue </li></ul><ul><li>What to do with Excessive Cash? </li></ul><ul><li>Superficial changes vs. Fundamental Changes </li></ul><ul><li>Investors depend on ‘hearsay’ vs. ‘facts’ </li></ul><ul><li>Share Price ≠ Market </li></ul><ul><li>R&D/M.S./HR vs. Investor Expectations </li></ul><ul><li>Opposing ‘Expert’ views </li></ul>www.myCNI.com.my www.OOBEY.com
    8. 8. IR problems <ul><li>“ Good news for stockholders can be bad news for other stakeholders.” </li></ul><ul><li>Gregory Miller, Assoc. Prof., Harvard Business School. </li></ul>www.myCNI.com.my www.OOBEY.com
    9. 9. Why integrate IR internally? The unseen effects of Internal Matters on external Investor Relations www.myCNI.com.my www.OOBEY.com
    10. 10. Principles of Investor Relations <ul><li>Long-term relationship </li></ul><ul><li>Consistent and Proactive </li></ul><ul><li>Performance vs. Controllability </li></ul><ul><li>Aligned with operating/strategy position </li></ul><ul><li>One message, Different Emphasis </li></ul><ul><li>Outside-in Intelligence* </li></ul>www.myCNI.com.my www.OOBEY.com
    11. 11. Types of Investors (1/2) <ul><li>Institutional </li></ul>Fund Managers Corporations Sovereign Funds VCs NGOs Non-Profit Org Financial (Loans) JV Partners M&A Social VCs Holding Co. HQ (MNC) Gov. VCs Supply Chain Gov. Partnership PFI Competitors Franchisees www.myCNI.com.my www.OOBEY.com
    12. 12. Types of Investors (2/2) <ul><li>Retail </li></ul>Investor-Shareholders Employee-Shareholders Management-Shareholders Customer-Shareholders Distributor-Shareholders Distributor-Entrepreneurs www.myCNI.com.my www.OOBEY.com
    13. 13. Why do they Invest? <ul><li>Return/Profit </li></ul><ul><li>Risk Management/ Hedging </li></ul><ul><li>Tax-benefits </li></ul><ul><li>CSR/Image </li></ul><ul><li>Diversify revenue </li></ul><ul><li>Counter-cyclical balance </li></ul><ul><li>Support ‘Mission’ </li></ul><ul><li>Exclusive rights </li></ul><ul><li>Contractual obligation </li></ul><ul><li>National Agenda </li></ul><ul><li>Control Supply Chain </li></ul><ul><li>R&D portfolio </li></ul><ul><li>Control Management </li></ul><ul><li>Alternative Cash Flow </li></ul><ul><li>M&A </li></ul>www.myCNI.com.my www.OOBEY.com
    14. 14. How do Investors get their ‘INFO’? (1/2) Institutional Gov./Politics Customers Suppliers Economics AGM Market Research Internet* Annual Report Media Analysts Fund Managers Due Diligence NGOs Newsletter Spokespersons www.myCNI.com.my www.OOBEY.com
    15. 15. How do Investors get their ‘INFO’? (1/2) Institutional Gov./Politics Customers Suppliers Economics AGM Market Research Internet Annual Report Media Analysts Fund Managers Due Diligence NGOs Newsletter Spokespersons www.myCNI.com.my www.OOBEY.com
    16. 16. How do Investors get their ‘INFO’? (2/2) Retail Gov./ Politics Customers Public Events Economics AGM Ads Internet* Annual Report Media Analysts Fund Managers Relatives Friends Pasar Malam Employees Employee Bloggers Mgmt Actions Newsletter www.myCNI.com.my www.OOBEY.com
    17. 17. How do Investors get their ‘INFO’? (2/2) Retail Gov./ Politics Customers Public Events Economics AGM Ads Internet Annual Report Media Analysts Fund Managers Relatives Friends Pasar Malam Employees Employee Bloggers Mgmt Actions Newsletter www.myCNI.com.my www.OOBEY.com
    18. 18. How not to talk to Retail Investors <ul><li>“ The holder [of a CAB certificate] may continue to serve regularly any point named herein through the airport last regularly used by the holder to serve such point prior to the effective date of the certificate. Upon compliance with such procedures relating thereto as may be prescribed by the Board, the holder may, in addition to the services hereinabove expressly prescribed, regularly serve a point named herein through any airport convenient thereto.” </li></ul>Civil Aeronautics Board, 1977
    19. 19. How not to talk to Retail Investors <ul><li>“It has been determined not to be in the public interest that United Airlines continue to provide air transportation services between San Diego and San Antonio” </li></ul>“ I forbid United Airlines to fly between San Diego and San Antonio”
    20. 20. What topics interest Investors? www.myCNI.com.my www.OOBEY.com Acquisition target Layoffs Cost Cutting New Mgmt Treatment of Profits Consistency Ecology Economics Politics Strategy Alignment CSR- related Crisis Topics?
    21. 21. What topics interest Investors? www.myCNI.com.my www.OOBEY.com Acquisition target Layoffs Cost Cutting New Mgmt Treatment of Profits Consistency Ecology Economics Politics Strategy Alignment CSR- related Crisis Topics?
    22. 22. What Events impact Investors? www.myCNI.com.my www.OOBEY.com Politics Financial Announcements Shareholding changes Structure Accidents Economic Crisis Competitor Moves M&A New Plans Share- drop Events?
    23. 23. What Events impact Investors? www.myCNI.com.my www.OOBEY.com Politics Financial Announcements Shareholding changes Structure Accidents Economic Crisis Competitor Moves M&A New Plans Share- drop Events?
    24. 24. How to integrate IR internally The unseen effects of Internal Matters on external Investor Relations www.myCNI.com.my www.OOBEY.com
    25. 25. What to Integrate? www.myCNI.com.my www.OOBEY.com 1. Aligning Organization To the Culture 2. Integrating External & Internal actions 3. Alignment and Consistency to the Strategy 4. Long-term Relationship Building efforts
    26. 26. Principles of Investor Relations <ul><li>Long-term relationship </li></ul><ul><li>Consistent and Proactive </li></ul><ul><li>Performance vs. Controllability </li></ul><ul><li>Aligned with operating/strategy position </li></ul><ul><li>One message, Different Emphasis </li></ul><ul><li>Outside-in Intelligence </li></ul>www.myCNI.com.my www.OOBEY.com
    27. 27. Integrating IR internally Culture Importance of I.R. Investor Relations Principles www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
    28. 28. Alignment: Framework <ul><li>Operational and Strategic moves have to consistent with messages </li></ul><ul><li>Trust – consistency in external-internal messaging </li></ul><ul><li>Visibility – through Culture and Morale </li></ul><ul><li>Clear Employee roles </li></ul><ul><li>Outside-in Intelligence for decision making </li></ul>Culture www.myCNI.com.my www.OOBEY.com
    29. 29. The 6 Sins of Greenwashing <ul><li>Sin of the Hidden Trade-Off </li></ul><ul><li>Sin of No Proof </li></ul><ul><li>Sin of Vagueness </li></ul><ul><li>Sin of Irrelevance </li></ul><ul><li>Sin of Fibbing </li></ul><ul><li>Sin of Lesser of Two Evils </li></ul>Study by: TerraChoice, December 2007
    30. 30. Alignment: Framework <ul><li>Org Structure </li></ul><ul><li>Job Design </li></ul><ul><li>C&B </li></ul><ul><li>Policies & procedures </li></ul><ul><li>Decision making </li></ul><ul><li>Job fit </li></ul><ul><li>Management Systems </li></ul><ul><li>BSC and KPIs </li></ul><ul><li>Decentralized & Empower </li></ul><ul><li>Specialists IR in CR topics e.g. Ethics, Ecology, Politics </li></ul><ul><li>Spokespersons </li></ul><ul><li>Business Unit reporting </li></ul><ul><li>Shares, C&B schemes </li></ul><ul><li>IR ↔ MR </li></ul>www.myCNI.com.my www.OOBEY.com Structure
    31. 31. Alignment: Framework <ul><li>Role modeling </li></ul><ul><li>Vision/Mission/Philosophy </li></ul><ul><li>Leadership Style </li></ul><ul><li>Delegation & Empowerment </li></ul><ul><li>C&B, Promotions </li></ul><ul><li>Sense of Urgency </li></ul><ul><li>Speak regularly about Strategic and Operational direction </li></ul><ul><li>Spokespersons </li></ul><ul><li>Business Unit reporting </li></ul><ul><li>Fundamentals vs. Short-term </li></ul><ul><li>IR as MR intelligence </li></ul>www.myCNI.com.my www.OOBEY.com Leadership
    32. 32. Alignment: Framework <ul><li>Recognition </li></ul><ul><li>Recruitment </li></ul><ul><li>Training </li></ul><ul><li>Profit sharing </li></ul><ul><li>Values </li></ul><ul><li>Motivation </li></ul><ul><li>Self Efficacy </li></ul><ul><li>Awareness </li></ul><ul><li>Useful Competencies </li></ul><ul><li>Career aspirations </li></ul><ul><li>Specialists IR in CR topics e.g. Ethics, Ecology, Politics </li></ul><ul><li>Spokespersons </li></ul><ul><li>Business Unit reporting </li></ul>www.myCNI.com.my www.OOBEY.com Person
    33. 33. Alignment: Framework <ul><li>Enablers </li></ul><ul><li>Technology </li></ul><ul><li>Equipment </li></ul><ul><li>Materials </li></ul><ul><li>Human </li></ul><ul><li>Intellectual Property </li></ul><ul><li>Partners </li></ul><ul><li>Property </li></ul><ul><li>Financial Utilization </li></ul><ul><li>Investment </li></ul><ul><li>Divestment </li></ul><ul><li>Dividends </li></ul><ul><li>HR </li></ul><ul><li>Buybacks </li></ul><ul><li>Restructuring </li></ul>www.myCNI.com.my www.OOBEY.com Resources
    34. 34. Integrating IR internally Culture Importance of I.R. Investor Relations Principles www.myCNI.com.my www.OOBEY.com Structure Resources Leadership Person
    35. 35. Integrating Internal/External Communications Internal External Mgmt Distributors Suppliers Proactive Reactive Proactive Reactive COMM Tools COMM Tools www.myCNI.com.my www.OOBEY.com Employees Associations Universities NGOs Investors Media Government Public Authorities
    36. 36. Integrating Internal/External Internal External Feed Feed www.myCNI.com.my www.OOBEY.com
    37. 37. Integrating Internal/External <ul><li>Internal </li></ul><ul><li>Halal Committee </li></ul><ul><li>Social Education (e.g. SCK) </li></ul><ul><li>Umrah trip </li></ul><ul><li>China Trip </li></ul><ul><li>RBOS </li></ul><ul><li>CFA/HFA </li></ul><ul><li>Coffee Van </li></ul><ul><li>External </li></ul><ul><li>Sponsorship </li></ul><ul><li>Donations </li></ul><ul><li>News clippings </li></ul><ul><li>Newspaper Ads </li></ul><ul><li>MHI </li></ul><ul><li>Awards </li></ul><ul><li>Corporate Profile </li></ul><ul><li>AGM </li></ul><ul><li>Gov. Celebrity </li></ul><ul><li>Analyst research </li></ul>www.myCNI.com.my www.OOBEY.com
    38. 38. Integrating Internal/External <ul><li>Internal </li></ul><ul><li>Entrepreneur Dev. </li></ul><ul><li>Health products </li></ul><ul><li>Health education </li></ul><ul><li>“ Made in Malaysia” </li></ul><ul><li>Events </li></ul><ul><li>Media Celebrity </li></ul><ul><li>External </li></ul><ul><li>Website </li></ul><ul><li>DSAM </li></ul><ul><li>Yayasan </li></ul><ul><li>Publish Book </li></ul><ul><li>Social Education </li></ul><ul><li>Crisis Comm </li></ul><ul><li>Children Education </li></ul><ul><li>National interest </li></ul><ul><li>Analyst BD connections </li></ul>www.myCNI.com.my www.OOBEY.com
    39. 39. Alignment & Consistency <ul><li>Mamak stall </li></ul>www.myCNI.com.my www.OOBEY.com
    40. 40. Alignment & Consistency <ul><li>&quot;Exactly what I need&quot; </li></ul><ul><li>Customized products </li></ul><ul><li>Personalized communications </li></ul><ul><li>&quot;They're very responsive&quot; </li></ul><ul><li>Preferential service and flexibility </li></ul><ul><li>Recommends what I need </li></ul><ul><li>&quot;I'm very loyal to them&quot; </li></ul><ul><li>Helps us to be a success </li></ul>&quot;They are the most innovative&quot; &quot;Constantly renewing and creative&quot; &quot;Always on the leading edge&quot; &quot;A great deal!&quot; Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership &quot;A no-hassles firm&quot; Convenience and speed Reliable product and service Product Leadership Operational Excellence Customer Intimacy www.myCNI.com.my www.OOBEY.com
    41. 41. Alignment & Consistency: Market Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
    42. 42. The McPlaybook* <ul><li>Make it easy to eat </li></ul><ul><li>50% drive-thru </li></ul><ul><li>Meals held in one hand </li></ul><ul><li>Make it easy to prepare </li></ul><ul><li>High Turnover </li></ul><ul><li>Tasks simple to learn & repeat </li></ul><ul><li>Make it quick </li></ul><ul><li>“ Fast Food” </li></ul><ul><li>Tests new products for Cooking Times </li></ul><ul><li>Make what customers want </li></ul><ul><li>Prowls market for new products </li></ul><ul><li>Monitored field tests </li></ul>*Adapted from: Businessweek , Februrary 5 th 2007 www.myCNI.com.my www.OOBEY.com
    43. 43. <ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li></ul><ul><li>Meet volatile customer needs </li></ul><ul><li>Fast concept-to- counter </li></ul><ul><li>Never satisfied - obsolete own and competitors' products </li></ul><ul><li>Learning organization </li></ul>Alignment & Consistency: Disciplines, Priorities, and KPIs <ul><li>Operational Excellence </li></ul><ul><li>Competitive price </li></ul><ul><li>Error free, reliable </li></ul><ul><li>Fast (on demand) </li></ul><ul><li>Simple </li></ul><ul><li>Responsive </li></ul><ul><li>Consistent information for all </li></ul><ul><li>Transactional </li></ul><ul><li>'Once and Done' </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Management by Fact </li></ul><ul><li>Easy to do business with </li></ul><ul><li>Have it your way (customization) </li></ul><ul><li>Market segments of one </li></ul><ul><li>Proactive, flexible </li></ul><ul><li>Relationship and consultative selling </li></ul><ul><li>Cross selling </li></ul>www.myCNI.com.my www.OOBEY.com
    44. 44. <ul><li>Operational Excellence </li></ul><ul><ul><ul><li>Move know-how from top performing units to others </li></ul></ul></ul><ul><ul><ul><li>Benchmark against best in class </li></ul></ul></ul><ul><ul><ul><li>Ensure operations training for all employees </li></ul></ul></ul><ul><ul><ul><li>Use disciplines like TQM for continuous learning to reduce costs and improve quality </li></ul></ul></ul>Alignment & Consistency: Market Disciplines www.myCNI.com.my www.OOBEY.com
    45. 45. Alignment & Consistency: Market Disciplines <ul><li>Customer Intimacy </li></ul><ul><ul><ul><li>Capture knowledge about customers </li></ul></ul></ul><ul><ul><ul><li>Understand customer needs </li></ul></ul></ul><ul><ul><ul><li>Empower front line employees </li></ul></ul></ul><ul><ul><ul><li>Ensure that everyone knows the customer </li></ul></ul></ul><ul><ul><ul><li>Make company knowledge available to customers </li></ul></ul></ul>www.myCNI.com.my www.OOBEY.com
    46. 46. <ul><li>Product Leadership </li></ul><ul><ul><ul><li>Reduce time to market </li></ul></ul></ul><ul><ul><ul><li>Commercialize new products fast </li></ul></ul></ul><ul><ul><ul><li>Ensure that ideas flow </li></ul></ul></ul><ul><ul><ul><li>Reuse what other parts of the company have already learned </li></ul></ul></ul><ul><ul><ul><li>Ensure there are multiple sources of funding </li></ul></ul></ul>Alignment & Consistency: Market Disciplines www.myCNI.com.my www.OOBEY.com
    47. 47. Alignment & Consistency: Market Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
    48. 48. Alignment & Consistency: Market Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
    49. 49. Summary www.myCNI.com.my www.OOBEY.com
    50. 50. Challenges of Investor Relations <ul><li>Stock- vs. Share-holder </li></ul><ul><li>Public Opinions </li></ul><ul><li>Global operations – difficult to explain </li></ul><ul><li>Increasing focus on ecological, social, ethical issues </li></ul><ul><li>Diverged expectations for same issue </li></ul><ul><li>What to do with Excessive Cash? </li></ul><ul><li>Superficial changes vs. Fundamental Changes </li></ul><ul><li>Investors depend on ‘hearsay’ vs. ‘facts’ </li></ul><ul><li>Share Price ≠ Market </li></ul><ul><li>R&D/M.S./HR vs. Investor Expectations </li></ul><ul><li>Opposing ‘Expert’ views </li></ul>www.myCNI.com.my www.OOBEY.com
    51. 51. Principles of Investor Relations <ul><li>Long-term relationship </li></ul><ul><li>Consistent and Proactive </li></ul><ul><li>Performance vs. Controllability </li></ul><ul><li>Aligned with operating/strategy position </li></ul><ul><li>One message, Different Emphasis </li></ul><ul><li>Outside-in Intelligence* </li></ul>www.myCNI.com.my www.OOBEY.com
    52. 52. How do Investors get their ‘INFO’? (1/2) Institutional Gov./Politics Customers Suppliers Economics AGM Market Research Internet Annual Report Media Analysts Fund Managers Due Diligence NGOs Newsletter Spokespersons www.myCNI.com.my www.OOBEY.com
    53. 53. How do Investors get their ‘INFO’? (2/2) Retail Gov./ Politics Customers Public Events Economics AGM Ads Internet Annual Report Media Analysts Fund Managers Relatives Friends Pasar Malam Employees Employee Bloggers Mgmt Actions Newsletter www.myCNI.com.my www.OOBEY.com
    54. 54. What topics interest Investors? www.myCNI.com.my www.OOBEY.com Acquisition target Layoffs Cost Cutting New Mgmt Treatment of Profits Consistency Ecology Economics Politics Strategy Alignment CSR- related Crisis Topics?
    55. 55. What Events impact Investors? www.myCNI.com.my www.OOBEY.com Politics Financial Announcements Shareholding changes Structure Accidents Economic Crisis Competitor Moves M&A New Plans Share- drop Events?
    56. 56. What to Integrate? www.myCNI.com.my www.OOBEY.com 1. Aligning Organization To the Culture 2. Integrating External & Internal actions 3. Alignment and Consistency to the Strategy 4. Long-term Relationship Building efforts
    57. 57. Don’t forget… <ul><li>“ The business of business is Business, not Investor Relations” </li></ul>www.myCNI.com.my www.OOBEY.com
    58. 58. Thank You. soft copy of slides: http://totallyunrelatedrandomanddebatable.blogspot.com/

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