One Strategy Group CEO David Meadvin was featured in Axios this week, discussing the strategic approach he recommends corporate leaders take to their quarterly earnings announcements.
"A general rule of thumb is that you can't message your way out of bad earnings, and you don't want to message your way out of good earnings,” he told the outlet. “Most of the time, earnings fall somewhere in the middle, and that's when how you communicate can have an impact."
One issue in particular that came up during the discussion was how much an earnings release should be directed at internal stakeholders. As David noted, it may be tempting to try to kill two birds with one stone, but the formality and competing priorities of an earnings statement make it a poor substitute for more authentic communication opportunities. He told Axios:
"One of the biggest mistakes that a company can make is to communicate by press release to your employees."
"In my experience, employees aren't usually terribly focused on earnings. When internal comms are necessary, it's usually because something has gone really wrong,” he added. “When that happens, the best advice I can give is to treat your team like grownups, and make sure to let them know you have a plan to fix things."
Here are a few additional thoughts about how to get the most out of earnings season:
- Take a year-round approach to communications: A successful comms strategy is built on a steady and consistent cadence of messaging that builds trust with all of your internal and external stakeholders. If you’re only communicating once a quarter, then you’re missing out on opportunities to establish that reliability with your major audiences. A year-round approach also means that you can focus on the essential messages in your earnings announcements, instead of feeling as though you need to squeeze in three months worth of comms.
- A difference on the margins: Much of the audience for earnings announcements are sophisticated consumers familiar with your organization or industry. As such, a strategic approach to communications can make marginal differences by helping to highlight developments or messages, but executives should keep in mind the limits of that power – any attempts to “spin” weak results are often quickly spotted and risk engendering distrust.
- When it’s good, keep it simple: We’ve all seen examples of companies that report strong results, and then keep talking their way into a muddled and unsure response from the market. When quarterly outcomes are strong, the best advice is to get out of the way and let those results speak for themselves.
- Don’t become a broken record. While it’s important to be consistent within any one release, the market (and sometimes the media) will take notice if you use the same lines over and over again in successive quarters. Whether those lines are about goals, priorities, excuses, or macro conditions – too much repetition between consecutive earnings statements can make it seem like you’ve run out of ideas, are not taking adequate action to address the challenges in front of you, or aren’t paying enough attention to how conditions may be changing.
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