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Many corporate leaders are alarmed by the federal government’s increased oversight of and intrusion into business in response to the Great Recession. They see new and significant regulation in the financial services and healthcare markets, uncertainty over environmental and tax policies and changes to the bankruptcy process. Many executives believe these initiatives will make it difficult to plan, impede future growth and restrain an already fragile economic recovery.
A new FTI Consulting study, titled CEO as Statesman, shows that investors are concerned as well. According to its findings, institutional investors—analysts, portfolio managers and others—overwhelmingly believe that the decisions made in Washington have a significant negative impact on the value of their portfolios. By more than a three-to-one margin, investors also want companies to do a better job of informing them about the potential impact of policy changes.
An even greater number (some 85%) feel that CEOs must proactively engage with policy makers to help shape policies and regulations and protect shareholder value. Those respondents were four times more likely to view active CEO engagement as a positive rather than a negative. Furthermore, they are calling for CEOs to use their leadership platform to “get in the game,” educate analysts and investors about ongoing efforts and become more actively and personally engaged in shaping national objectives and policies.
A recent independent study by the National Journal found that a strong reputation built on respect and integrity is central to a firm’s ability to influence policy debates. Transferring a corporate reputation into a credible and relevant policy platform requires a strategic civic engagement plan that complements and reinforces existing government and investor relations messaging. It includes thought leadership, executive positioning and political engagement. It should reinforce existing, positive narratives about the company and its involvement in the policy making process.
Examples of effective engagement strategies like this are rare today, but one case stands out: investors worried that a major industrials company would be unfairly compromised by new rules and regulations from Washington. Some of the company’s top executives felt the company should publicly repudiate the regulatory agency.
But instead, the company worked with the agency in question to find common ground. The company’s strategy included thought leadership, enlisting public support, developing relationships and networks that led to policy consensus and helping the agency to see the unintended consequences of previous policy positions. Their work helped to build a better regulatory blueprint for economic growth. Through regular speeches and briefings to investors, the executive team was able to demonstrate how working productively with the government benefited the company and the industry.
Developing a “CEO as Statesman” platform helps position executives above the partisan fray as policy leaders and broad advocates for industry. It allows them to engage on multiple levels through multiple channels. Activities for civic engagement may include attending and sponsoring conferences with leading NGO policy centers to issue white papers and research; using public forums to articulate policy concerns and solutions; and lobbying members and staff of the U.S. Congress as well as relevant state/local/foreign governmental entities.
Informing investors of policy risks and gaining their support for regulatory platforms requires a balancing act. Companies need to talk about the risks at a very high level, remembering that an overly complex or detailed explanation of various policy scenarios may actually unsettle investors rather than reassure them. Reassuring investors that the company has anticipated policy decisions and has already taken steps to manage the risk proactively and effectively is the most effective communications message.
A well-executed civic engagement program enhances the company’s credibility to all stakeholders and provides real access to policy makers and opinion leaders needed in these uncertain times. This is a winning strategy to shape policy consensus, meet the new concerns of investors, and ultimately protect and enhance enterprise value.
Elizabeth Saunders is the Americas chairman and Jackson Dunn is senior managing director and Americas Public Affairs leader of the Strategic Communications practice of FTI Consulting. Contact Saunders at Elizabeth.Saunders@fticonsulting.com or Dunn at Jackson.Dunn@fticonsulting.com.
The Strategic Communications practice of FTI Consulting works closely with management teams and boards of directors, advising them on communications strategies to protect, enhance, develop and defend their enterprise value.