CEOs that embrace communication lift company performance
Companies with a publicly vocal CEO better withstood the initial negative share impacts of the Covid pandemic, according to a new report from FTI Consulting.
The study examined the CEOs of the top 100 companies with the highest share price growth rate from 2015 to 2019 across the S&P 500, FTSE 250, and Euro Stoxx – observing mentions of the CEOs on news and social media and if their statements generated a peak in discussion and news coverage. The report team then assessed share price performance between March 4 and May 11, 2020.
Eighty-one percent of these fastest-growing companies had a vocal or outspoken CEO. According to the report, companies with a CEO who had a brand and communicated regularly performed better than their industry peers during the Covid pandemic by an average of 2%, translating to $260 billion in shareholder value.
Many of the top companies have long known the connection between communication strategy and business value, and its importance has magnified in the past several years. Consumers are increasingly demanding that companies are vocal on issues outside of business, investors are pressuring companies to commit to and communicate ESG standards, and the proliferation of digital channels (Twitter, etc.) means that consumers expect leaders to communicate in a personal and transparent way.
What’s more, the pandemic has pressured companies to demonstrate how they are helping in their community’s health and economic recovery.
FTI Consulting found that of the 81% of vocal CEOs, nearly 40% were “stakeholder CEOs” who took a public stance on non-business topics, such as social, political, and environmental issues. The companies with stakeholder CEOs outperformed their industry peers by an even higher margin of 3.75%.
“This research shows that the brand of the CEO ought to be a board-level consideration. While there are certainly many factors that contribute to the growth and value of a company, it is telling that CEOs who show true leadership through effective communication perform well, particularly in a crisis,” said Mark McCall, the global head of FTI Consulting's strategic communications practice.
He continued, “Strong and consistent communication about the near-term challenges and long-term drivers of a business can provide focus for the organization, reassure employees, customers and suppliers, and protect a company during a broader market downturn.”
CEO communications has become an increasing priority across sectors (except for the basic materials industry). The healthcare sector, which is typically considered a quieter sector with less communications to broader audiences beyond investors, had a large share of vocal CEOs (89.5%). Of the 22 CEOS who led the 19 healthcare companies in the top 100 between 2015 and 2019, 19 were vocal and had a brand, while four were stakeholder CEOs.
“Open and transparent leadership are paramount, not just to employees or customers, but also to shareholders. Interestingly, it does not mean your CEO needs to seek controversy or open a flood of posts on Twitter,” said Lauren Burge, a managing director and head of the corporate reputation practice in Brussels for FTI Consulting.
Instead, the study highlights that “employees, shareholders, and customers react positively to thoughtful, authentic communications.”
The report also found that communication was a priority for female CEOs. Of the six women among the 128 CEOs evaluated, all had a distinct brand and communication style.
