- Author: Lel Smits, Executive Director The Capital Network
- Posted: May 4, 2023
CFOs must grow their online profile or risk being left behind
Corporate digitalisation strategies are not all about operational efficiency
The digitalisation age continues to reshape how Australian companies and their CFOs conduct and communicate their business. Operational efficiency gains delivered by the replacing labour-rich manual processes with technology-rich alternatives have grabbed the headlines. These initiatives have resulted in margin enhancements that, in turn, have bolstered earnings.
Advances in technology have done so much more than just reshape companies’ commercial relationships with their customers and suppliers. Digitalisation has also materially revamped the relationship between companies and another all-important group – their shareholders.
Company ‘meetings’ with shareholders now extend beyond the AGM
The torrent of ‘snail mail’ once sent by companies to their shareholders has reduced to a trickle. Annual reports and other financial reports are now almost exclusively available on a company’s website, while shareholder-specific dealings and updates are increasingly being provided online.
But the digitalisation of company communications has also drastically reshaped the way most companies’ board of directors interact with their shareholders. While the face-to-face Annual General Meeting (AGM} is returning to vogue as the COVID-19 pandemic subsides, it is now accompanied by a slew of virtual meetings.
These interactions with shareholders and investors are designed to better highlight key company developments, like quarterly or half year results, a significant acquisition or perhaps a new product launch that delivers additional revenues.
They have also evolved hand-in-hand with company-specific news flow delivered through social media channels like LinkedIn, Twitter, Facebook and YouTube.
They are over and above the traditional ASX announcements accompanying price-sensitive events that satisfy continuous disclosure requirements. The proliferation in virtual meetings and social media communications came about as investors, institutional investors especially, demanded better information flows. These market and stock watchers consult a mix of digital and social media when doing their due diligence on the value in ASX-listed companies.
The CFO has become a key part of the presenter team at these meetings
The Chief Financial Officer (CFO) has gradually become a more high-profile position in ASX-listed companies as they have upped interactions with shareholders and potential investors, In days gone by, the key presenters at company meetings with shareholders were the Chair and the CEO. However, the CFO, once a faceless person working behind the scenes, is now regularly called upon to explain key aspects of a company’s financial statements. Their skills really come to the fore when more detailed questions are asked by fellow finance professionals, institutional investors included.
The CFO’s higher profile means their online profiles get more hits
On top of their roles in company presentations, CFOs of ASX-listed companies are now also expected to appear in social media channels to explain the key drivers behind financial results. A recent example was the short video made by Grant Douglas, the CFO of ASX 200 stock Brickworks Limited (ASX:BKW). In a concise one and a half minute YouTube video, he communicated the key drivers behind Brickworks’ earnings uplift, the growth derived from its investments and the continued robustness of its balance sheet. You can view the video here:
So, with the CFO taking on a higher profile, the digitalisation process flowing from companies’ shareholder communications have evolved even further. The increased visibility of the CFO means that their online profiles are getting increased hits. Given this, the content on these profiles must be up to scratch.
The CFO and their profiles are now part of investors’ due diligence process ahead of stock selection. And not in a small way. A report prepared by Greenwich Associates titled ‘Institutional Investing in the Digital Age: How Social Media Informs and Shapes the Investing Process’, found that 80% of institutional investors use social media as part of their regular work flow. A significant number of retail investors also turn utilise social media sources as part of their investment process.
How CFOs can enhance their social media profiles
As a first step, CFOs should ensure their biographies on major social media channels, LinkedIn included, are accurate. Here they must clearly detail their work history, skillsets and what they are bringing to their current roles. This gives the reader insightful information on whether the CFO adds value to their employer’s leadership team.
Once individual online profiles are updated CFO’s could consider contributing to their company’s digital programs, in particular during reporting periods. Observing and engaging with content on digital platforms will continue to advance learning while media training can provide tangible skills to boost confidence ahead of a CFO digital presentation.
Overall, the fundamental values of communication and compliance will continue to form the foundations of all investor relations, but CFOs who embrace digital technology will continue to ensure both they are their organisation remain at the forefront of innovation.