Please read the two (2) below discussions and write a response.
Must be a minimum of 12 lines per discussion.
Please include a reference in your response using APA format and cite the reference in the text.
1-The only person Grueber can report to is the CFO and CEO the problem was Steelcase was a family owned business, so they mainly kept all their decisions within. I believe the biggest challenges that Grueber faced was that the company went public and no one understood the complexity of all the issues they were going to be faced with. Steelcase realized that they were admired because of their core values and had wanted to continue to focus as a family owned business. However, times had changed, and liquidity become more important and later became inflexible. When Steelcase went public, they shares skyrocketed. But not before long Steelcase profits became weaken. At the same time investors choose to stay clear and did not want to get involved with Steelcase because of their illiquidity.
Gary Malburg who was head of IR, but he never had time for investor relations activities due to his responsibilities with Treasury Department. Because of this, Steelcase had not remained active in communicating with existing shareholders. Grueber problem was not only the fact that the company went public and didn’t know how to handle it, but he again was faced with the family choosing who was going to be on the board. They became very cautious as to what went out to the public.
Grueber’s functions is to communicate to both directly and indirectly to investors. However, in his case, how can he do his job proficiently when there were already several problems. One core feature of dealing with a public company is that the separation of ownership and control, basically the principal relationship between the shareholders and management. But where the clash happens is that the shareholders’ interests will differ then managements, and then the IR functions find themselves in a balance of power (Hoffman, C., & Fieseler, C., 2012).
2-Investor Relations is a critical function within the organization that is more than just producing annually or quarterly reports. In the case of Steelcase, and with most organizations that have an in-house IR department, Grueber should be reporting directly to senior management which includes the CEO and CFO. The reason for this is that IR plays both a proactive and reactive role within the organization (Argenti, 2013). With direct access to the CEO and CFO, the IR manager can engage in proactive communication with investors by providing regular information updates and also develop communication strategies in response to internal events or crises (Argenti, 2013).
When Grueber joined Steelcase in the IR department the stock for the company was already plummeting, and one of the key objectives of IR is to reduce stock price volatility (Argenti, 2013). I believe one of the first resources Grueber should ask for is the recruitment of an outside agency for assistance. Like others have said in this discussion, Steelcase should have hired a dedicated investor relation professional before the company made their initial public offering. One of the challenges that now face Grueber is getting the companies investor image back to where it should be. The lack of communication with investors after Steelcase went public negatively affected their overall perception for investors and analysts. “Investor relations professionals strive to increase a company’s visibility in capital markets to enhance its impact on investors’ perceptions and opinions” (Hoffmann & Fieseler, 2012). The recruitment of an outside agency such as a PR firm with a strong IR department would be beneficial in this situation.
Handling these challenges can be done with an in-house IR function given that they have the right communication strategy. Based on research (Hoffmann & Fieseler, 2012) there are several non-financial factors that contribute to a company’s image and valuation on capital markets. Some of these factors are quality of communication, quality of management, and consistency. These may not be direct responsibilities of the IR department such as quality of management but, there are ways that the function can influence the image of the company to investors based on these factors. Transparency of the organization and multiple channels of communication from IR to the public can be beneficial in improving investor relations. To accomplish this goal, I would empower the IR manager by having them sit in on all meetings with the CFO and CEO so that they have a better understanding of the company besides just the financials. By giving the IR manager a seat at the table when developing strategies for the organization in different aspects, it allows that person to be able to craft their respective strategy and better communicate with investors.