Communicating context to employees during a shareholder activism push

Activist investor pushes have become increasingly common over the past year.

Earlier this year, we reported on proactive strategies communicators can take ahead of activist investor activity in the wake of the battle between Disney and billionaire investor Nelson Peltz. That situation provided several lessons, including the need for an omnichannel, integrated comms approach to keep things moving along at such a large company during the activist investor push.

Now another major American company, CVS, faces its own activist investor issue. According to CNBC, Glenview Capital, a major shareholder in the healthcare company, met with company leadership and shared proposed fixes for the struggling business — a move understood as a precursor to an activist investor push.

Often lost in the external talk of activist investor moves are the impacts this criticism of the business has on its employees. Savvy corporate communicators have an internal strategy to keep the focus on the organization’s day-to-day activities while still acknowledging the larger issue at hand.

Communicating complexities in purgatory

Communicating about activist investors is especially challenging because the situation is fluid and uncertain.  While it’s not certain that CVS’ situation will lead to an activist investor battle, Glenview Capital’s recommendations to fix CVS’s financial health are a sign that comms pros must be prepared.

But how do you fight a two-front battle, addressing the issue while still messaging employees about day-to-day expectations?

Montieth Illingworth, founder and CEO of global communications firm Montieth and Co., said this puts communicators at CVS in a bind.

“They’re in a sort of purgatory right now,” he explained. “There’s a lot of moving parts to this, so it’s a combination of needing patience and the requirement to speak to employees about what’s going on.”

Illingworth described a few different ways that comms pros can approach activist investor situations:

• Acknowledgment of complexities: Being up front with your people about how complicated these situations are is a positive, transparent starting place. “Commit to setting things right, but cater those responses to your different audiences, including retail, insurance, and corporate, in this situation,” he said.
• Strong and stable leadership: In times of major change, people want to hear from their leaders. Activist investor movements are no exception. “Communicate to settle people down first, then create messages that instill confidence in your plan,” said Illingworth. Leaders should also have a team around them to navigate these choppy waters, including C-suiters, internal communicators, and leaders of business functions. This ensures employees receive holistic, complementary perspectives as the situation progresses. It helps give holistic and thorough statements from differing perspectives to employees as the situation progresses. This includes proper training for your board members as executive communicators and aligning communications with them as a unit.
• Plot the milestones for employees: As the situation progresses, employees will want to hear how it’s moving along. Illingworth crafting and bundling your messages to reflect the process. “Showing the strength to make key decisions and plotting out milestones of progress, such as new board members joining the company, serves to show employees you’re doing what you set out to accomplish in the process,” he added.

Contextualize the business around organizational values

Activist investor activity can cause uncertainty for a company’s employees, largely due to the uncertainty of what a potential takeover might do. Will it cause job cuts, or even split the company in two?

Communicators can minimize this by holding their organizations steadfast to a couple of ideals:

• Hold active listening sessions, but be careful with which methods you choose. These two-way listening methods can help employee communicators learn about employee sentiment and craft messages accordingly. But Illingworth suggested that some communication methods like surveys may fare better than others, such as town halls. “Town halls could lead to pitchforks because of the uncertainties in play,” he said.
• Let your company’s mission and values lead the way forward. In uncertain times, your company’s mission and values provide a guide to follow. For CVS’ employees, this includes a commitment to making a positive difference in healthcare for millions of customers. A change on the board or in leadership won’t change that.

There are still a lot of details left to unfold in the activist investor process that might be underway at CVS. But with proper comms tactics, employees of the company will be both informed about what’s going on at the top of their company and able to focus on their day-to-day roles.

Sean Devlin is an editor at Ragan Communications. In his spare time he enjoys Philly sports and hosting trivia.