Corporate Communications for Public Companies: Dos and Don’ts

In an era where information travels faster than ever and stakeholders are increasingly demanding transparency, public companies face the challenging task of managing their corporatecommunications. Corporate communications are crucial for ensuring that a public company maintains its reputation, aligns its strategies with its values, and effectively engages with stakeholders, including investors, employees, customers, and the broader public.

Public companies, listed on stock exchanges, have heightened responsibilities. Their communications aren’t just about public relations or marketing—they have legal, financial, andregulatory dimensions that can significantly affect stock prices, investor confidence, and brand reputation. The wrong message or an ill-timed comment can lead to financial losses, lawsuits, or even a public relations disaster. Conversely, strategic, well-managed corporate communication can build brand equity, bolster stock performance, and fortify relationships with critical stakeholders.

This op-ed will explore the essential dos and don’ts of corporate communications for public companies, addressing the strategies and tactics that contribute to a successful, ethical, andtransparent communication framework. Whether you’re a CEO, a communications director, or a member of a PR team, this guide will provide you with practical insights into how to handle the delicate balance of corporate communication in a public company.

1. The Dos of Corporate Communications for Public Companies

1.1 Do Prioritize Transparency and Honesty

In an age where information is readily accessible and leaks can happen at any time, transparency is paramount. Public companies must be open and clear about their financial performance, business strategies, and any potential risks. With the advent of digital platforms, investors, customers, and employees expect to receive timely and accurate information.

For instance, quarterly earnings reports are critical in building and maintaining trust with investors. In addition to providing the necessary figures, companies should be open about any challenges they face, whether financial, operational, or reputational. Misleading stakeholders, even unintentionally, can lead to catastrophic consequences, including SEC investigations or plummeting stock prices.

Transparency builds credibility, especially in crises. Consider Apple’s response to the iPhone battery controversy in 2017. After it was revealed that the company had intentionally slowed down older iPhones, Apple quickly acknowledged the issue, apologized, and offered customers a discounted battery replacement. Though the situation could have escalated, Apple’s transparency about the issue helped contain the damage and maintain its brand reputation.

1.2 Do Engage Consistently with Stakeholders

A public company needs to maintain an open line of communication with all of its stakeholders, including investors, employees, customers, regulators, and the media. Regular updates, whether through press releases, investor calls, or social media engagement, are critical to staying top of mind and building loyalty. Inconsistent or infrequent communication can result in confusion, misinformation, or a loss of confidence in the company.

Investors are especially sensitive to communication, given their financial stakes. This means that when a company faces challenges or opportunities, stakeholders must be informed in a timely, concise, and meaningful way. Tesla’s communication strategy is a good example of maintaining consistent engagement. CEO Elon Musk regularly communicates with both investors and the public via Twitter, press releases, and earnings calls. Despite facing public criticism for his unorthodox approach, Musk’s active engagement keeps the company’s stakeholders informed and connected to the company’s vision.

1.3 Do Align Communication with Corporate Values

In today’s socially conscious world, public companies must align their corporate communications with their core values. Messaging that reflects a company’s values can help strengthen its reputation and attract the right customers, partners, and talent. Authenticity in this regard is essential.

For example, Ben & Jerry’s has consistently aligned its corporate communications with its commitment to social justice, environmental sustainability, and activism. The company has never been afraid to take a public stance on controversial issues like climate change or racial inequality, often leveraging its voice to influence social change. This strategy has endeared Ben & Jerry’s to its customers and created a strong, value-driven brand identity.

Aligning communication with corporate values also extends to responding to crises. A company that values diversity, equity, and inclusion should ensure that its communication strategy demonstrates these principles, even when responding to negative news, product failures, or legal challenges.

1.4 Do Prioritize Crisis Communication Plans

Even the best-managed companies will face crises—whether a product recall, a lawsuit, or an executive scandal. The key to successful crisis management is preparation. Corporatecommunications teams should develop a crisis communication plan that is ready to be activated at a moment’s notice. This plan should include clear steps for informing stakeholders, managing internal communication, and addressing the issue publicly.

When Johnson & Johnson faced the Tylenol poisoning crisis in 1982, its corporate communications strategy was a textbook example of successful crisis management. The company immediately recalled 31 million bottles of Tylenol, communicated the decision to the public, and provided consistent updates as it worked to ensure consumer safety. Their swift andtransparent response, combined with decisive actions, helped the company maintain its reputation in the long term.

A crisis communication plan should also consider the channels and tone of messaging. An internal communication protocol should be established to ensure employees are kept informed and are empowered to be part of the company’s external response.

1.5 Do Use Data and Analytics to Measure Success

The power of data in corporate communications cannot be overstated. Public companies have access to a wealth of data—whether from social media, website analytics, or customer feedback. By tracking how stakeholders are responding to corporate messaging, companies can gauge the effectiveness of their communication strategies and adjust as needed.

Investor sentiment analysis, for example, can provide real-time insights into how the stock market is responding to a company’s earnings report or crisis management efforts. Similarly, monitoring social media and customer feedback can provide critical insights into how the public perceives the company’s actions and messaging.

2. The Don’ts of Corporate Communications for Public Companies

2.1 Don’t Withhold Critical Information

One of the biggest mistakes a public company can make is withholding critical information, whether it’s about a financial issue, a product failure, or an operational challenge. Not only does this undermine trust, but it also opens the company up to potential regulatory scrutiny. Public companies have legal obligations to disclose certain information to the public, such as financial performance and material risks. Failure to do so can result in fines, lawsuits, and a damaged reputation.

Enron’s downfall is a classic example of the perils of withholding information. The company’s executives hid massive financial losses and manipulated financial statements to mislead investors. When the truth finally came to light, the company collapsed, leading to significant financial losses for shareholders and employees, and ultimately leading to stricter regulations like the Sarbanes-Oxley Act.

Similarly, withholding or delaying a product recall announcement, as Volkswagen did during the 2015 “Dieselgate” scandal, can cause irreparable damage. In the case of Volkswagen, the company’s initial attempt to cover up its emissions-cheating software only fueled the crisis. A quicker and more transparent response might have prevented much of the publicbacklash.

2.2 Don’t Be Defensive or Combative

During times of crisis, corporate leaders must resist the temptation to be defensive or combative when responding to critics. A confrontational approach can escalate a situation andfurther damage a company’s reputation. It’s crucial for companies to maintain a calm, professional, and empathetic tone when communicating, particularly in response to negative news or public outcry.

When BP faced the Deepwater Horizon oil spill in 2010, the company’s CEO, Tony Hayward, made several public statements that were perceived as tone-deaf and defensive. Hayward famously said, “I’d like my life back,” while millions of barrels of oil were spilling into the Gulf of Mexico. This comment angered the public and reflected poorly on the company’s leadership. Had BP adopted a more empathetic and humble approach, the damage to its reputation may have been less severe.

Public companies should embrace a collaborative, solution-oriented approach, even when dealing with criticism. It’s important to listen to stakeholders, show accountability, and focus on taking corrective action rather than attacking those who are questioning the company’s decisions.

2.3 Don’t Overpromise or Underestimate the Situation

When faced with a crisis or challenge, corporate leaders should be careful not to overpromise a quick fix or underestimate the situation. Overstating what the company can do or rushing to promise unrealistic outcomes may backfire when the results fall short. In the face of adversity, it is far more effective to offer a realistic assessment of the situation and outline a clear, achievable plan for addressing the issue.

For instance, Samsung faced a massive crisis in 2016 when its Galaxy Note 7 phones started catching fire due to faulty batteries. Initially, the company downplayed the issue andcontinued to release the phone despite reports of overheating. When Samsung finally issued a recall, it failed to address the severity of the problem, leading to further customer dissatisfaction. Only after a more honest and thorough response, including halting production and offering full refunds, did the company begin to recover.

By offering clear timelines, realistic expectations, and a plan for corrective action, companies can avoid the negative fallout from underestimating or overpromising in their communications.

2.4 Don’t Ignore Internal Communication

Internal communication is just as important as external communication in corporate crisis management. Employees are the company’s first line of defense and should be kept informed about key developments, especially in times of crisis. Failing to communicate internally can lead to confusion, misinformation, and a lack of alignment within the organization.

For example, Netflix’s response to the 2011 Qwikster debacle, when the company attempted to spin off its DVD rental service into a separate entity, was poorly handled internally. Many employees were left in the dark about the strategy and felt blindsided by the public announcement. This led to a breakdown in employee morale and a public backlash that hurt Netflix’s brand.

Companies should ensure that employees are informed, aligned, and empowered to communicate effectively with external stakeholders during a crisis. A unified, internal communication strategy is essential for maintaining the company’s reputation and minimizing confusion.

2.5 Don’t Overlook the Power of Social Media

In today’s digital age, social media can make or break a company’s communication efforts. Ignoring or mishandling social media can amplify a crisis and further damage a publiccompany’s reputation. A clear, proactive social media strategy is essential for engaging with customers, investors, and the public, particularly when a company is facing challenges.

During H&M’s 2018 controversy over a racially insensitive ad featuring a black child wearing a sweatshirt with the phrase “coolest monkey in the jungle,” the company’s initial response was slow and inadequate on social media. The brand failed to act quickly on platforms like Twitter and Instagram, allowing the backlash to snowball. Had H&M addressed the issue more swiftly and empathetically, the situation might have been mitigated faster.

In the future, companies must be agile on social media, responding promptly to concerns, addressing issues directly, and using these platforms to showcase transparency andaccountability.

For public companies, effective corporate communications are essential to sustaining a positive reputation, building trust with stakeholders, and weathering the inevitable crises that arise. By prioritizing transparency, empathy, and consistency, public companies can craft communications strategies that foster lasting relationships with their stakeholders.

However, poor communication decisions—whether withholding information, being defensive, or failing to engage in internal communications—can jeopardize a company’s reputation and financial standing. As we move into an increasingly interconnected world, the ability to navigate corporate communications with integrity, professionalism, and responsiveness will be more important than ever.

The dos and don’ts outlined here serve as a roadmap for leaders and communications professionals to manage their public company’s message in a way that engenders trust, maintains credibility, and ensures long-term success. When executed well, corporate communications can be a powerful tool for public companies in managing relationships, navigating challenges, and building an enduring legacy.