Helping Your CEO Craft a Talent Narrative for Investors
There’s been a quiet transformation in earnings calls—the number of CEOs talking talent with investors, and connecting it to firm (financial) performance, has risen from 48% in 2010 to 61% in 2016.[1]
This trend toward talking talent with investors makes sense for two reasons: CEOs value talent more, as do shareholders.
For the past several years, the number of CEOs worried about finding the right talent has grown to 76%.[2] In fact, because of the importance of assuring customers and investors they have the right people, six in ten CEOs now publicize how their organizations manage talent as part of an overall public relations strategy.[3]
Investors appear to welcome this type of information. More than 80% of them say qualitative information is critical to their buy/sell decisions and to evaluating a firm’s forwardlooking guidance. Properly presented insights on a firm’s talent management strategy can help to paint a more holistic picture of how it creates value.[4] Therefore, today’s CEOs need to be able to craft talent narratives that provide investors with insight into the underlying human capital factors that drive firm performance and mitigate risk. And to be perceived as credible, these narratives must avoid people platitudes and instead delve substantively into people planning.
Although CEOs, CFOs, and heads of investor relations can weave talent discussions into scripted remarks at earnings calls, what investors find most valuable is the unscripted qualitative information derived from Q&As.5 This is where both the greatest opportunities and risks lie—and CHROs can help CEOs successfully navigate these unscripted conversations. Heads of HR must work closely with CEOs to draft and fine-tune a thoughtful and clear talent narrative that investors will immediately grasp and remember. But how can CHROs do that?
There are multiple ways to prep CEOs for these unscripted moments. They can be as simple as CHROs reviewing prepared remarks with the CEO or the head of investor relations to identify where to go deeper during Q&A. Or they can be more intense, including having CHROs coach CEOs on tough talentrelated questions. We’ve even heard from one CHRO who prepared a briefing book on talent issues that he brought to the CEO’s earnings call practice sessions. Regardless of how CHROs and CEOs partner, there are a few common Q&A situations for which they should always prepare a thoughtful talent response.
Conclusion
Don’t let your CEO get caught off guard during the next quarter’s earnings calls when talent, and its impact on the bottom line, becomes prominent in the discussion. Help CEOs realize the potential of talent narratives, in both scripted and unscripted remarks, to substantiate firm valuations and increase investment. Leading CHROs will prepare CEOs to lean on talent, in addition to financial information, to robustly answer investor inquiries and enhance their brand’s value.
For more insights on, and examples of, talent discussions in earnings calls, download the Investor Talent Monitor Report.
1 CEB 2017 CEO 20 Pulse Survey.
2 20 years inside the mind of the CEO in Central and Eastern Europe
3 CEB 2017 CEO 20 Pulse Survey.
4 CEB 2017 Investor Talent Monitor.
5 Daniel J. Edelman Company, "It's Not Only The Numbers: How Institutional Investors Use Non-Quantitative Information," April 2015,