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Edelman Smithfield


Turnover at the Top

Five Ways Healthcare Leaders Can Garner Investor Trust as They Take on New Roles

December 08, 2022

Dan Nguyen, Account Executive and Lauren Davis, Senior Vice President in Edelman Smithfield’s Financial Communications Healthcare

While company leadership turnover plummeted in the early months of the COVID pandemic – the pace of transitions normalized, but has recently picked up in most sectors, including healthcare. It can’t come as a surprise. From economic headwinds and labor impacting performance, to delayed retirements and rising inflation, CEOs and Boards of Directors of healthcare companies must successfully navigate these unchartered waters and, at the same time, articulate their companies’ value propositions if they want to maintain conviction and build trust with the Street.

An Edelman Trust Barometer Special Report: Healthcare Institutional Investors found 87% must trust a healthcare company’s CEO before making or recommending an investment – and 82% must trust a healthcare company’s Board of Directors. The study unveiled important aspects of healthcare investor trust that are particularly salient right now as leadership and board transitions skyrocket.

Here are five crucial ways healthcare executives can build and maintain (or develop and hone) investor trust during normal course – and importantly – during times of transition.

  1.  Strategically Reaffirm the Company’s Narrative
    While CEO transitions often get significant media attention, leveraging media coverage as an opportunity to reaffirm the company narrative, investor narrative, and the company’s unique value proposition is critically important. Building a strong presence out of the gate with a commitment to clear, consistent communications is one of the most important strategies a leader can focus on in their first 90 days, as this can help to articulate company vision and strategy, and build trust, according to Edelman’s Healthcare Institutional Investor special report. It can also preempt and inoculate against potentially negative scrutiny at a time when most new leaders are focused internally. Harvard Business Review’s research on succession planning estimates poorly managed transitions in the S&P 1500 costs close to $1 trillion a year in market value, but better planning “could help the large-cap U.S. equity market add a full point to the 4% to 5% annual gains that Wall Street projects for it…” or, in other words, “company valuations and investor returns would be 20% to 25% higher.” This only reaffirms the importance of a strong transitions strategy and timely communications as a vital component of a leader’s first 90 days.

  2. Develop an Executive Platform
    Complement corporate channels with an executive visibility platform that outlines areas and topics to credibly and authentically own, especially when facing industry headwinds. Economic uncertainty has put a dim outlook on most sectors – but according to Edelman’s Healthcare Institutional Investor report, expectations for healthcare remain high with 87% of investors saying the pandemic has highlighted the value of healthcare investments in the long term. It is even more important given the challenges currently facing the industry – from labor shortages to inflationary impact, supply chain disruptions and concerns about the impact of this winter’s Tridemic – flu, RSV, and Covid-19 – on operations. This is an opportunity for new leaders to strategically identify ownable thought leadership opportunities, leverage timely media relations opportunities and newsjacking to build awareness and stay relevant.

  3. Leverage Multiple Channels
    Social media isn’t only for Millennials and Gen Z. Leverage the power of social and consider owned content on company websites or LinkedIn as part of your multi-channel approach. Edelman’s Healthcare Institutional Investor report revealed healthcare investors use 5-6 sources on average to assess potential healthcare investments with the top being the company website, investment portfolio, PDF ESG report, company’s IR website, and financial filings. Nearly one in three investors will specifically look to communications from the C-suite, but sharing those communications on the company’s website and LinkedIn page will amplify its reach. With investors looking far and wide to understand a company’s growth potential, healthcare leaders should be prepared to meet them where they are. That could mean amplifying corporate milestones and catalysts or sharing one’s POV on the industry trends mentioned earlier. 

  4. Showcase Vision
    One of the most eye-opening findings from Edelman’s Healthcare Institutional Investor report was the import investors place on leadership and vision, which was second only to financial performance, in building trust in a healthcare company they’re considering investing in or recommending for investment. New leaders should ensure they’re showcasing the corporate vision and value proposition of their companies. This can be conveyed at investor meetings, on social media and other owned channels, and by leveraging media interviews where leaders can demonstrate strong leadership and articulate their vision for the future. As previously discussed, incorporating a variety of forums and channels is essential to communicating with investors – who are keen to understand more about the vision, drivers of performance, differentiated value proposition and execution against corporate strategy.
    Five Ways Healthcare Leaders-1
  5. Highlight Pace of Innovation
    Eighty-seven percent (87%) of institutional investors say the healthcare sector responded to COVID-19 with such immediate action that it proved healthcare companies have the potential to innovate faster than they have historically. With these insights in mind, new leaders must not only build the case for their innovation strategies, but also communicate how they will push their companies forward through setbacks, and articulate the risks they will take and why the rewards are worth it.

In a slowing global economy, sensitivity around leadership transitions may only increase as investors look for companies to demonstrate stability and long-term vision. When assessing healthcare assets, investors expect more than just financial performance before putting their trust – and considering an investment – in a company. Now it is more important than ever to ensure leadership is actively communicating with investors and visibly driving progress within their company.

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