In part one we identified important different stakeholders and examined how the communication flows among them.
But now let's tackle an equally important question:
who should manage stakeholder communication?
Should it be the CEO? Should it be a dedicated marketing department or someone else entirely?
In an early-stage startup, the responsibility typically falls on the CEO. A proper marketing department is usually not in place and hence, the CEO often has to manage all sorts of communication, whether–it is related to brand development, pitching to investors, handling customer feedback, or any other kind of communication. At this point, the primary focus is on the business development, and all communication efforts are directed towards this goal.
However, as the startup grows, it may start to build a marketing department that would handle advertising, digital communications, social media and brand development for the business. This transition allows marketing related communication to be managed by specialists, freeing up the CEO to focus on strategic communication with potential customers, business partners or investors.
Eventually, as the business grows and becomes more structured, it might consider appointing someone specifically to manage investor relations or investor communication and this role might involve conducting zoom calls with investors, creating pitch decks, managing meetings with investors and building the company’s image in front of potential investors.
So, that summarises who should be communicating.
Now, another important question you might encounter: how do we communicate? and what are the tools for effective communication?
The tools to be used and their frequency will often depend upon the type of stakeholder.
Shareholders
For shareholders, communication tools themselves may be provided by law or specified in the shareholder’s agreements. For instance, shareholders agreements might require quarterly/monthly information statements or audited /unaudited results on a certain periodic basis to be provided to the shareholders. The law will inevitably provide for an annual forum where shareholders can gather and ask questions to the management. Keeping shareholders informed and engaged is crucial and doing so regularly will ensure transparency and build trust.
Board Members
Communication with board members play a pivotal role in aligning the company's strategic direction and governance with its persistent goals. Board meetings bring together key stakeholders such as the founder, investor and appointed board members to discuss critical matters affecting the company's performance and future initiatives. The core of this communication strategy involves holding regular quarterly board meetings, with well prepared agendas and detailed minutes. Encouraging one on one meetings with board members is important for addressing specific issues. Also, conducting annual strategic planning and board development workshops or retreats ensures efficiency and alignment with the company's vision and objectives.
Potential Investors
Startups may not realise this, but potential investors are tapping into every move of fast growing startups. The appropriate communication tools here can be social media, press releases, founder interviews or getting covered in popular blogs etc.
Using these tools carefully can help create a desired image of the business in the minds of potential investors. Then, when you bring a pitch deck to provide detailed information, an investor can relate to the progress. For investors, it pays to build a proper stakeholder communication plan since you want to control how you appear to them.
Employees
Communication with employees can be for various reasons, but the most important one is to align them and keep them aligned to the goals of the organisation as a whole. In this case, the communication tools can be CEO letters, town halls or functional head meetings. The functional heads will, in turn, communicate various developments in their respective areas to all employees in their department. This will ensure that all teams remain aligned with the company's overall interests and objectives.
Suppliers and Customers
Building strong relationships with suppliers and customers goes beyond transactional communication. Keeping your customers and suppliers informed about important updates and changes is vital for maintaining strong relationships. The communication can be through emails, phone calls, or meetings, newsletters or events organised for partners. Often a lot of business is generated simply by maintaining great relations and keeping the communication ongoing.
Government
In the early stages, the government will have a limited role as a stakeholder since there is usually basic compliance to be taken care of and government or regulatory agencies are more concerned with actions which can impact the general public. However, where a startup is functioning in a regulated sector itself, such as health or insurance, the government is definitely involved. Communications with government or regulators are either statutorily prescribed or requested by the government itself. The most important point here is to not delay responding to such communications.
Larger Community
Building and maintaining a positive reputation within the larger community is important for long-term success. Hosting and participating in community events, volunteer programs and local initiatives demonstrates a genuine dedication to social responsibility. It is important to communicate transparently through newsletters, press releases and social media updates so the community knows what you’re up to and how you’re impacting them. Further, you can also implement Corporate Social Responsibility (CSR) initiatives that address community needs like environmental sustainability programs, educational scholarships or health and wellness projects. By using these tools you can create shared value with your local stakeholders.
Managing Conflicts and Crisis
A startup CEO's life is almost always on edge, balancing conflicting interests like those of early stage investors and later stage investors, both of whom often consider themselves to be the most important and demand attention accordingly. This can become difficult for a CEO to manage. However, both of them are interested in the Company’s profitability and appreciation of their capital. As long as a CEO is able to convince them that the business is on a growth trajectory, it might be possible to achieve this delicate balance.
Handling communication gaps between co-founders can be very challenging. It can hurt egos and create conflicts which, if left unaddressed, can lead to disastrous outcomes like co-founder fallouts or disagreements between the co-founders and investors. Communication between co-founders should be as frequent as possible, through daily huddles or progress calls.
Beyond resolving conflicts, a CEO's communication skills are tested during a crisis. For instance, let's consider a scenario where a customer spreads false rumours about the company on social media or if someone leaks confidential information. It is also possible that the company has failed to comply with certain regulations leading to negative opinions about the company. Another example could be if someone files a lawsuit against the company. With this, the entire reputation of the company will be affected.
Communication during such times must be handled diplomatically - neither agreeing nor outright dismissing claims unless the claims are completely baseless. It takes 20 years to build a reputation and just five minutes to ruin it.
To sum up, managing stakeholder communication is an evolving responsibility in a startup’s life cycle. By using the right strategies and tools, startups can navigate the complexity of engaging with stakeholders that help them grow and build long lasting relationships.
