S3E09 - David Calusdian from Sharon Merrill on Effective Communication for IROs and Executives

Introduction to Effective Communication

Mark Fasken: So, David, I wanted to kick off this episode talking about some of the most important factors to think about when trying to verbally communicate an effective and compelling message. And the reason I feel that's important, is that throughout the course of this podcast, IR has been compared to sales and marketing and communications many times.

And there's been a lot of discussion around how do you create a compelling message? How do you create an effective message as an organization? And that is obviously very important, but what we want to talk about today as well, if you have that great message, how do you actually, as an individual, communicate that message in an effective way?

 And you are an expert in this and communication and public speaking. And so, I'll go back to my question, what are the most important factors that people should be thinking about when trying to verbally communicate an effective and compelling message? 

David Calusdian: Yeah. Thanks, Mark. And thanks for having me on today.

I've been enjoying listening to your podcast. So I'm looking forward to be on today. 

The Importance of Structured Messaging

David Calusdian: I think there are two factors and you mentioned having an effective message, first of all, and it's important that that message be very structured. So one is having a very structured message, and make sure you have one.

Make sure you have a point in any communications. Go back and think, what am I trying to communicate to this particular audience? So, first and foremost, make sure you have a point. And then you mentioned the delivery. The delivery is the second thing, make sure that you have great body language, and I'm sure we'll go into that and a little bit more detail in a bit and effective voice.

So if you have effective messaging structure together, that resonates with your particular audience, and that dynamic delivery, you've got it all. 

Mark Fasken: Awesome. That's helpful. And you're right. We will get into a bit more detail on this. And I think the first piece that we're going to touch on, you just talked about it is the structure.

The Communications Pyramid Model

Mark Fasken: In articles you've published, you've spoken to a model that you call the communications pyramid. Can you explain how an IRO can use this structure to ensure that their messaging is clear and well structured? 

David Calusdian: Sure, I, I use my own take on what's called McKinsey's pyramid principle and the communications pyramid is simple, but it's really brilliantly effective, and it works for the delivery of any message.

And in this case, with IR messaging, we're talking about persuasive speech, and in the end, we're trying to convince investors or analysts that we have a great investment story, putting our best foot forward, yet obviously discussing all the risks. So, in this 3 tier pyramid, at the very top of the pyramid is the theme.

Again, what's the point? For example, if you're speaking to a slide in a presentation on product development and your message is, product innovation is enabling our company to capitalize on strong growth trends. That's the point and the highest level of this 3 tier pyramid is that point. Now, the 2nd level of the pyramid are the key messages that support that point.

And those are the messages you want the audience to remember as they leave the room. Now, the 3rd and lowest level of the pyramid, that's the data, the facts, the figures, the stats that back up each individual. Each individual message, so if you use that organization, and then we go back to the cliche of tell them what you're going to tell them, what you've told them.

If you start off by mentioning the point, the message you're trying to convey, and then you have those supporting points, you mentioned each one, and then for each one, you bring in the data, the backup material, and then again, at the end, bring up that point, you've now really hammered home that message three times with very structured, organized data to support everything and that's, that's how you get a really persuasive argument. And it works for Q&A too, this time with the pyramid, the top of the pyramid becomes the answer and then the middle of the pyramid are those supporting points that support the answer. And this time, I don't recommend bringing in the bottom of the pyramid, those facts, the figures, because that's when people start to make meander all over the place. And they, they mentioned a key message and then a fact, and then they go up to a different key message and another fact, and it gets, it gets a little weedy.

And that's where I find most people fall down on Q&A, is they just go on way too long.

Mark Fasken: And so is there a part of this sort of pyramid that you feel like people do not deliver on most often or maybe ask another way. 

Common Mistakes in Communication

Mark Fasken: Is there a mistake that you see as being very common? You just mentioned sort of going on and on, are there other things?

David Calusdian: Yeah, I think it not having that structure, and not really thinking through what is the main message I'm trying to convey and then not having those specific supporting points to support that message. So, most people go into a situation and just say, well, I'm talking about this. XYZ without really thinking through what is my persuasive argument and how am I supporting that?

So there's no structure to it. It's just a meandering conversation without a real point without the supporting points. So, for example, with, if you're, if you're communicating through an IR deck, and you don't have an investment thesis and you're not communicating that investment thesis throughout that deck in a very prescriptive, a very structured way, then the whole point may get lost.

Mark Fasken: I imagine that this is perhaps a bit easier to do for, say, an earnings call where you have time to prep and you're sort of speaking, right? You've got the stage for a period of time. I would, I would think that where some IROs run into issues on this. Sort of just talking out loud here is mostly investor meetings, right?

You're going into investor meeting, you don't really know what's going to come up. And so kind of going back to your point, I think it's important that these IROs that IROs have those clearly thought through messages so that when a question gets asked, they're not expecting they've already got an answer formulated.

They've got those data points. They're not just, on the spot, like, oh, man, how do I answer this? And blabbering on and on, right? 

David Calusdian: Right. It's there are two things there, one is about the preparation. That's the most important thing is thinking ahead, what are the major questions that I could get? What are the gotchas?

What are the questions I don't want to answer? What are the tough ones? And, you don't need to come up with a hundred different questions. I often see companies with Q&A documents that are a couple hundred questions long, and that's kind of self defeating. You can't memorize a hundred answers, but you can memorize key talking points to major topic areas that you may have trouble with.

So, if you do that, anytime you have a question that relates to that specific topic area, you can go back to those 3 key messages that you will have rehearsed a lot in advance. And then you can be very dynamic and be very effective at answering. And the other thing is, once you practice that so much, you get into that mindset of being very crisp with three key messages for every question.

And then you keep it very concise.

The Role of Body Language in Communication

Mark Fasken: Let's talk about body language, which seems like a weird topic on a audio recorded podcast, but we can see each other right now. Maybe people, people don't know that who are listening, but, you, you talk a lot about the importance of, of body language, obviously when you're, when you're in a meeting or, or presenting in, in front of folks, whether it's on video or, or in person.

So what are some of the key areas to focus on as it relates to body language? And why is that so important? Why is it an area that you focus?

David Calusdian: Without effective delivery, your messaging, as well thought out as it can be. Can get lost if a speaker is mumbling, if they're going on too long, if they don't sound excited about their topic they're speaking about, it can get lost.

So it's, it's a marriage. You need good body language and delivery along with the great messaging. So on in body language, I look at three key areas. One is posture, because that brings confidence into the conversation. Throw your shoulders back, stand up straight. It's not rocket science. It's something we've all been taught since we were little kids, but it's so important.

Talk and walk like you own the room, and you're the expert of whatever you're talking about. And then the second thing that I, I look at and I comment a lot when I'm working with speakers is your hands, your hand gestures. And that's an area I get a lot of question because, no one knows what to do with them.

I get that question all the time. I recommend to just keep it natural. Use your hands as you would in normal conversation. A lot of people think they use their hands too much, but I'll tell you, I can, I can count on one hand. How many times I've had to say, okay, you're going a little crazy with the hands.

And in that case, I say, here's a strike zone from your chest down to your belt where you should be keeping your hands, but otherwise just have them natural. Have them flow like you would in a regular conversation with a friend. And, and I'll go on a little tangent here, but a good presentation is really a conversation.

When you enter a speaking engagement, whether it's an investor meeting or a major speech, it should be a conversation. People want you to talk with them, not at them. So if you're just talking like you are with your hands and normal everyday conversation, then you'll be okay. So the hands, the posture, eye contact is another one that's, that's probably an obvious, but some people may just scan the room when they're delivering a presentation or, or look at a single point at the back of the room.

And that's really not effective. I always suggest to people that if you're speaking with 100 people, act like it's not 1 conversation with 100 people, but it's 100 conversations. With 100 people, try to make eye contact with each and every, every person as best you can so that you have that engagement.

And it also helps to prevent them from looking down at their iPhones constantly. If you're, if you're engaged with them in that way, too. 

Mark Fasken: Absolutely. And you told a really great example when we were, when we were sort of prepping for this conversation. You mentioned, I don't know whether this is a true story, just sort of an example that you gave of, of an executive team who was in meeting with an investor and sort of talking through and feeling very confident about their strategy.

And one question came up and they were sort of forward and engaged. And one question came up, they didn't like, and they immediately sort of sit back and cross their arms and, and go sort of into a dejected mode. Yeah. And you made a really great point. Those are things that investors pay attention to.

And in certain instances, are trained to pay attention to. And so it's something that we, as the IR team really need to pay attention to as well. 

David Calusdian: Absolutely. Absolutely. We know that investors and analysts are sometimes trained by body language experts, and we need to be cognizant of the things that we do as representatives of our companies so that investors don't read into something that just might, might not be there.

For example, the example that you just gave that I talked about earlier, I was in a room with a CEO and a bunch of investors, and this was a multi industry company and the CEO is going through each one of the six businesses, and he was sitting forward at the conference room table, very engaged, using hand gestures, and he went to that sixth business, which I knew wasn't doing that well, but when he was asked about that last business, he sat back, folded his arms, his, his language was, It's still consistent, but anyone trained in body language could notice that very distinct change in his body language.

He closed himself off by, by crossing his arms. Most people know that crossing your arms while you're talking is, is a negative. And it's because, self consciously you're protecting yourself. You're, you're folding your arms, you're protecting your vulnerable, uh, parts of your body, the opposite as when you're petting your dog, they roll on your belly, they let you pet their belly, they're being very open, they're, they're, they don't feel defensive in the same way with when you're speaking.

If you're crossing your arms over your chest, you're being very defensive. So, yeah. That's the CEO was very distinct in the change in his body language. Sometimes crossing your arms across your chest is just comfortable, or you're cold, but it's that very distinct change in body language that people can read into something.

And we just need to be cognizant of some of those things that create that perception of doubt when we're speaking. Other examples are, I mentioned hand gestures, having your hands hidden, having them behind your back, in your pockets. Some speakers like to have their hands in their pockets because it's something to do with them.

But hiding your hands is like you're, you're hiding something from the audience. So it's all self conscious stuff. And as you watch a speaker, that's also self conscious how you read into their body language. So, having that open posture with the hands in motion is definitely the best thing to do. So you're not looking like you're like, you're hiding something.

Mark Fasken: I just have to wonder how many people listening to this episode right now are like, sitting up straight and like, taking their hands out of their pockets. Right? Like, that's that's what I'm doing. I'm like, oh, man, I got to sit up straight. What do I do with my hands? Those are great points. 

Improving Executive Communication

Mark Fasken: And so, For my next question, and we're sort of getting into like executives, right?

I mean, I've heard questions before about, you know, IROs. Obviously, there's everybody has opportunities to be a better speaker and communicator. So these are certainly tips and ideas that IROs should be listening to and reflecting on for themselves to think about, like, am I, am I doing any of these things that could be misconstrued or or seen as negatives?

But there's also a lot of discussion about the executive team, right? Like, how do you prep an executive team? What if you have an executive who is not a great communicator. Like, how do you approach that? And so one of the first questions I wanted to ask along that vein is, what are some of the questions that you get most commonly from executives during some of these training sessions?

What are some of the areas where they want to improve, or maybe are not feeling as confident? 

David Calusdian: It definitely that that mentioned the hand gestures. What do I do with my hands? It's Is definitely one I get a lot. Another one is what do I do with the podium? What do I do when I'm standing behind the podium?

Do I grab the podium? Can I look down at my notes? What do I do? I look at podiums as, as evil. I don't like podiums. Podiums create a barrier between you and your audience. When you're behind a podium, you do tend to grab it, you look down at your notes, which, which breaks the eye contact with the audience.

So I recommend when I'm asked about podiums, if you don't have to stand behind it, walk in front of it, walk next to it, and speak from the heart, speak from from memory, you should not, in an investor deck situation, not really have to look down at your notes a lot. You can glance to the slides off to your left or right a little bit, but step away from the podium, be more engaged with the audience.

So that's, that's one question I get. And then, I do get a lot of questions around body language tells what, what are the things I might be doing with my body that might indicate I'm uncomfortable with what I'm saying. And I mentioned a few of them with your hands. Another one with the hands is, is covering your mouth when you're speaking.

And that's a signal that, that says that you're uncomfortable with what you're speaking. You're trying to keep the, the lie inside. When you're, a little tip when you're at a cocktail party, when you're speaking with somebody and they have their hands over their mouth and you're speaking, that's an indication that they desperately want to talk, and then maybe you should stop talking, let them say something.

Watch how your, where your feet are pointed. If you're watching a speaker and their feet are pointed away from the audience, it's an indication they want to be anywhere than where they are right now. So if you're speaking one on one with somebody that that's an indication. So that's, that's another body language tell.

So those are a few things that I'm, I'm asked a lot about. 

Mark Fasken: Those are great. And, and as the IR team, I mean, you know, the IROs do a lot of prep work, right? Whether it's writing the scripts or doing the practice runs. So spending a lot of time both practicing themselves, and working with the executive team to prepare them for, for these events, you just mentioned a couple of great things.

Are there any other things that IROs should be looking for, or feedback that they should be providing to the executive team when preparing them for, whether it's a presentation, a board meeting or an earnings call? 

David Calusdian: Some of the things we've talked about, but looking for the message, how we talked about this at the start of our conversation, what is the message?

What's the point of the conversation? And if it's an investor presentation, does the deck hit the investment thesis? Or even if it's a conference call script, whatever it is, is it hitting that investment thesis, you need to get across to your audience. Is it strong? Is it compelling? And do you have a number of key takeaways that you're emphasizing over and over again throughout the deck implicitly or explicitly?

Cause there, there should be. And then another thing that I work on a lot with executives is again, bringing out the energy and the excitement in the delivery. So as you look at your management team and they're presenting or practicing the deck, and they're practicing the conference call script, and there's just no energy in the delivery and it doesn't, a lot of executives they aren't necessarily monotone, they just say things the same way throughout the deck. So there's no indication what's important and what isn't important. If you say the word excited and you say it the same way you say every other word, it doesn't resonate. So I, I recommend that as you're watching your, your CEO, your CFO speak, if there's a key point that they should be emphasizing more, think about how they're using their vocal variety.

I recommend for every slide in a deck, for example, or again, through the conference call script, if there's a major point, let's use some vocal variety to make it stand out, talk faster. So you can show that excitement, talk softer, so it can sound more dramatic or louder. So just the way you vary it up can be very effective and bringing out those key points. So, those are some things that can help an executive go from 0 to 60 very quickly. So, that's a few ways that IROs can look at their management team and say, hey, I've got a few things that you can work on and improve very quickly. 

Mark Fasken: And so I think we've touched on this, but obviously not everybody is a great public speaker. There are some executives and IROs and just people in general who understand their businesses in very deep amounts of detail and are experts, but maybe can't communicate those messages so well, and so any recommendations for an IRO on how they can approach a member of the management or executive team who may not be a great presenter.

David Calusdian: Sure, that's that's a great question. Another one that I get all the time, and there are a lot of variables to consider there. Is the management team aware of their need for help? What's the relationship between you, the IRO and the manager and the member of management? Is the management team member, the type of person who seeks out opportunities for self improvement, or can they be very defensive?

Do they want to improve? So the answer to those questions make a big difference in how you approach them. And first and foremost, personalities and relationships make a huge difference. All being even though, I'd suggest that the IRO approach the team. The management team and not just the individual, and say it would be a great exercise for everyone to up their game to go through training, and because even the best speakers go through speaker training. And, the best speakers are the best speakers because they've done that.

So if it's a team that really wants to improve going to everyone versus saying, You, you need help. If you go to the team and say, this is something we all should do. And I'm brought in a lot of situations where there may be 1 or 2 members of management that really need the help. But everybody goes through it.

So no one's, no one's pointed out.

Mark Fasken: I think that's a great idea. And I guess it's probably easier to have that third party. You can come in, identify some of the issues, give that to the IR team or the team in general and say, for this individual or these individuals, these are things to watch out for. And you can provide that feedback as you go through prep.

So probably extremely helpful. 

David Calusdian: Yeah, or they could, if there are some things that aren't as personal, it might be easier for an IRO to say to their CEO, let's look at how we're structuring the messaging versus you're just mumbling all the time. That's when it's better to bring in somebody from the outside that.

That's no, that it won't be career limiting. 

The Importance of Effective Communication in Investor Relations

Mark Fasken: Well, in the spirit of good communication and having a well structured message, my final question sort of summarizes a lot of what we've talked about today, which is why should IROs and management care about their communication style? 

David Calusdian: It's not necessarily about style, but they should care about effectiveness.

They should care that the right, that they have the right message. And it's a compelling message that helps them to achieve their IR goals, that is specific to their audience. And to make sure it's actually getting through to investors, because if you don't have the right message for the right audience, you don't have the right structure that we talked about that helps it be more compelling and to resonate.

 And then, very importantly, as we've been talking about, if you don't have the ability to marry that good, structured, compelling message with an effective delivery that can help it get across to investors, then it's all for nothing. So it's again, it's really a marriage of delivery and message. And then you, you can be very effective in how you,

how you communicate. 

Mark Fasken: Well, David, this has been super helpful. I know that I've learned a lot. I'm slightly confused about what to do with my hands now. And so I, maybe I'll be talking to you about that after, I am sitting up straighter. And so I think those are all good things, but really appreciate your time and your expertise.

And thank you for coming on the podcast. 

David Calusdian: Thanks for having me. Enjoyed it.

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