IN THE NEWS / Suncor Energy Speaks Out
One of Canada's big integrated oil companies has become a market darling by following a simple credo -- communicate and then communicate some more.
By CLAUDIA CATTANEO
The Financial Post
Rick George, president and chief executive of Suncor Energy Inc., has scooped up his share of accolades over the years for spinning great public relations.
But a good measure of his company's great reputation for telling its story probably came in a remark made wryly behind his back.
"It's amazing how much good press they get for that hole in the ground," an executive of a competing company remarked recently. That hole is Suncor's large oilsands operation in northern Alberta, its main asset and the focus of a $2.2-billion expansion.
Suncor, with $5-billion in market capitalization, is one of Canada's four integrated oil companies. Its oilsands operation is one of two mining Alberta's tar sands. Suncor also operates a refinery in Sarnia, Ont., a chain of gasoline stations in Ontario, and is beginning to expand abroad.
Mr. George is so highly regarded as a corporate communicator he recently received one of the world's top public relations honours for excellence in communications leadership -- the International Excel Award from the International Association of Business Communicators.
In a recent interview, Mr. George estimated he spends more than 40% of his time communicating -- with the press, the investment community, employees and the community at large.
He even regards communication as a working asset that can generate measurable value and growth.
"Resist the urge to stop communicating," he told the Calgary Chamber of Commerce recently. "Just because you have said it a million times doesn't mean it's been heard a million times. You can get tired of hearing your own voice long before you're understood or believed."
Observers agree his strategy has paid off for Suncor: Its stock price has quintupled since 1992, before its unprofitable operations were restructured.
"We did a lot of things to make that transformation happen . . . but I also give a lot of credit for our current success to our ability as an organization to communicate well," Mr. George said.
The focus on communications has made the company so well known it has helped reduce the stock's volatility, keeping it within 10% of its all-time high, despite an oil price slump that has decimated the share values of other oil and gas companies.
It has increased the shares' visibility in the United States, where 30% of Suncor's stock is held.
Most recently, Suncor, an energy analysts' favourite, emerged as the big winner among the oil and gas stocks in the new S&P/TSE 60 index. At 1.36%, it has the largest weighting among energy stocks.
"Communication is everything, especially in this very bad storm that all the [oil] companies are in right now," said Martin Molyneaux, research director at FirstEnergy Capital Corp. in Calgary. "They talk to their people, to analysts, to institutional investors, to the press, and even to environmentalists. More companies should do what they do. It doesn't pay dividends to keep your head in the sand."
Any of the "relationship" disciplines support the stock price, agrees John Sparks, principal of Calgary-based Sparks Associates Inc. "If you are really good and talk to no one, how do they know?" he asked.
Communication practices range from the so-called "cold" approach of disclosing only what's legally required to avoid getting sued, to "hot" selective disclosure to a few friendly journalists, analysts and institutional investors by "whispering in their ears" the information they want to disperse, to "Goldilocks" disclosure that involves providing relevant and accurate information to all audiences simultaneously, said Fred Kerr, president of the Alberta Chapter of the Canadian Investor Relations Institute.
Mr. George said he discovered the value of communication and the importance of giving consistent messages early in his career. Later, when he embarked on a radical restructuring of Suncor's operations, he came to regard communication as part of the work of building a corporate vision.
To get an organization to change, objectives have to be articulated clearly, Mr. George said. "Effective communication really gets the crowd with you."
He said he steers away from communication that is promotional, like making promises or statements in public that are not attainable or that would be risky to attain. "Those things always come back to haunt you."
His focus, he said, is on communication that builds trust and helps mould the perception Suncor is a bold yet caring company that says what it does, and does what it says.
In Suncor's case, the company has built so much trust with its internal and external audiences they believe in management's ability to deliver, he said.
A good example is Suncor's announcement a year ago of Project Millennium, the $2.2-billion expansion of its oilsands plant. The stock gained $7 on the announcement, or an $800-million increase in market value. "Not a bad return for a news conference -- especially for an announcement of a project that was five years away from completion," Mr. George said.
The lawyer and civil engineer doesn't see himself as a particularly gifted orator -- although his deep voice and ambassadorial good looks make him particularly effective on TV.
Mr. George said his strategy with the media centres on honesty and directness. He estimates less than 10% of his chats with reporters result in inaccurate or unfair reports -- small enough to keep himself available for media interviews.
"Either you run your organization or your life for the 90% that goes well, or the 10% that doesn't. I think the answer is that you have got to go for the 90% because that's where the value is," he said.
As the leader of a major Canadian public company, Mr. George is the exception, not the rule, in his high regard for communication.
Most corporate bosses cringe at the prospect of a media scrum, facing employees in an information session, or talking to investment analysts, corporate communications professionals say.
Media relations are a particularly sore point. "Around the boardroom tables a lot of time is spent bitching about bad press, or experiences individuals had with reporters," says Pat Gossage, president of Toronto-based Media Profile, a leading national public relations firm.
A common practice is to leave spokesmanship to junior employees -- even when issues are of national importance and should be handled by someone in a leadership role to reflect their importance, Mr. Gossage said. A recent example of bad public relations, he said, is that of Toronto-Dominion Bank delegating to a spokeswoman "the unpleasant task of announcing to the world that the bank mergers were in trouble. My feeling is that the more important the story, the higher up you want to go," said Mr. Gossage.
But Mr. Kerr said common concerns about communicating include being misquoted or disclosing information that is material and non-public -- which then involves having to make a general disclosure and facing potentially dire consequences. Executives tend to delegate for lack of time.
But it's also a control issue: "Executives are used to having a fair degree of control over their environment, and some may feel that if they can't control the outcome, it's better not to say anything," Mr. Kerr said.
Common are communication efforts that turn into major blunders, whether because of neglect or faulty strategy. Damages range from beating down stock prices to harming a company's image.
For example, Northern Telecom Ltd. watched its stock dive after chief executive John Roth, in a Sept. 29 meeting with analysts in New York, spent most of the session talking about the merits of its purchase of data networking firm Bay Networks Inc., only to be contradicted by his chief financial officer, who disclosed that demand for Nortel's core switching products was weakening. Analysts phoned in their sell orders before the session ended.
When screwups reach crisis proportions, executives call in public relations professionals for a fix.
"There is certainly a trend to bringing in a lot of high powered advice when there is trouble," said Mr. Gossage. "For a lot of us in the business, that's where our skills come into play."
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