Does your company’s interaction with shareholders feel more like an obligation than an opportunity? If so, it might be time to consider a different approach.

If you’re curious why this happens, think about the relationship between your business and its investors. Is there a high level of confusion or contention between investors and the board? Is the business’s approach to communication seen as a formality? Is your engagement usually conducted strictly during times of crises?

In recent years, articles and interviews with executives discussing shareholder engagement appear to be on the rise, indicating an uptick in awareness. Still, as a whole, businesses could stand to improve their outreach.

At Saratoga Investment Corp., we place a high emphasis on shareholder engagement and outreach. The reason is simple: proper investor outreach is mutually beneficial. By keeping your investors further informed on business proceedings, you give them a greater sense of immersion and connection to their investment. When investments continue to perform, investors are less likely to consider pulling their money from the venture. They may even opt to invest further.

In short, if your company isn’t thinking like a shareholder activist, maybe it’s time to consider a paradigm shift when it comes to your outreach. As Vanguard chairman and CEO F. William McNabb III notes, thinking like an activist helps your company in the very best sense. He elaborates, “Healthy and vibrant boards think like an activist in the very best sense. They ask:

  • Where should we be pushing harder or taking costs out? What are the management team’s blind spots?
  • What are the board’s blind spots?
  • And how do we correct that? Some boards bring in sell-side analysts that have a ‘sell’ on the company to tell them what they’re missing.”

By thinking like an activist, your company can become proactive in ways that a shareholder couldn’t possibly from merely an investment standpoint. Now the business places itself in an advantageous position. Imagine the next time you communicate to your shareholders that you did notice areas of improvement. The issue was resolved and now the business is reporting the positive improvement to its investors.

That sort of engagement is bound to produce positive sentiment, don’t you think?

If your business effectively communicates its financial performance, that’s excellent, but it’s far from all you can do. To expand your outreach efforts, consider expanding the discussion to include strategy, risk assessments, and other topics that are important to investors. By discussing these, you give investors a higher level of transparency, which has a high likelihood of translating into a higher level of confidence and trust for your business.

Even if your business is working on producing the numbers your investors want to see, an in-depth engagement approach provides investors with a deeper level of understanding of your business. By granting access to more pertinent information, the investor is able to understand their investment on a deeper level — a desire you might have heard more about since the financial crisis.

From dedicated teams to a few tweaks, more of today’s businesses are listening to the opportunities and benefits that come with improved shareholder engagement. If your company hasn’t done so, it’s high time to at least consider adapting your current approach. In the end, all parties could reap the benefits.

This post was originally published on CFO.com