Need to know: share prices

What is the current share price and what influences its movement?

Why you need to know

It is very important to understand the current share price of your business, not least because of the impact it might have on your bonus. On a more serious note, obviously share price is only relevant to floated companies, so if you work for a private company or public-sector or no-for-profit organisation then you will need to understand what the key indicator of performance is for your organisation and apply the advice to that.

Understanding where your business sits in the market will naturally help when you need to make strategic choices that affect the business. If the business is perceived as buoyant, then certain suggestions are more likely to be taken up if share prices are falling, then you will need to temper your strategy in line with the current mood.

Share price is a sign of how the external market views your company – how well it is doing in terms of its strategy and how it is ranked against its competitors. (as well as general economic trends). But the share price itself and its movement will not give you insight into how your business is performing. You also need to understand the context in which the shares are moving.

The share price of your business will be affected by any number of external factors, including competitor activity, the general economy, how the media is reporting your company, how market analysts view your company’s strategy, and how it is being achieved. Therefore, share price is one of the key indicators of whether your business is achieving its objectives at the broadest level.

Your company’s share price will be published in the newspapers, so keeping an eye on it will help you to determine how it’s moving. Newsfeeds, such as the Financial Times service that tells you about your company and sector, will help you to understand how the share price reflects factors affecting your sector, and your investor relations department (or person, perhaps) can give you access to analyst reports that will provide insight into how the market views your company, while your PR department keeps you informed about how the media is reporting it.

Share price is something that your clients are interested in because it is a key indicator of performance. Thinking and knowing about the same things that your clients consider to be important will help you to engage them in meaningful conversations. And a key part of being strategic is being able to talk with your business partners or clients about matters that they are interested in or concerned about.

Jan Hills, director, HR with Guts


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