We seem to be in a polarized, zero-sum world, where a “win” for one is considered a defeat for another. Looking for a “win-win” situation is considered so clichéd and unrealistic that it's the basis for a popular television commercial where a business traveler changes his airline seat to avoid sitting next to his compatriot. His fellow worker's crime? He constantly seeks win-win solutions and won't stop repeating the phrase.

Yes, the win-win guy is obnoxious. But think about it: How far have we fallen—how far has the zero-sum zeitgeist infected American society—that the idea of everyone rising together has become the punch line of a joke?

If you only read the popular press, you probably think that polarized dynamic is at work in the shareowner and corporate management relationship as well. After all, this is the world of tabloid headlines that feature “special interest shareholders” versus “entrenched management.” Thankfully the real world of company-investor engagement is a much more positive place. In fact, you might even call it a win-win.

A recent study commissioned by the Investor Responsibility Research Center Institute and conducted by Institutional Shareholder Services surveyed nearly 500 investors and public corporations. What this first-ever benchmarking of corporate-shareowner engagement found is rather surprising: Both companies and investors think engagement is largely successful. In fact, companies are even more satisfied with their recent dialogues with shareowners than the shareowners are themselves. There seems to be mutual respect, too: The vast majority of engagements remain confidential, and many encourage more dialogue.

So what are the highlights? The state of engagement is high and getting higher. About 87 percent of public companies, 70 percent of asset managers, and 62 percent of asset owners reported at least one engagement in the past year. Moreover, at least half of every category of respondent reported that the level of engagement was increasing; virtually none reported a decrease. (The analysis subdivided investors between asset managers, such as mutual funds, and asset owners, such as pension funds and endowments.)

Perhaps most intriguingly, corporations rather than investors seem most satisfied with the recent results of engagement, by about 2-to-1. Approximately 80 percent of companies said their engagements with investors were “always” or “usually” successful, compared to about 40 percent of the investors—although 56 percent of investors did say their engagements were “sometimes” successful.

Overall, then, engagement seems to be satisfying both investors and issuers. The definition of success, however, differs depending on your side of the table. Companies are more likely to believe mere establishment of a dialogue constitutes success, while investors more typically want additional disclosures or a change in corporate policies to consider it a win.

Finally, the level of trust among the investors and corporations that engage in dialogue seems to be rising. Some 80 percent of issuers, 72 percent of asset owners, and 62 percent of asset managers said the majority of their engagements remain private.

Marc Goldstein, the primary author of the report, cites the recent adoption of “say-on-pay” in the United States, as well as the increasing advent of majority voting for director elections and the recent financial crisis, as some of the driving forces behind the increased level of engagement. Tellingly, however, he thinks these are specific manifestations of a broader trend, and that engagement is here to stay. “Investors around the world are increasingly concerned with the sustainability of their portfolio companies, and are encouraged—if not mandated—to exercise their responsibilities as owners,” he says. “For all these reasons, engagement only will increase in importance going forward.”

If that's the case, then what are the important conclusions of the report?

Staff correctly. For many companies, engagement has moved from a quarterly, numbers-driven exercise to a year-round activity dealing with issues as varied as strategy and execution, executive compensation, and sustainability. Smart companies realize that and staff accordingly. On average, companies have two to five employees involved in engagement, no matter their market capitalization.

Where is the staff located? Issuers much prefer to have the investment relations staff begin engagement. Some 65 percent said engagement began in the investor relations department, and 24 percent said the corporate secretary initiated the dialogue. Investors also tend to start with IR, with 40 percent contacting that office first. But that is not the only conduit for communication. About 28 percent start with the corporate secretary. And in a major difference, 28 percent initiated dialogue directly with “C-suite” executives.

Also, socially responsible investors often said they reached out to executive in charge of the corporate social responsibility initiatives at the company. So, to staff correctly, employees in all of those areas need to be trained in how to engage with investors, and they need to communicate with each other to properly manage the process. By the way, you should note who is not on the list: the general counsel. Investors tend to view the counsel's office as a hurdle. “Avoid the corporate lawyers,” said one. You may or may not like that opinion, but you should be aware of the dominant viewpoint.

The person across the table from you is probably a seasoned professional. no newbie. Another finding of the report is that investors tend to engage a lot, or not at all. Approximately 28 percent of asset owners and 34 percent of asset managers reported engaging with more than 10 companies, while about 45 percent of investors did not initiate any engagement. In other words, if you are in a negotiation, the odds are that you're across the table from someone who is experienced. The corollary to that is that you can expect, and even demand, professional behavior. Feel free to ask for confidentiality, for instance. Despite the occasional high-profile engagement, 80 percent of companies said most engagements never go public, including fully 30 percent of companies that said none of their engagements have become public.

Regulations are concerns, not barriers. Investors generally don't give much credence to arguments against engagement based on regulatory concerns such as Regulation Fair Disclosure. They know how to guard against unintentional disclosures. Companies that cite Reg FD as a blanket reason for avoiding engagement should expect a fair amount of push back and may be characterized as dissembling and stonewalling.

Keep talking. A constructive dialogue was considered a success by overwhelming majorities of both companies and investors. Interestingly, however, any dialogue— even a contentious one—was considered a success by a majority of issuers, and a near majority of investors.

Engagement seems to be working. Perhaps a little more knowledge could make it work even better. We encourage you to download the report, which is both chock full of information and available for free. Did someone say, “win-win”?

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