Best Practice Report - Becoming a trusted adviser to senior management
It’s often said that you know you are doing your job well when people start asking for advice from all different parts of the business. From the board...
<sup>Best Practice Report</sup>
Becoming a trusted adviser
to senior management
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Introduction
Why IROs are responding to the changing ESG landscape
Introduction
Why IROs are responding to the changing ESG landscape
It’s often said that you know you are doing your job well when people start asking for advice from all different parts of the business. From the board and senior management down, you have become a vital resource on the company, the industry and the mood of the capital markets.
But how do you become a trusted adviser? In this report, senior IR experts offer advice on how IROs can make themselves indispensable to their firm and elevate their career to the next level.
Creating opportunities for impact
There’s no question that the IR department enjoys a unique position within an organization. With fingers in many pies, and eyes and ears that are always open and on the pulse externally and internally, IROs are ideally placed to have a tangible effect on the business and make a positive impression at all levels, both within the company and across the external stakeholder landscape. But amid the hustle and bustle of this busy and diverse function, how can IROs stand out and position themselves as vital trusted advisers?
IR teams typically have valuable intelligence gained through regular interaction with analysts and investors
For Shelly Patel, head of IR at Rathbones Group, securing the support of the senior management team and C-suite is key. ‘I believe one of the most important pillars for success in an IR function is to have senior management and board level buy-in,’ she says. ‘The more you can show leaders of a business the value of a successful IR function, the more likely you will become an invaluable resource.
‘This can involve gathering the intelligence management needs for solid decision-making, such as discussions you have with the external markets, competitors, investors and analysts – in short, it’s the information that will support the management team’s strategic thinking.’
To make a tangible impact and boost their profile, IROs need to make the most of every opportunity from every source to add value, according to Sandra Novakov, head of IR at Citigate Dewe Rogerson.
‘IR teams typically have valuable intelligence gained through regular interaction with analysts and investors, analysis of investor trading patterns, peer group benchmarking and perception studies,’ she says.
‘This positions IR professionals well to help shape company strategy, support operational initiatives and facilitate good corporate governance. The extent to which they leverage this opportunity will determine the quality of their relationships internally as well as the extent to which they are seen as a vital resource.
‘By sharing market intelligence with the board, senior management and heads of key business divisions, IR teams can aid decision-making and play a vital role in shaping the strategic direction of the group.
‘For example, being able to anticipate the likely market reaction to a potential transaction or a shift in strategic direction can determine how such initiatives are communicated to ensure optimal levels of support from the investment community. Not addressing investor concerns in such situations can have detrimental consequences.’
Shelly Patel, Rathbones Group
An external view
This view is shared by Patel, who reinforces the point that effective IROs can provide a window on the thinking of the outside world.
‘Often, management is too focused on what’s going on internally and an external perspective is missing,’ she says. ‘IR should be the conduit for this. When anyone in the business wants to understand the market backdrop, what competitors are doing or what investors are thinking, you want them to think of the IR function as their greatest source of knowledge.
You want them to think of the IR function as their greatest source of knowledge
‘This helps to build trust with key senior stakeholders who are often incredibly busy day to day and are looking for someone they can turn to as a trusted subject matter expert.’
Resourceful IROs and teams can also play an important role in supporting good governance, says Novakov, whose company is, at times, mandated by company boards to investigate market perceptions regarding management performance in certain areas.
‘This allows the board of directors to take appropriate action to address any issues in a timely manner,’ she explains. ‘When it comes to supporting business heads, intelligence gathered through benchmarking research conducted by the IR team can be extremely useful when assessing changes in the competitive landscape and reviewing actions taken by competitors, including how these were received by the market.’
Dealing with the challenges
Prioritization and time management are key to delivering value
Dealing with the challenges
Prioritization and time management are key to delivering value
Being indispensable isn’t without its downsides and IR teams that consist of one person (or one senior person) face great challenges in this respect.
‘They are expected to provide swift and insightful responses on an increasing range of issues to the investment community for which they need strong support and good relationships across the business,’ says Sandra Novakov of Citigate Dewe Rogerson.
‘In addition, according to our research, 65 percent of IROs have additional responsibilities alongside their core IR role, most commonly for corporate communications, ESG and strategy. The increasingly integrated nature of corporate communications and the need to consider multiple stakeholders when delivering updates to the market have placed IR teams worldwide under increasing pressure.’
With this in mind, while striving to be the best they can be, is there such a thing as too much on a trusted-adviser IRO’s plate? No, says Rob Gurner, head of investor relations at Plus500 – though he adds the caveat that effective organization is key to successful workload management.
As long as you can prioritize and appropriately manage your work and activities, it shouldn’t be too stressful
‘I enjoy challenges and I love being busy so, actually, I embrace being the go-to person,’ he says. ‘As long as you can prioritize and appropriately manage your work and activities, it shouldn’t be too stressful.’
Craig Marks, vice president of IR at Ipsen, echoes this sentiment: ‘If you’re true to the IR values of honesty, proactivity, reliability, knowledge, passion and clarity, there are no downsides. Being ‘always on’ in a job you love is no bad thing.’
In the experience of Shelly Patel of Rathbones Group, being able to call on the skill and support of colleagues is key to dealing with the often-onerous IR workload.
‘This is a role where you need to be able to multi-task and prioritize,’ she points out. ‘If there are a lot of things happening in the business where IR is involved – strategy, M&A, results – it can quickly seem like a mountainous task to ensure the smooth delivery of the function.
‘This is when it becomes important to know your business – and who else in the business can help with certain requests. Having a strong internal network can really help with managing workload. This is particularly important when you have a small IR team.’
Sandra Novakov, Citigate Dewe Rogerson
Making a difference, across the board
Internal knowledge and contacts are key to building your profile
Making a difference, across the board
Internal knowledge and contacts are key to building your profile
So where do our experts feel their role as trusted adviser is most salient? For Shelly Patel of Rathbones Group, it’s a case of being a visible resource to the many, not just the few.
‘I don’t believe there is one single place where the trusted adviser role should sit – being seen as a respected function across the group is the goal,’ she observes. ‘IR is often seen as an information repository but, in order to get there, you will have had to form relationships – and not only externally but also internally.’
The importance of this multi-faceted approach is also iterated by Plus500’s Rob Gurner. ‘For the board, you are the primary window to the market,’ he points out. ‘So you are able to directly impart important information to it about market trends, sentiment and competitive dynamics.
‘This is becoming increasingly important as capital markets become more dominated by such things as algorithmic trading, for example, and share-price movements and market sentiment consequently become more difficult to analyze and understand.
It’s important to demonstrate your credibility to build a strong and collaborative relationship
‘For senior managers, who you work directly with on a day-to-day basis, you must have their confidence and trust to ensure you can deliver a high-quality and credible IR program. For your colleagues, it’s important to demonstrate your credibility to build a strong and collaborative relationship and help them understand share price and valuation dynamics.
‘This is vital given that many of them will most likely be shareholders in the company and therefore have a vested interest in its performance and positioning within the capital markets.’
Be proactive in making your team known to the business and integrating yourself
Tips and tactics
With this in mind, what tactics and skills can IROs use to raise their game and boost their career to the next level?
‘Be proactive in making your team known to the business and integrating yourself,’ advises Patel. ‘I have spent as much time getting to know all of the different business units at Rathbones as I have meeting investors and speaking to analysts.
‘It is imperative that you regularly communicate with the leaders of business units – and beyond – about the external market’s hot button topics and take on board their views.
‘The more your senior stakeholders understand the importance and outcomes of accurate messaging, the more likely it is that they are engaged and respect the function. This approach has meant I have been able to form strong relationships with the chairman, senior leaders, subject matter experts and practitioners from across the business.
‘Knowing the business as best you can from an internal perspective allows you the best chance of distilling that information in an engaging and meaningful way to the external world.’
Rob Gurner, Plus500
This company-wide mentality is echoed by Ipsen’s Craig Marks. ‘Some companies vary in their board-IR interactions, but every company needs IR to be a trusted adviser to management and colleagues,’ he says.
‘My advice is to build the IR brand internally as you get out there: know the company better, build strong relationships (which is great for information gathering), present widely to internal teams and make IR relevant and vital. Also, invite senior management team members outside of the CFO and CEO to conferences, bus tours and fireside chats.’
The last word
The best way to develop is to get out of your comfort zone
The last word
The best way to develop is to get out of your comfort zone
It’s clear that today’s IRO is often already an indispensable company resource, but what final thoughts do our experts have to share on how they can elevate their career even further?
‘IR people often understand the pulse of the company more than almost any other function of the business,’ comments Rathbones’ Shelly Patel. ‘They live perfectly in between the internal and external and are privy to the views and direction of a company from a senior management and board perspective, while understanding deeply the expectations from investors.
‘Use that positioning well – not everyone will be as fortunate as you to be that source of knowledge, nuance and guidance on messaging, positioning and strategic direction to management so that it lands in the best possible way with investors.’
Craig Marks, Ipsen
‘In my view, its vital (and interesting!) to constantly learn and develop your knowledge about IR, the macro environment, the industry or sector you’re working in and the company you’re working for,’ adds Plus500’s Rob Gurner.
‘So I think it’s really important for IR professionals to never be afraid to take on new challenges, work streams and activities. It might seem scary at the time and you may be out of your comfort zone – but that’s the best way to learn and develop.’
‘Build your personal brand: know the company better than anyone, be your company’s oracle. This way, you develop credibility in the company and in the market,’ concludes Craig Marks of Ipsen. ‘You’ve got to network to get work, but you can only do this with credibility. Go beyond expectations: innovate, be proactive, try – and enjoy.’
Tales from the top
Rob Gurner, head of IR at Plus500
‘In one of my roles, the UK-listed company I worked for was being acquired by a business listed in another territory so it was clear the IR role would significantly change in scope, mandate and form. Fortunately, I had built good relationships with the senior leaders within the incumbent business so I offered to assist and support the merged business with any ‘non-IR’ activity they felt was required during the takeover transition.
‘Subsequently, I was tasked with leading a number of important tasks and projects away from the world of IR, including running the post-merger office, delivering major commercial projects and managing a number of internal communication events for the newly merged business.
‘There are two important aspects I learned from the experience. First, building internal relationships is vital. The starting point for engagement here is to always ensure your colleagues understand the basics of IR – for example, why we have a share price, what drives valuation, what investors think of your company. Maintaining a consistent internal dialogue here is important and will help you whenever you need something back from your colleagues – for example, information and data around an investor event.
‘Second, skills learned in an IR role are very transferrable into other areas, including corporate development, different channels of communications and a number of commercial and operational areas. So if you build those internal relationships and highlight the key facets of your IR role, it will give you the opportunity to become involved with non-IR activity and therefore enable you to be more embedded in your organization, which is always a fascinating and valuable learning experience. This will also give you more credibility when speaking to investors, as you’ll have direct experience of perhaps commercial or operational activity within the business.’
Tales from the top
Craig Marks, vice president of IR at Ipsen
‘I remember when I started in IR. I was working for a fantastic FTSE 250 consumer business, and I’d started up the in-house IR function around a year after flotation. I thought that, to match the ambitions of the business, we should have a FTSE 100 IR program, which included IR roadshows right across the usual and more far-flung regions in North America and Europe.
‘I really wore out the shoe leather. I remember being challenged by the chairman of the board, as well as an old colleague who’d just gone into IR, on why such a program was needed, until private equity sold its large stake overnight, the day the company went ex-dividend.
‘All of the demand created by the program was unleashed, meaning an immaterial change in the valuation and a very good-quality share register. It took a while, but recognition eventually came. Proactivity is a key foundation in IR.’
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Becoming a trusted adviser to senior management
By Jamie Stanton, senior director of IR, Q4 Inc
Becoming a trusted adviser
to senior management
By Jamie Stanton, senior director of IR, Q4 Inc
Although there are many interpretations of it, one of the key goals of the investor relations function is to develop and communicate the messaging and outreach to investors that captures the investment thesis and enables a company to achieve a fair valuation. To accomplish this, an IR professional must become the eyes and ears of the management team regarding the perception of the company as viewed by investors.
But being an effective IRO goes beyond simply providing information. To truly excel in your role, you need to become a trusted adviser to senior management. This means providing valuable insights and advice on a wide range of issues, from the company’s financial performance and industry trends to the mood of the capital markets.
IROs must also be effective in sharing that within the company and proliferating the company’s view externally. Often, the IR professionals who do this successfully are viewed as trusted advisers to management. Accomplishing this level of credibility requires excellent communication skills, strong financial knowledge and sharp business acumen.
How to be best in field
Clear communication is key to the success of anyone pursuing a career in IR. Written content such as press releases, earnings commentary and FAQs are expected to be well organized, accurate and easily understandable. More senior IR personnel take on a company spokesperson role, presenting the company’s unique differentiation and responding to investor questions.
The best in the field are perceived by the investment community to be speaking as a member of the management team, not as someone who speaks in place of management team members.
Being an effective IRO goes beyond simply providing information. To truly excel in your role, you need to become a trusted adviser to senior management
Financial knowledge is foundational for being able to communicate with the investment community. Because much of the messaging that is of interest to investors is related to the financial performance of the company, IR professionals have to be able to explain historical and expected financial performance.
They also have to draw understandable connections between the strategic objectives of the company and the financial results they will generate. IR professionals must be able to connect income statement, balance sheet and cash flow details to specific operational aspects of the company.
Pulling the pieces together
Business acumen is sometimes defined as an ability to see the big picture, to understand all business functions, to know all the functional areas of a company or even to know how the company makes money. For IR professionals who seek trusted adviser status with their management team, demonstrating business acumen requires cross-functional knowledge of the competitive landscape the company faces, how the company’s products and services create differentiation and ultimately how that creates value for all company stakeholders, especially shareholders.
When IR professionals are able to pull these pieces together, provide insight from both the internal and the external perspectives and contribute to shaping the long-term direction of the organization, they become not just trusted advisers to management but also key leaders within the management team.
Building and maintaining these skills requires continuous improvement efforts and monitoring for changes in the best practices implemented by IR programs. Individuals must make it an ongoing objective to advance in their career. Strengthening these capabilities is an important part of ongoing IR skill development at all levels, but is an essential part of career development for those who look to advance beyond the top of the IR profession.
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Q4 is a leading capital markets communications platform provider that is transforming the way publicly traded firms, investors and investment banks make decisions to efficiently discover, communicate and engage with each other. The Q4 end-to-end technology platform facilitates interactions across the capital markets through its IR website products, virtual events solutions, capital markets CRM solution and shareholder and market analytics tools. The firm is a trusted partner to more than 2,650 public companies including 50 percent of the S&P 500. Q4 is based in Toronto, with offices in New York and London.
