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 fieldClear 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.
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 togetherBusiness 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.
