From IR awards to perception studies, independent views provide robust measures of success
When it comes to measuring success, independent, external opinions are among the most useful, both for finding ways to improve and to demonstrate the value of IR to management.
Some companies use investor perception studies to do this. Alongside questions about the corporate strategy and messaging, they may include specific questions about the IR program, covering areas like responsiveness and accessibility. Companies can also request input on IR performance as part of broker feedback following a roadshow.
IR awards offer another source of external validation. IR Magazine’s awards events, for example, feature two categories. Awards by research are based on a survey of portfolio managers, buy-side analysts and sell-side analysts, while awards by nomination are judged by a panel of capital markets experts. Institutional Investor‘s rankings are also commonly referenced by IR teams.
Whether done by an external company or internally, one way for investor relations teams to set a baseline for performance is to conduct an audit of other programs. Often, this focuses on other companies in the sector. It may look at areas like disclosure practices, conference and roadshow attendance, number of meetings and use of digital channels.
IR teams conducting an audit should consider looking beyond their immediate sector peers, says Alex Jorgensen of Prosek Partners. ‘There are diminishing returns when you’re looking at a peer group you’ve ostensibly been looking at for years,’ he explains. ‘The beautiful thing about communication is that it’s industry-agnostic. To be really value-added to your management team, you have to look beyond your own industry.’
You have to discern what activities are going to make the biggest impact and make sure management understands that
Number crunchingIncreasingly, technology is also a source of independent feedback on the IR program. Analytics from the IR website, online events and digital publications can show companies whether they are building an engaged audience. These metrics are arguably even more crucial following the onset of the Covid-19 pandemic, when so much IR activity moved online.
‘Websites, webinars and other online tools offer key data points and insights on who is listening to your story today,’ says Jorgensen. ‘That said, we believe there is a huge opportunity for companies to create digital calls-to-action that attract a wider investor and stakeholder audience and make those analytics more actionable over time.’
Summing up, companies are not short of potential ways to measure IR. There is a wide variety of options, both quantitative and qualitative, that gauge the performance of the IR team and its contribution to the wider business.
Each approach will need to be individually tailored to the company’s overall goals and management expectations – and IR has a key role to play in advocating for the most appropriate system of measurement. ‘You have to discern what activities are going to make the biggest impact and make sure management understands that,’ concludes Jorgensen.
