Noemi Distefano talks to leading IROs about how to build a high-performing IR team from scratch and asks where IR fits into a career path
The role and responsibilities of IR teams have been subject to profound changes over the past 15 years. The remit of IR teams has widened and, as a result, the perception of the role within companies and the skills needed to perform it have evolved.
Ajaya Intaraprasong, head of investor relations at Bangkok Dusit Medical Services, has seen the evolution of the IRO and its repercussions first-hand. ‘The way senior management, the board and the investment community perceive the IR function has changed and IR professionals now receive more recognition,’ she says. ‘As a result, IR professionals are in higher demand and companies are scrambling around to find the best talent.’
Intaraprasong has been leading the IR function at Bangkok Dusit since 2008. When she joined, she first operated on her own and built her team of three from scratch. She says compared with 15 years ago, the skills required to work in IR are evolving beyond the more traditional communications, analytical and planning competencies. ‘New skills require an understanding of ESG, technology, regulation and anything else that falls under the investor relations remit today,’ she says.
The way senior management, the board and the investment community perceive the IR function has changed
Balaji Krishnamurthy, CFO of mobility and head of IR at Uber, adds that what has also changed is the background profile of IR professionals.
‘[Until] 15 years ago, the profile of a traditional IRO would be someone with a financial planning and analysis or communications background who was probably transitioning to an IR role internally,’ he says. ‘The first change, which probably started in 2008 after the great financial crisis, is that now there are a lot more IR professionals coming to the role from a sell-side equity research analyst background.’
Since he joined Uber in 2019, the year of its IPO, as the second member in an IR team of two, Krishnamurthy explains the IR function at the firm has undergone a few changes. Following his promotion to head of IR in 2020 and after running the function solo for a year, he built up a team of four. Sharing his own experience and discussing changes to IR recruitment, he says: ‘Companies hire more internally today than they did in the past, although there is still a meaningful role for the top-tier recruitment firms out there.’
Curated recruitment Internal recruitment both for IROs and other IR team members seems to be the most common approach taken by companies when establishing or strengthening their IR function.
‘I’ve typically recruited people internally for IR roles because there are some benefits,’ explains Lynn Antipas Tyson, executive director of investor relations at Ford Motor Company and a member of the board of directors at Q2 Holdings. ‘First, it allows me to curate a team that has strengths in different areas of the company. They might be strong in a region, in a product category or in certain parts of the operation of the business.’
With nearly 30 years of IR experience – starting at PepsiCo in 1995 – Tyson says her IR efforts have always aimed to establish or strengthen ‘a world-class, high-performing IR function’. On recruitment practices, she notes that at Ford her team of seven follows a rotation model, with her role being the ‘continuity position’.
‘I rotate my team every two years on a staggered basis, which allows me to be very deliberate about how I fill any knowledge gaps in the team,’ she explains. ‘When I am recruiting internally no one has IR experience, but that is something that can be learned over time. If I am looking externally, I would typically try to find somebody with some IR experience, though I would stress that in a high-performing team, what’s expected is sometimes different from what people have done at other companies in IR.’
Krishnamurthy also says internal recruitment comes with some perks. ‘One of the advantages of internal recruitment is that someone who already works for the company has greater familiarity with the firm’s long-term objectives and strategy,’ he notes. ‘More importantly, as the hiring manager, if you are deeply involved in the recruiting process, it is much easier to work with an in-house human resources team that is already engaged with a lot of the internal processes than to outsource to an agency.’
Skills to thriveAs in any profession, showcasing an understanding of the nature of the role and its purpose is the first step to getting hired.
‘The core function of IR and what a team of IR professionals should bring to the party is the ability to correctly read the markets, understand how fund managers and analysts are thinking and have a good overview of how peers are performing and what is driving the market,’ says Martin Ziegenbalg, executive vice president of investor relations at Deutsche Post DHL.
Asked about the top skills he looks for in candidates, Ziegenbalg says how candidates answer the question ‘What is IR?’ is what makes the difference.
‘I need to know they understand IR is not a sales function,’ he explains. ‘It’s about building trust and building long-standing relationships between the people and different market players and movers. You cannot do that with a sales approach.’
When it comes to core skills for IR, mathematical, analytical and communications abilities are the foundation. Ziegenbalg says knowledge of finance is also something aspiring IR professionals cannot be short of.
‘This is because as an IRO, you will find yourself as the moderator between the market and your company C-suite,’ he explains. ‘There are cases where management doesn’t have a strong understanding of the capital markets and therefore it is down to you to explain, give insights on market trends and suggest steps forward.’
If you approach IR as a stepping stone, you are not going to do a good job
For Tyson, there is a difference between the set of skills needed by an IRO and those needed by the rest of the IR team. For an IRO, she says the top skills are ‘good situational judgment, maturity, ability to navigate and thrive in ambiguity, the courage of conviction, very good written and verbal skills and strategic thinking.’
For anyone else in IR, Tyson considers the ability to thrive in ambiguity a top scorer. ‘That’s important because information flows so quickly now and you need to be able to make decisions fast with imperfect information,’ she points out.
Structure for success Starting an IR function from scratch can be daunting. While there aren’t universal guidelines to follow, some practices might work better than others depending on the company’s sector, market and objectives. Krishnamurthy says the formula that worked well for him was ‘thinking in tiers’.
‘First, you need a leader for the IR team, which was the role I had when I started building the IR function at Uber,’ he recalls. ‘You then need a mid-level figure, an executive who is relatively senior and experienced in engaging with investors. This is the person who is going to give you bandwidth expansion because the head of IR cannot engage with every single investor or analyst.
‘It’s also important to have a member of the team who deals with the administrative tasks such as engaging with different corporate access teams at different banks or supporting the co-ordination of all earnings releases.
‘Lastly, the role of a junior associate is also important to support the rest of the IR team with analysis tasks.’
Tyson agrees that choosing a leader is the first step, but stresses that the IR professional needs to be at a senior executive level.
‘That person will need to then consider challenges and opportunities for the company and create an IR plan,’ she explains. ‘Important questions to ask yourself when creating that plan are: what impact does IR want to have on the company and the capital markets? What resources do you need? Once you know what capabilities you need, you start looking for talent.’
The way skills are allocated across different IR functions varies from company to company. For example, some IR teams have members carrying out very specific tasks, as is the case with Ziegenbalg’s team of 10, where different members cover different areas of IR, from corporate access and retail investor engagement to annual and interim reporting, among others.
Other companies might take an all-round approach and Intaraprasong says there are advantages to having a team of generalists.
‘When everyone on your IR team can do everything related to the function, that gives you greater flexibility and the option to delegate,’ she says.
For Krishnamurthy, having a cross-functional team is important, especially for newly established teams as it allows each member to practice a variety of tasks. ‘IR is a strategic role and you cannot operate in silos,’ he says. ‘You need to be working as a team and greater visibility of all tasks will help figure out who has the strongest skills for a specific task. A siloed approach from the very start could result in inefficiency.’
IR is not a sales function. It’s about building trust and building long-standing relationships
Stepping stone While many IR professionals remain active in the profession for many years or never move on, some see IR as a step that leads to greater things. Many, perhaps rightly, view IR as a golden opportunity to develop a wide array of transferrable skills that can make a difference in subsequent financial roles, even at the C-suite level.
‘At Ford, we treat IR as a developmental role,’ explains Tyson. ‘When you are in IR, you are at the vortex of strategy and execution, finance and communications: it straddles a lot of things that no other role does.’ Asked whether she sees IR as a stepping stone, she adds: ‘The IR function is absolutely a stepping stone. I recruit people who have the capability for upward mobility. It’s a pivotal role that helps to accelerate their career development. IR is a tool they can add to their toolkit that will help them be more effective in subsequent roles.’
For others, however, the stepping stone label is incorrect. While it can open doors to roles higher up within a firm, some argue that approaching IR as a transitional role from the very start is the wrong mindset.
‘If you approach your IR role this way, you are going to set yourself up for failure,’ Krishnamurthy says. ‘You need to come to investor relations as an opportunity that could also be where you are going to stop on your career path. It creates a mindset of owning your own decisions and building long-term relationships with investors.
‘If you approach the role as one where you want to be successful for many years to come, then new pathways may open for you. If you approach IR as a stepping stone, you are not going to do a good job: that to me has always been clear.’
