IRO Onboarding: How to Assimilate Effectively in Your New Role
Whether by choice or chance, investor relations officers switch jobs and companies regularly. With employment churn a fact of life, many IROs have perfected the ability to onboard themselves quickly and effectively in their new roles. In this issue of IR focus, we examine some of the surefire ways to acclimate to a new role. In the next issue, we provide thoughts on ‘offboarding’ – or how to leave a position in good shape for a successor.
Step One: Read Up Before Stepping Up
When taking an IRO position, it is tempting to move immediately to meet key investors and analysts: in other words, to make your presence known. Without preparation, that is a mistake. The best way to start a new role is to read everything about your new employer you can get your hands on: conference call and broker conference transcripts, news releases, website content, white papers, business plans, analyst research, past investor surveys, summaries of one-on-one meetings completed by your predecessor, share ownership reports (yours and peer companies) and social media posts. Look in particular for current/emerging themes and areas of controversy and seek to understand your company’s business model, investment thesis/points of differentiation, and key financial metrics and trends. Study all pertinent materials closely and look at the investor relations and disclosure practices of your peers as well as your own company.
In so doing, think of yourself as an analyst picking up your company’s story for the first time. You will never get another chance to be a true outsider with a fresh perspective so make sure to take note of business concepts you do not understand and disclosure practices that could be enhanced and/or questioned. As you move deeper into your job, you can use your own early observations to propose improvements.
Most IROs research in advance of accepting a job but not usually to the same degree of intensity and often they do not have access to certain materials such as business plans. Those who are promoted internally to the IRO role may feel inclined to dispense with this step. However, IROs interviewed for this story agree that to best represent your employer, you had better be absolutely current with and fluent in the corporate story and investor perceptions.
Develop a list of questions from your studies – questions that can be asked in your next stage of assimilation.
Step Two: Gain a 360 Degree View
Once you develop a basic understanding of the business – which shouldn’t take more than a few days – it is time to schedule interviews with management, including the people who are running operations.
Nothing makes a business model come to life faster than the tactile experience of visiting an operation to see products produced or customer services provided. Again, approach site visits and interviews as you would if you were an investment analyst: ask questions, dig for information and make meaningful contacts. All of this will serve you well in your role, whether you must explain an operational concept to an analyst or host an institutional investor tour of company assets.
Your familiarization tour should also include stops in R&D, marketing/sales, public/employee relations, human resources, IT and legal. As many IROs are closely connected to or work in the finance department, this will often be the first port of call; just make sure it is not your only one.
Your predecessor in the IRO role and IR team members are also great sources of knowledge and perspective, if they are available to you.
As you travel through the company, prepare relevant questions in advance (including those developed in completing step one), take notes, and follow up after each meeting to both validate your understanding of the concepts discussed and to thank participants for taking the time to educate you.
A good complementary onboarding practice is to arrange meetings with accounting, legal, IR and proxy advisors whose expertise and perspectives are invaluable and whose future counsel will be sought.
Step Three: Document Your Knowledge
As the penultimate step in the process, document what you learn by developing an IR plan (strategic) and investor Q&A compendium (tactical). The IR plan establishes the direction for your first year by setting out objectives, strategies, performance measures, and budgetary needs that will guide your work. Seeking plan buy-in will ensure you are addressing areas that senior management considers relevant and in ways that it approves. IROs agree that developing a high quality IR plan is the best way to impress your new superiors and gain their trust and confidence. If such a plan already exists, at a minimum revisit it to find areas for enhancement/improvement.
Although senior IROs have developed many IR plans during their careers, a surprising number still turn to the CIRI Guide to Developing an Investor Relations Program to ensure they are covering all the bases. (When attending CIRI events, it’s also useful practice to seek out other IROs new to their positions to share onboarding ideas.)
The Q&A compendium is a tactical necessity that ensures you are able to carry on an informed and intelligent conversation with an institutional investor or sell-side analyst. The most effective and respected IROs are able to answer investment community questions without having to constantly say ‘I don’t know, I’ll get back to you.’ Too many deferrals such as this quickly frustrate investors and can lead to the IRO being sidelined.
A Q&A compendium should include all of the key financial and strategic questions and answers given during quarterly analyst calls and investor meetings. It is incumbent upon the new IRO to commit the answers to memory and to add new questions/research to ensure the list remains relevant as company circumstances change.
Completing these preparatory steps invariably helps a new IRO to develop contacts and credibility across the business. It is now time to step up and make your presence known to investors/sell-side analysts. Introductory phone calls are a good starting point, but better still is a one-on-one meeting, ideally featuring another senior member of the management team.
Although senior IROs are ready to fly solo almost from day one, it is considered best practice to be a co-pilot in these introductory meetings, as it mitigates the risk of missteps. First meetings with investors/analysts are also a great time to validate the IRO’s perceptions of what investors think of the company and investor informational needs. Many IR plans have been refined based on observations made during introductory sessions, especially when the IRO asks the investor/analyst how to improve the service provided.
Onboard When You Are the Boss
Some, if not all, of these same steps will work well for onboarding new members of your own IR staff. In fact, there is no substitute for critically reading all available material (step one) and gaining a 360 degree view of the company (step two). Step three might be altered to focus only on the tactical rather than the strategic depending on the role/responsibilities of the new employee, but having a new employee begin by writing a Q&A compendium is a good way to test and validate corporate knowledge before taking on an outward facing role.
IROs agree that it takes time to become a valuable contributor and that there is no substitute for the sort of IR boot camp that is proposed in this article. The key, however, is to be aggressive in accumulating knowledge and internal contacts so that the period of assimilation is as short as possible.
Where To Get More Information