The IRO Exit: Leaving Without Leaving Your Successor in the Lurch
Although reliable statistics are unavailable, anecdotal evidence suggests that the average investor relations officer changes jobs four or more times during a 25-30 year career. Most often, job changes involve moving to a new employer, although for the baby boom cohort, retirement is looming large and for those working in financial services and some other sectors, there is the ever-present opportunity of transitioning to a new role within the same company.
While the circumstances of a job change will vary, and unfortunately in today’s resource sectors, layoffs are commonplace, IROs agree that there are definitely best practices for leaving a position behind. In this issue of IR focus, we examine some of the ways exiting IROs can help their successors achieve a smooth transition.
Paving the Way to an Effective Transition
For those willingly vacating an IRO position, the length of notice period is a key determinant of how much assistance can be provided to your soon-to-be former employer. While the legal standard may be two weeks – and there are other considerations at play, including how much holiday time to take before starting the new position, how quickly your new employer needs you to start and the seniority of the position you are leaving – a good practice is to provide 30 days.
A full month of transitioning will help your former employer to hire your replacement. And it will allow you to take a leadership role in that process by: updating your job description (to ensure it accurately captures all of your responsibilities, which may have evolved substantially since the day it was written); helping the senior management team decide what skills (hard and soft) are necessary to perform the function going forward; using your professional network, including the CIRI Job Listings feature, to promote the pending job vacancy; identifying several high quality potential hires; and taking part in interviews.
While on the surface it may seem odd to actively assist in recruiting your own successor, IROs who have done so say it is rewarding to be involved and is extremely helpful to the company, as no one knows the IR landscape or the job to be filled as well as the incumbent. Helping your soon-to-be former employer in this way is a pay-it-forward act that uses your contacts and all of the knowledge you have gained in your years of service. It also provides the outgoing IRO with the ability to influence the future direction of the position.
Remember that the CIRI membership moves with the departing IRO, so remind your soon-to-be former employer to encourage someone else on the IR staff, or the incoming IRO, to join to take advantage of the benefits.
If a new IRO is recruited during your notice period, another good practice is to introduce the newcomer to your disclosure control processes. This can help your successor avoid early missteps – such as inadvertently distributing confidential content – by ensuring that he or she is in sync with other members of your Disclosure Committee.
When the notice period is shorter than 30 days, transitioning becomes a matter of triage, where the most important items are dealt with first. The most important is to get the wheels in motion to find your replacement; the second most important is to ensure that the employer you are leaving has your cell number in case of emergency!
Of course, the day of departure is the day when all of the outgoing IRO’s organizational strengths and weaknesses come to the fore. By building sound systems, procedures and a support team that is not entirely dependent on the outgoing IRO, the foundation is laid for a smooth transition.
Such systems, procedures and support teams do not simply appear overnight but are the product of months, if not years, of effort. The way to tell if such a foundation has been laid is to see how the IR function works when the IRO is on vacation. If the right foundation is not in place, the risk of disruption for a company and its shareholders is high. The risk is also elevated for companies without a support team to carry on. Many small cap companies lack IR bench strength and find themselves in this predicament but there are ways to mitigate transitional issues.
One of the most tactically important and simplest ways to avoid immediate problems is to ensure buy-side and sell-side contact lists and a calendar of upcoming events (inclusive of meeting commitments/opportunities) are up-to-date and easily accessible to those who will carry on in your place.
These files should be on the top of the agenda for a pass the torch meeting with the CFO. Other topics of discussion at such a meeting, which is ideally held immediately after the IRO’s notice has been given, might include the status of the annual IR plan and IR budget. Discussing these items provides the IRO’s successor (or the CFO) with insight into progress on major projects/initiatives that are underway and/or need to be pursued, such as expenses that have been incurred or are pending. Similarly, third party service contracts, if any, should be tabled at the meeting. Many companies have found suppliers, including IR consultants, to be effective at filling short-term capacity/capability gaps between IRO hires. A handoff of supplier contacts such as newswire providers is also valuable so that there are no disruptions when it comes time to issue news.
For companies that employ contact management software, the state of individual shareholder relationships will be easily viewed, including date of last contact and history of discussions. Most CEOs and CFOs, if not all, will also have up-to-date perspectives on the status of such relationships. Even so, the outgoing IRO can add value by reminding the team of any issues with external relationships. Simply checking that the contact management information is up-to-date before departing adds value.
When to Inform Shareholders
Informing key members of the buy-side and sell-side of the IRO’s departure should occur after the company believes it has a continuity plan in place. It is best to pass on this information in a phone call hosted by the CFO, the outgoing IRO and the interim or permanent successor. The outgoing IRO’s role in such a call is minor but it affords all parties with a formal opportunity for farewells and the company the chance to reinforce the message that it’s business as usual. Occasionally, particularly upon the retirement of an IRO, the quarterly conference call with analysts is used to acknowledge the services of the outgoing IRO and to introduce his or her successor. This practice is employed by companies of all sizes when the IRO is a member of senior management. A mention on the quarterly call, however, should not replace the act of telling key shareholders/influencers privately of the changeover.
Transitioning When the Choice is Not Yours
Some job changes are not voluntary. In the event a career is cut short because of a termination, the outgoing IRO may not have an opportunity to offer transitional support or be in any mood to do so. However, it is worth bearing in mind the transcendent nature of shareholder and sell-side relationships. By acting in a professional manner even under dire circumstances, terminated IROs can look forward to maintaining prior connections on the Street once they start a new job with another employer. In this scenario, acting professionally means: helping your former employer if asked because you have a duty of care to shareholders and, if later called upon by a shareholder of your former employer for assistance, turning that request over promptly to your successor. Reaching out to shareholders and analysts to inform them of your departure is also acceptable, as long as this does not violate a termination agreement.
Leaving a job or employer behind is commonplace for today’s IRO. Exiting graciously and in a way that helps your former employer achieve IR continuity is a choice, not an obligation, but there is long-term value in doing so, particularly given the transcendent nature of buy-side and sell-side relationships.
Where To Get More Information