One of the most often spoken truths about investor relations is that the practice rests on two pillars: communications and finance. IROs with commerce degrees often scramble to learn the niceties of writing press releases and keeping in regular contact with investors, existing and prospective alike. And IROs who come from a journalism or public relations background may need to take classes to understand how to speak knowledgeably about cash flows, balance sheets, and ROI.
While honing skills in both areas is arguably more important than ever, what an IRO needs to know has grown beyond these two pillars, maintains George Kesteven, Manager of Corporate and Investor Relations at Sterling Resources. “Financial literacy has grown in importance, but it’s more than understanding profit and loss and working capital,” he says. “Investors want to know: ‘What’s an organization’s value proposition?’ And they’re interested in a company’s ‘social license to operate.’”
“IR has become so elaborate because investors have become so sophisticated,” says Kesteven. “IR is changing continuously. There’s now corporate governance, overboarding, board diversity. And as an IRO, you’ve got to be ready to address these; otherwise, you’re not doing your job.”
Being at the top of your professional game is a growing preoccupation, given the economic downturn and tough job market. What’s more, a recent Korn Ferry study entitled The Future of Leadership in Investor Relations finds that turnover is high in IR, with 56% of the FTSE 150 heads of investors relations surveyed in their roles for two years or less.
The Korn Ferry study found that IR is now attracting many financial services professionals who initially pursued a different career path. Nearly one-third (31%) of survey respondents had prior experience in investment banking, while 25% are qualified chartered accountants. For these individuals, some aspects of financial literacy are within easy grasp while knowledge of other IR tactics may require additional hours logged in the classroom.
Lisa May, a consultant based in Vancouver who has served as IRO at a number of microcaps, acknowledges that IROs need to do some soul-searching and identify where their skills need updating.
“In this profession, you have to look at yourself honestly and ask what might be the gaps and weaknesses in your education,” says May. “And then you have to bolster those up.”
A Much Broader Mandate
IROs come into the profession from a wide range of backgrounds. For many years, winning an IRO role with a communications or marketing degree was fairly common. The ability to converse intelligently and to forge relationships with analysts and investors were the main criteria for the job.
Today, financial skills are increasingly sought after, as are a raft of other competencies, including a familiarity with technology generally – and social media in particular.
Kesteven maintains that “IROs should know how to use social media – without caveats.” Kesteven says that Sterling is closely held by institutional investors and so he can contact 70% of the investor base with 10 phone calls but for IROs at companies with a larger retail base, “social media knowledge has become critical.”
Another area of expertise that almost all IROs will want to master is corporate governance. “Governance is becoming more fundamentally required as knowledge for IROs,” says Sylvia Groves, President and Creative Director of the Governance Studio in Calgary. She points out that an understanding of governance lets IROs tell their companies’ “long-term story.”
Mastering corporate governance also helps IROs ward off activist campaigns. Groves notes that a company vulnerable to criticism for a lack of gender diversity on the Board, for instance, would want an IRO who could convincingly explain the steps a company is taking to remedy this situation.
For an IRO hoping to gain more know-how on governance issues, an excellent place to start is the corporate secretary. “Read the proxy circular and then sit down with the corporate secretary and ask: ‘Where are our weaknesses? Where are our vulnerabilities?’” advises Groves. “The more you know, the more you can build a cohesive response.”
To get an overview of governance issues, Groves recommends programs through the Canadian Society of Corporate Secretaries (CSCS), as well as courses at the ICD (Institute of Corporate Directors) or the Directors College.
Finally, Groves advises IROs to ask to attend Board meetings whenever a governance consultant – like herself – is invited to update the Board about developing issues.
“Corporate governance is not going away because it opens so many doors to activists – and potential hostile takeovers – by really showing the cracks in a company’s armour,” says Groves. “Some IROs know this stuff inside and out, but so many others have been brought up the ranks on the financial side. It’s just new to them and it’s important for them to understand this.”
The CPIR
“When it comes to something like strategic planning, an IRO might have had to learn the hard way,” says Kesteven. That’s why he finds the Certified Professional in Investor Relations (CPIR) designation to be ideal for an IRO. He argues that a multidimensional program like the CPIR can be truly helpful because “it gives IROs an update as to current practices.”
May believes that the CPIR course has “tremendous value” because it gives professionals “crossover and credibility with respect to people looking at their resumes. Employers can say: ‘These people are financially literate and that’s proven by their taking this course.’” She also sees the CPIR as a way for IROs to rise to an “elite level” within the profession.
Laurie Thomas, Manager, Investor Relations, at Cameco Corp. in Saskatoon, has the letters “CPA, CMA, CPIR” trailing her name. “I’m a huge believer in education,” she says.
Thomas, who was in the inaugural CPIR class, likens the program, which is offered through the Richard Ivey School of Business, to “doing a small MBA program while you’re working full time.”
“Because I’m a CMA, [the CPIR] tied everything together,” she says. “The corporate finance, the regulatory, the planning, the dealing with your Board. It helped elevate my skills to a much higher level.”
If imitation is the sincerest form of flattery, the fact that the CPIR has a new equivalent in the U.S. might be a very telling sign of success. Early this year, NIRI unveiled its IRC certification. Unlike the CPIR, a designation granted through coursework and an exam, the IRC credential is granted to individuals with three years’ experience working in investor relations who then pass a four-hour exam consisting of 200 multiple choice questions.
For individuals contemplating a career in IR, Seneca College launched an IR certificate program in May 2016. Jeff Roach, Coordinator, Corporate Communications and Investor Relations Programs at Seneca College, notes that the two-semester, post-graduate course will cover everything from media relations, writing, social media, and the IR toolkit in the first semester before turning to capital markets and disclosure in the second semester.
Students take the Seneca course full time. “There’s no formal training available in IR at all,” says Roach, hoping that programs like Seneca’s will encourage more talented people to join the profession.
Networking for the Future
Going back to school can help an IRO acquire new skills and address sophisticated investors on myriad levels. Education is critical, says Groves, because “the more well rounded an IRO is, the more able he or she is to present the company’s story in the right light.”
And beyond the curriculum itself are the networking opportunities that IR courses can provide.
Cameco’s Thomas praises the CPIR course for having given her a wider group of colleagues to contact when a question arises. “When I have issues in IR at my company, I’ll phone the people I went to school with,” she says.
For Thomas, continuing to learn and to broaden one’s skills is an important aspect of the job – and the cornerstone of why this multifaceted career continues to hold appeal. She concludes: “My dad always said: You can take away a lot of things from people in life, but you can’t take away their education and the opportunities learning gives you and the doors it opens.”
Here are Web addresses for getting more information on the education programs mentioned in this article:
Canadian Society of Corporate Secretaries:
http://www.cscs.memberlodge.org/page-1861180
CIRI/Ivey Certified Professional in Investor Relations (CPIR):
https://www.ciri.org/Certification/ProgramOverview.aspx
http://www.ivey.uwo.ca/executive/our-programs/ciri-ivey-investor-relations-certification-program/
The Directors College:
http://thedirectorscollege.com
Institute of Corporate Directors (ICD):
https://www.icd.ca/Courses/Directors-Education-Program.aspx
IRC:
https://www.niri.org/certification
Seneca College:
http://www.senecacollege.ca/fulltime/IRM.html