Five years ago, if you were to look at a lot of companies in Europe, the IR role was being performed by people with PR backgrounds, rather than investor relations purists. Today an increasing number have financial or analyst backgrounds.’
Adrian Rusling, a partner at IR agency Kuhn Partners in Brussels, is upbeat about the European IR recruitment market. Like others, he confirms that more listed companies than ever before are waking up to the need for in-house IR expertise. Many such companies are turning to those with financial backgrounds to fill the position which means there is a real shortage of IR experts across the Continent. Finding the right people at the original price is becoming more and more difficult. The result? IR compensations are on the rise.
Good direction
Despite the relative shortage, Rusling is convinced that recruiting those with a financial background remains the best route. It may present a challenge in terms of having to refine their skills as communicators, he says. But in general, he believes it is easier to teach these individuals communications skills than the other way around.
Some companies frustrated by the external search are turning inward to fill the IR slot. Just take a look at DaimlerChrysler. It’s fairly widely known in German IR circles that the automotive giant hired two recruitment agencies to search for a new Stuttgart-based IR professional. Several months down the line, disappointed by the difficulty of the search and the failure to lure one high-profile IRO away from another German blue chip, DaimlerChrysler eventually opted for an internal appointment.
By most accounts, the acceptance of the position by Ralf Brammer, who formerly worked in chairman Jorgen Schrempp’s office, is an excellent appointment. The key to internal promotion, it seems, is being given enough seniority for unrivalled access to senior board members. Brammer has absolutely no problem in that regard.
This use of the investor relations role to ‘fast-track’ high fliers internally into senior management roles is quite common in the US, says Rusling, but leading UK headhunter Vicky Mann believes it’s also becoming more common in Europe.
She explains: ‘A lot of the major international firms will stick their finance people into IR for a couple of years as part of their management training, so the position never gets to see the light of day externally.’
However, Mann also concedes that there are a lot of others who are now coming straight from analytical roles in the City, bringing with them in-depth knowledge of a particular sector. ‘Some of these individuals won’t necessarily have any communications skills at all, because a lot of people think you can bolt on the communications side. But it’s actually more of an inherent skill than the financial knowledge. If you haven’t got it, then no amount of learning will help you with it.’
Natural gifts
Mann suggests that some people also find it ‘monumentally difficult’ to break the habit of a lifetime and be open with the investment community about information. While most believe themselves to be good communicators, they are actually not naturally gifted.
The continued reliance on established ‘blood’ within company ranks is a sign of the times. Unless, you’re a leading blue chip, tempting analysts, fund managers or experienced investor relations professionals into another IR position can be difficult. There just isn’t the money available. Even when you are a leading blue chip, the going can be tough. Just ask DaimlerChrysler.
Ironically, the shortage can mean that the headhunters lose out as companies rely on personal contacts and internal reshuffles. Vicky Mann & Associates – generally perceived as one of the major IR recruiters in the UK – has been asked to work on relatively few IR appointments over the last year.
‘We’ve performed about six IR searches in the past year – and that’s pretty good going. Some of these will have ‘duality’ to the role, that is, they’re not solely investor relations. However, the IR side is the prerequisite,’ says Mann. She adds that she would be very surprised if there were more than a handful of investor relations roles at leading UK blue chips that have actually been advertised over the past five years. In fact, the number would probably not reach double figures.
In the loop
For those roles that do actually get offered externally, the bulk are newly-created positions in companies where there is little understanding of what investor relations really entails. In fact some of Mann’s counterparts, who work in the continental European recruitment market, believe that the evolution of the investor relations professional on the Continent has been accelerated by a series of key changes in the world of European business.
Byron Ousey at IR consultancy Gavin Anderson notes, for example, that the French privatization program has created a new demand for IR professionals ‘to come into the loop’. Indeed, that privatization demand has been mirrored in other markets such as Spain and Italy. The fantastic growth of smaller, secondary markets such as Aim in the UK, the Nouveau Marche in France and the Neuer Markt in Germany has also fed demand. These newly-listed companies are made aware of the IR need right from the start and are often more adept and fleet of foot at getting their relationship with the financial community up to scratch than their larger, long-time listed brethren. The rise of sectoral analysis has also increased the need for companies to communicate to a much larger, pan-European investor community. All these factors are feeding the demand for – and increasing the relative shortage of – good IR candidates.
Ousey has had his own experiences of the difficulty of finding a well-qualified and experienced IR professional at the right price. He and his colleagues have helped a number of clients define the IR job roles they can offer to potential candidates.
In terms of caliber, Ousey perceives a great diversity of competence on the European stage, and this has as much to do with the inherent cultural differences as it has with the availability of people of the right caliber and with the right set of skills.
‘There is an understanding that investor relations practitioners who have learnt the game in London are an attractive proposition, but it’s not exclusively so,’ he explains. ‘The cultural questions of language, and being in one’s own country are important. There have been some appointments from London to companies on the Continent, but not that many. You have to appreciate certain critical issues for many of the European companies – liquidity being a prime example. A lot of these companies are not a 100 percent float, with government [or families] retaining some controlling interest. That changes the very nature of the IR role, and hence the skills required.’
Old hand
Paul Foster, managing director of London-based Foster Crouch, has been a recruitment consultant for some 20 years. He takes a much stronger line than Ousey in terms of where today’s IR skills lie. Foster firmly believes that continental European companies might be better off looking in the UK or US for their IR appointments. He remains bewildered by the apparent lack of sophistication of continental IR professionals. ‘Many don’t know the financial marketplace at all,’ he confides. ‘While they may be very expensive animals, they are still very naive.’
For Foster, like Vicky Mann, financial nous may now be vital, but the sophistication of a candidate’s communication skills remains an essential ingredient. Getting the balance right remains quite a challenge when attempting to select the right candidates.
‘The ability for individuals to be able to express themselves and be good communicators is very important,’ Foster emphasizes. ‘Whereas I can get some very good people from banks and investment houses, and they are good analysts and brokers, they are not always very good communicators.’
There is also an increasing pressure on companies to clearly define exactly what they want a prospective IR manager to bring to the party. Pinning down such ‘job specs’ is where the members of the headhunting fraternity really earn their money. Sometimes it can be rather like pinning jelly on a wall.
Varying job spec
Indeed, it is a sign of the changing nature of the investor relations role across Europe that the job spec can vary so greatly – especially according to the level at which the individual is expected to operate.
At the highest level, referred to by Foster light-heartedly as IR ‘god’, there are those individuals who easily command six figure sums from large blue chips. These people need to be highly visible and credible, should be natural communicators, and must know the financial community in several financial centers very well. They should possess a broad range of experience both in investor relations and many other corporate communications disciplines.
‘All these things are part of the role,’ says Foster. ‘They don’t have to do it all, but at least they must have had some exposure to it because, essentially, these people should be high-level advisors to the company. They are now engine drivers not oil rags.’
Byron Ousey bullishly predicts that, in five years time, there will be the equivalent of a National Investor Relations Institute for the whole of Europe and company directors sitting in key positions with investor relations as their prime responsibility. Paul Foster agrees. He believes that, over the next three or four years, there will be an increase in the demand for specialist IR people because of the various changes afoot in Europe.
‘Investor relations people are behind the times in Europe,’ says Foster. ‘But it’s got to take off. If a company intends to go far, it will literally have to set its stall out by having decent investor relations.’
