Natural communicator or numbers person? Flair for building relationships or for building spreadsheets? Communications degree or MBA? If you’re at the top of your game as an investor relations officer, chances are you can tick ‘yes’ for all the above. And many companies are now putting one person in charge of investor relations and corporate communications.
Catherine Mathis at the New York Times Company, Brad Allen at Imation, Thomson’s Brian Martin, SABMiller’s Sue Clark and Elizabeth Ventura at Bear Stearns are just a few of the high-profile executives currently doing double duty.
Executive recruiters say there is no single reason for the trend. The convergence of IR and ‘corp comms’ could be chalked up to new communications strategies, heightened media pressure or new regulations like Reg FD and Sarbanes-Oxley. The reasons vary for each company but one thing most experts agree on is that combining the functions is rarely just a cost-saving measure. Factors within companies as well as out in the market are pushing IR and PR together, but axing jobs is rarely the goal.
‘We’ve definitely seen an uptick in the number of IR folks going into the top corporate communications role,’ confirms Nels Olson, the Washington, DC-based head of Korn/Ferry’s external affairs search practice. Most senior IROs have earned MBAs and have a strong business sense, which top management finds very attractive. ‘IR pros can be a lot more strategic because they understand the impact of Wall Street,’ Olson says.
The convergence is most marked at newer, smaller companies. ‘They have the luxury of building a combined function under today’s guidelines rather than having to live with legacy structures,’ observes Susan Boyd, who heads up investor relations searches for Russell Reynolds Associates.
Combo zeal
Pepper Lunsford, Korn/Ferry’s star IR recruiter, says a combo position often starts out as an IR job. ‘Then corporate communications gets added to the platter. It’s more of a necessity in IR than it was five to ten years ago,’ she says, pointing to Nancy Murray at Polo Ralph Lauren as an example. Murray started in 1999 as VP of investor relations and was later promoted to senior VP of corporate affairs, reporting to Ralph himself.
Elizabeth Ventura is another good example. When she joined Bear Stearns as head of investor relations in 2001, IR and PR were newly separated functions. When the PR head resigned, the firm had to decide whether to keep the departments separate or reunite them – and it plumped for a reunion. ‘I had been handling PR on an interim basis and management came to realize that dealing with the financial media was too important to risk uncoordinated messages,’ Ventura explains. ‘When we talk with the financial media we are talking with both our clients and our shareholders.’
In a recent presentation for the Mexican IR association, Ameri, Ventura espoused her ‘one voice’ theory: ‘The outside world doesn’t understand the difference between what’s said by IR, PR and marketing. There’s no point wondering if you should or shouldn’t integrate because the market already has.’
One of Ventura’s top tips is: don’t wait for permission. ‘Start on your own and get input from partners throughout your company,’ she says. She suggests IR and PR teams trade press releases. ‘At Bear we found that the messages we thought were most important didn’t seem to be getting into the headlines. So I gave our earnings press release to our head of corporate PR and we talked about ways to reposition the key messages. Now we give three short financial highlights before we get into the body of the press release. We have tried to make it easy for the media to see what we think is important.’
Ventura says she gets constant on-the-job training from her IR analyst as well as her PR ‘right hand’, who has a TV news background. The team has survived a tough time for financial services – an industry Ventura ruefully acknowledges is ‘very much in the headlines.’
‘Working under pressure teaches you how to gather the facts as quickly as possible and deliver clear, honest and timely information to both shareholders and the media,’ Ventura counsels. ‘Resist the urge to answer every question. If you don’t know something, tell the reporter, I don’t have those facts right now. I’ll talk to you as soon as I know something.’
Lean & mean
Companies around the world are in tune with Ventura’s one-voice philosophy. ‘We want to have a consistent voice and, more importantly, a cumulative voice,’ says Gary Ng, director of IR and corporate communications and the corporate secretary for Hong Kong-listed Clear Media, an outdoor advertising company.
Ng heads up a ‘lean and mean department’, which includes a corporate communications manager looking after media relations and an IR analyst handling the financial nitty-gritty. The company also retains an outside agency for some of the legwork.
Clear Media’s IR focus is on Hong Kong but it wants to keep building a media profile in mainland China where it does most of its business. Ng has to be aware of the financial media’s nuances in both countries. ‘As China has been a communist country for more than 50 years, the way reporters approach a story is very different,’ he explains. ‘Hong Kong financial journalists tend to be more investigative but in China they just digest the information that’s been released and tend not to question it too much.’
As chairman of the nascent Investor Relations Association of Asia, Ng remarks on the number of Asian companies that are strengthening their IR programs by folding in corp comms. On the other hand, many Hong Kong industrials are beefing up their IR teams with ex-analysts who may not be up to tackling the communications role. ‘There are two sides to it,’ Ng says.
Shake it up, baby
Corporate restructuring or a merger often triggers a shake-up in communications strategy. In 2001, when Australia’s BHP merged with South Africa’s Billiton to create the world’s largest diversified resources company, management set out to redesign the whole business. A new function called investor relations and communications resulted. ‘It covers all three legs of the stool: internal communications, media relations and IR,’ explains Mike Campbell, BHP Billiton’s vice president of IR and media relations for the South Africa region.
‘We’re a huge organization stretching from Northwest Canada down to Tasmania. It’s tremendously important to ensure consistent messaging. Besides, combining the departments gave us the opportunity to lose a few people,’ Campbell adds, suggesting that convergence can indeed help cut the communications budget.
Similar to BHP Billiton, Westpac Banking Corp, one of Australia’s big four banks, has a head of stakeholder communications, Noel Purcell. His responsibilities cover not only media, government, investor and community relations, but also corporate reputation and internal communications.
Andrew Bowden, Westpac’s head of IR, has a double reporting line to both Purcell and Westpac’s CFO. He says the convergence of IR and corp comms is being forced by the market rather than growing from inside companies. ‘The analyst and media communities are far closer than they used to be,’ he comments. ‘Journalists are far more informed and they have more access to sell-side research, so an issue in the market is bound to be in the media, too. This has broken down the barriers that used to exist between IR and corp comms.’
Bowden emphasizes the importance of a formal disclosure policy outlining who the corporate spokespeople are and what their expertise is. The policy may also dictate the procedure to follow before any announcement. For example, Bowden reviews all Westpac’s press releases, no matter what the subject. ‘Say the marketing people put together a press release about how well a particular product has done,’ he explains. ‘It may seem innocuous to them, but the disclosure bells could start ringing.’
Keeping those bells from jingling is what every company wants these days. No wonder, then, that IR has become a much more important part of corporate strategy, and, in turn, corporate communications a more important part of IR. And while hiring in this area went soft during the market downturn, it’s been getting better since the beginning of 2003. Olson says this is ‘a leading indicator that the market is strengthening.’
The headhunters seem to have a good idea of the kind of candidate they need to fill such a role. ‘Whether people have a background in IR, corporate communications or marketing, they need additional training to pull this off,’ says Boyd. ‘But it’s more difficult for communications people to learn the financial elements of IR than the other way around. The companies with the best chances of success are those that combine the functions under an IR professional.’
Or, as one London-based IRO succinctly puts it, ‘IR can do PR but PR can’t do IR.’
Still separate silos
More companies need to converge IR and PR functions, says Donni Case
In today’s world, there are no distinct communications audiences. When a company targets regulators with a public relations effort, you can bet shareholders are watching. A media campaign to attract customers also grabs the attention of other stakeholders. So if there are no distinct audiences at the receiving end of corporate messages, why are the communications functions – public relations, investor relations and media relations – still segregated within many companies?
In a recent survey of 260 companies carried out by Business Wire and Investor Relations Business, 70 percent of firms indicated they had separate reporting lines for PR and IR. So while everyone talks about integrated communications – where brand equity, financial strength and corporate reputation are all aligned – only a few companies are actually moving in this direction. More are bound to follow, however, because an integrated approach to communications is what works today.
Only when we leverage every communications discipline at our disposal can a unified message emerge. New product launches, regulatory issues, changes in top management and crisis situations all impact on investor perception. As such, corporations can ill-afford one message crafted for Wall Street and another message crafted for other constituencies.
It’s up to management to set up an integrated approach to messaging internally. Sarbanes-Oxley and Reg FD prevent companies from communicating exclusive messages to the Street but management still needs to set up the reporting lines that allow for a cohesive approach to communications.
So what prevents some companies from converging IR and PR functions? It could be that senior management is too distracted right now. CEOs and CFOs have more on their plates than ever with new regulations and a challenging economy to contend with. Change can be disruptive and carry a price tag.
Still, the return on investment that comes with integrated communications is well worth a temporary dislocation of reporting lines – and, perhaps, egos. Increased credibility and transparency among shareholders, employees and stakeholders is what companies that have synthesized IR and PR are seeing.
There is a real opportunity for enlightened IROs to accelerate the process and emerge as very important people at the strategy table. But if your CEO is not ready to meld these two functions, you can still work towards an integrated approach by reaching out to PR, marketing and media relations.
Here are some suggestions for IROs who want to begin building bridges internally:
Schedule regular face-to-face brainstorming sessions with other communications and marketing folks. New ways to make your company’s message compelling and credible will surface. Review your company’s growth strategies in these meetings – for example, do you have a strong brand message for all markets?
Share your skills with your marketing and communications staff. They will benefit from understanding the financial value-drivers of your company. Conversely, you can benefit from learning and understanding more about the non-financial metrics driving valuation. Increasingly, investors want to know about intangibles like reputation, brand equity, human capital, company culture and intellectual capital to help them better evaluate a company’s intrinsic value.
Build a common objective with your PR team. Economic returns drive the value of your company. By integrating IR with other communications efforts, the financial brand develops. When the stakes are high enough, you can get fierce competitors to join together for the common good of their customers.
Benchmark your combined efforts. You need to demonstrate the value derived from the joint communications effort to your CEO and CFO. One benefit is that the communications effort becomes focused on selling the company, not just its products. In doing so, you provide greater transparency to all audiences.
The bottom line is that marketing messages, like IR messages, must be grounded in economics. Company messages must be holistic and memorable in order to resonate with clients, customers, employees and investors. The CEO must become the message maestro, backed by his symphonic communications orchestra.
