Macroeconomy topped IR challenges in 2011

Life’s not so easy for most of the world’s IR professionals these days. OK, so it was never easy, I hear you cry. When markets are a bit more stable and investors aren’t in a state of rigid terror, however, a competent IRO can be reasonably confident of keeping most of his or her constituency happy – and take a degree of satisfaction from that.

In a time of chaotic markets and a declining economy, on the other hand, it’s tough to know where to focus and to feel confident of making even a slight difference. Perhaps that’s why some of the IROs who responded to our survey are wondering about chucking it all in.

We questioned them about their past challenges and future fears and the response was an outpouring of frustration – even desperation, in some cases. Asked about future hopes, one IR officer simply says: ‘Getting a new job.’

Mercifully for the future of IR, this is not typical. But a huge majority of the 644 IROs answering the question about their greatest challenge single out the kinds of issues over which neither they nor their companies can hope to have much real influence.

We have grouped the responses under separate headings but, in truth, the top three – macroeconomic factors, market sentiment and market volatility– are inextricably linked (see Greatest challenges faced by IROs, below).

Volatile sentiment

The euro crisis, for example, is a macroeconomic factor of a kind that frightens markets. That has a broadly negative impact on stock market prices but, because investors are just as scared of being caught short as being caught long, they pile back in at the slightest sign of a solution to the crisis.

Ultimately, that makes the market excessively volatile – and makes IR professionals complain of the irrationality of, and difficulty of dealing with, market sentiment (also known as: investors).

Their individual responses to the question about the greatest challenges they face are remarkably similar. The same words and phrases appear again and again, from investor relations people in Asia, Europe, North America and Brazil. Here are a few examples just to give a flavor of the commonality of feeling:
– ‘Understanding the global crisis and molding communication to show the impact on our stock’– IRO, Brazil
– ‘Handling the impact on our stock of the European debt crisis’ – IRO, China
– ‘Telling a positive story in a gloomy macroeconomic environment’ – IRO, Canada
– ‘Maintaining investor confidence in the crisis environment’ – IRO, Europe

Fundamentally disconnected

The huge disconnect between company/industry fundamentals and overall market direction is one of the most problematic issues for investor relations professionals. Again, the almost repetitive nature of their comments is striking.

‘My biggest challenge is that the stock price is driven by macro influences rather than fundamentals,’ complains one US IRO.

‘Getting investors to focus on fundamentals, and away from macro-concerns, is the challenge,’ says an IRO from a Spanish company. And an Asian IRO struggles to cope with ‘investors’ perception in this uncertain, unstable global economy.’

IROs’ challenges aren’t all about external factors, turbulent markets and panicking shareholders, however. For some, the greatest obstacles are the more standard investor relations problems of finding more analysts to cover the stock, or identifying more shareholders to buy it.

Internal issues come into play as well, whether those are to do with getting enough of senior management’s time to meet investors or coping with limited resources and managing their own time.

That’s because however dispiriting the work may have become for some IROs, the load has not been lessened in any way. Perhaps some of the evidence for this lies in the very brevity of the complaints about excessive work pressure.

For one US IR professional, the challenge has been ‘doing more with fewer resources’. Others are more succinct: ‘More work, less staff’, ‘Resources. Global economy’. Even more simply: ‘Workload.

’Not all IR professionals are cut from the same cloth, however. One of our global respondents – a European IRO, in this case – says his greatest challenge has been ‘to refrain from boredom’. His future hopes? ‘To answer the question: Crisis? What crisis?’

On a scale of one to 10, how good an IRO do we think this guy is? Maybe he’s right on the edge. Or perhaps he has a dark sense of humor that keeps him sane in a difficult role.