The Changing of the Guard in IR Part Three: Choose Wisely

Sep 2016

This is the final installment of the three-part series: The Changing of the Guard in IR?

What do you look for in the person to run your investor relations program? In our last two posts, we talked about companies’ increasing demand for higher quality IR pros, and the incoming supply of new talent to the field, much of it from senior Wall Street roles. In our final post in the series, we provide practical advice to CFOs (and others in the hiring process) on what to look for … and what to look out for.

Investor relations is a complex hire for many companies. While the immediate vision one conjures of an IRO is of a senior director or VP-level manager running an earnings call and spending most other days on the phone jawboning with analysts and investors, the reality is much more diverse. Just as important as obvious skillsets like an understanding of finance and strong knowledge of the financial markets, are a PR pro’s ability to weave a persuasive story and a strategy for telling it, a lawyer’s acumen for both communicating and protecting critical information and a politician’s knack for building and leveraging relationships across the many organizational “aisles” of any given company. And perhaps most important of all for CFOs seeking to uplevel their IR program: an individual with the chops to become a leader and trusted executive who commands respect inside and outside the company.

Finding someone with all of these skillsets in spades is rare; chances are you’ll end up with some of what you want and you’ll backfill the rest. So for a CFO beginning a search, it’s vital at first to understand what your company really needs most, what skills you can’t source from elsewhere in the organization, and what type of person you want to work with in close quarters and tough times.

These days we’re seeing three general pools of talent for top IR jobs: career IROs looking for a new challenge; the up-and-comer already inside the searching company, usually (but not always) from within the finance team; and ex-Wall Streeters. Let’s take a look at what to consider when evaluating candidates from each category.

Seasoned IRO.

There are a number of great career IR officers working today. Unfortunately for companies in need, the supply of top pros looking to make a move is limited. And for many, it’s not necessarily better compensation or even the next hot IPO that pries them loose. Many tell us the keys for them are their affinity for the CEO and CFO, the value the company places on IR and their belief in the story.

On the other side, if you’re a CFO looking for a proven pro, make sure your eyes aren’t just clouded by a company on the CV that hit a home run in the markets; make sure the IRO can articulate his or her specific role in making it happen. Even better: if he/she can apply lessons learned and offer some insightful ideas for your company.

A few other questions are also key: Are you hoping the candidate can ably represent the company on the road, without you or your CEO? Will your board take him or her seriously when the time comes? How was the candidate viewed both by the Street and his/her internal colleagues (the “relations” part of “investor relations”)?

The Up-and-Comer.

We increasingly see CFOs looking to staff the lead IR role from within, often from the finance team. The advantages are clear: the candidate knows the story, the numbers and the culture; he/she is also someone you clearly like and want to advance in the company. Moreover, if it’s the right individual, he/she will jump at the opportunity, quickly realizing it’s a reward that offers increased exposure to executive management.

The only real risks are aptitude, the presence of highly developed communications skills and “coachability” in areas like the workings of the financial markets. Some say IR isn’t rocket science, but it’s tougher than most think, especially if you fully expect your IRO to continue acing their current functions in tax, treasury, FP&A or elsewhere in the finance org. So, don’t under-estimate the nuances of the position.

One tip when evaluating the candidate: consider how to build around him/her to shore up the inevitable weaknesses. A strong, experienced #2 IR pro can be vital for day-to-day support, while an experienced consultant can help with professional development, mentoring and strategic counsel.

The Wall Street Pro.

This is the category where we’re seeing the next brigade of IR officers. As noted in our prior post, Wall Street has always been an IR breeding ground but the quality and experience of investment community pros entering the field is higher than ever. They bring exceptional knowledge of the capital markets, strong rolodexes and an intuitive sense of how the company’s positioning appeals to investors (or what it lacks in appeal, as the case may be).

All of these skill and experience sets are invaluable and it doesn’t hurt that a big name can bring you cachet with your followers on the Street. But as with any hire, there are potential tripwires no matter how great the resume. Make sure you can answer a few important questions about your candidate:

  • Can someone who has built a career as a dispassionate critic of stocks make the transition into an advocate for your company, both externally and internally, and even in tough times?
  • How much aptitude do they show for emphasizing the long-term value creation strategy versus managing short-term expectations?
  • How are their relationship-building skills within a corporate environment, especially a highly politicized one?
  • How do you rate their strategic skills in areas like solving complex disclosure problems?
  • And, is the individual capable of scaling into the role without the army of support staff they might have enjoyed on the Street?  This is an often overlooked question for companies that don’t want to allocate resources to building out a full department or if they’re expecting their new hire to also pinch hit in strategic or financial roles in addition to IR.

The good news for companies seeking fresh and higher-level leadership for their IR function is that they have more places to turn today than ever. But that doesn’t make finding the right fit any easier. The three candidate pools discussed here all bring tremendous skills, experience and opportunities, but each also underscores that there are multiple facets to the job, making it vital to choose wisely.

Originally Published on LinkedIn