The evolution of IR over the last few decades has enabled, at times, a siloed practice full of check boxes and routine. With it, an important question has surfaced amongst the IR community:
How can IROs get more stakeholders within the company to understand and contribute to their overall IR efforts?
It all comes down to a “total stakeholder approach,” according to Jeremy Cohen—Vice President of Investor Relations at Alight Solutions—whose diverse experience in IR at Morningstar, Gogo, and Edelman Smithfield has given him unique insight into what it takes to make an IR program genuinely successful.
We recently sat down with Cohen to learn more about how a successful IRO must act as a hub to connect stakeholders to strategy and to better understand how IR professionals can get a strategic seat at the table.
Read on to learn practical tips and advice for IR teams looking to leverage the benefits that come with working more cross-functionally within their company. We’ll also discuss:
Every day, an IRO must communicate with several audiences through various channels, such as sell and buy-side analysts, portfolio managers, and C-suite executives. However, whether this communication occurs at an industry conference, over an earnings call, or through social media, IROs must recognize that every message relayed to the public reaches further than just the investment community. IR professionals can expect many audiences to be listening to their messaging, including employees, competitors, media outlets, vendors, and customers.
So what is a ‘Total Stakeholder Approach’, and how can it positively impact an organization’s IR strategy?
A ‘Total Stakeholder Approach’ to IR allows IROs to build and implement their communication strategy and compose nuanced, personalized messaging tailored to each stakeholder. It also takes into account the IR team building deeper relationships cross-functionally, and using insights from other stakeholders to help craft the company’s investor branding efforts. It can allow for a more streamlined process, additional resources, and stronger differentiators in company messaging, while simultaneously embedding IR into the company culture and eliminating silos.
IR is a critical function in public companies, and is the determinate for not only capital raising, but also for company-wide innovation. With the scope of responsibility that IROs undertake, it’s essential that IR should have a seat at the table.
IRO’s are required to have a solid understanding of what’s happening in the markets and subsequently understand perceptions of their industry and what it takes to evolve them. They synthesize the information from analysts and further prepare C-suite executives with as much knowledge as possible. This way, when the senior management team or board member needs to make a strategic decision, they're able to account for how the Street is thinking.
IR professionals should have a seat at the table because they possess a vast amount of institutional knowledge that nobody else in the company has—at least not the breadth and depth of it. When we look at public companies with successful IR strategies, their IRO is likely seen as a thought leader and a subject matter expert (SME) both within the company, and with external stakeholders in the investment community. In these organizations, the C-suite listens to the IRO and respects when they tell them the good, the bad, and everything in between.
The most significant difference in keeping your IR strategy in-house compared to hiring an IR consultant or agency, is breadth and depth according to Cohen.
IR consultants and agencies will work with many companies at different stages in the lifecycle of a public company. IR consultants will be involved in various strategic situations, whether it be an executive transition, proxy solicitation, or a merger and acquisition. IR consultants can also take complete responsibility of a company’s IR program, covering investor targeting and outreach, shareholder communications, content development, and the management of investor roadshows and conferences.
It’s the responsibility of an external IR consultant to grow their relationships with executive leadership (as well as other staff members) and make a dedicated effort to embed themselves in an organization. Each company will have a different perspective on how they want their IR strategy to be implemented and how they plan to use an IR consultant’s expertise. However, the organizations that see success with external IR agencies are the ones that genuinely want to take direction from an outside perspective, paired with consultants that understand how the breadth of their relationships can impact the overall strategy.
In comparison, in-house IRO’s should focus on depth, as there is a cross-functional nature to investor relations that is more than finance and communications. There is a need to understand both your industry and your peers deeply. Having IR in-house can be beneficial when it comes to costs, risk, and to operational efficiency.
Whichever strategy you choose, keep in mind that there is a strategic mindset that a consultant or an in-house IRO must have to ensure that a company moves forward.
For an IRO to become their organization's internal expert and build strong relationships within the company, they must become the “hub of the wheel,” internally and externally.
In-house IROs need to have a strong understanding of finance and communications, legal, marketing, operations, strategy, and sometimes even customer service. While being a full-fledged expert in every subject matter isn't required, IROs should have a working knowledge and a solid understanding of what goes on in every department of their organization. This way, sourcing information from the corresponding internal SME and sharing it with the desired external audience will be uncomplicated.
In successful IR programs, the IRO must craft an effective communication strategy. However, this successful strategy also requires various resources and executive attention.
For IROs entering a new organization or those feeling their current messaging could be stronger, there are two aspects to growing support for the IR function.
IR professionals need to learn as much as possible about their organization and its industry to determine what matters and achieve success. Be sure to figure out why your audience should care about the organization, its growth and profitability story, and its sustainability.
IROs entering a new role often see an advantage to not fully being embedded in the company quite yet, as it allows for a third-party angle as the IRO participates in a “listening tour” with both internal and external audiences.
Whether it's investors, industry experts, customers, vendors, or industry journalists, as an IRO, your main goal should be obtaining as much information from as many different angles as possible.
Whether it's the CFO, CEO, or COO, the IRO must have a willing partner who understands your vision for the overall strategy and wants to assist in moving the story forward.
A narrative can often seem passive but make no mistake—it has a broad reach over the organization and can drive the perceptions of different stakeholders. IROS need a champion in the C-suite that they can work alongside and partner with to push the desired strategy forward with other leaders in the company.
Sometimes, IROs may find difficulty getting attention and resources for their desired strategy. It’s not uncommon for C-suite executives to push back or for an IRO to resist their ideas.
IROs must be ready to back up their plan with data to get the C-suite’s attention and to ensure they’re investing time and resources into building a solid communication strategy. Come prepared with hard numbers and proof of what investors are saying. Some IR professionals find it helpful to conduct a perception study or review equity research but don’t forget—every time you speak with an investor, you have the opportunity to collect real-time feedback. Becoming a trusted advisor to the C-suite allows you to share perceptions and feedback, and iterate or adjust company messaging alongside your management team.
How can effectiveness be tracked once an IRO has implemented their desired strategy and messaging? How can IROs be confident their audience understands their public communications and messaging?
The measurement of IR programs and their returns have often been subject to stock price and valuation metrics or activity-based metrics like the number of meetings held or press releases. While these are some of the ways IROs can measure the success of their IR effort, monitoring the progression of the company’s perception with the investment community, analyst impacts, and executive visibility are qualitative metrics that can indicate success or misalignment for the IR program.
As an IRO, the best way to tell if a story is being communicated effectively is if analysts and investors can repeat the same story the company has been publicly sharing. It’s less of a science, and more of an art, so be sure to have key overarching messages that align with your strategy and repeat them often.
Invest the time, be consistent, and the results will follow.