How do you tell an investor relations officer from a corporate communications director? It sounds like a joke but maybe in the future the answer will be: You can’t.
Headhunters report that the two functions, long separated in major companies and sometimes rivals in corporate boardrooms, are increasingly coming together, with several recent senior hires for communications director roles emanating from the investor side of conveying company information.
Take healthcare group Smith & Nephew which Phil Cowdy joined after 13 years as a director of Deutsche Bank, working in investor relations (IR) before taking his current post as head of corporate affairs and strategic planning.
Or credit information group Experian, where director of investor relations and communications Nadia Ridout-Jamieson arrived after ten years as an investment banker.
‘The remit of investor relations has changed over the past five years,’ says Oskar Yasar, managing partner of Oskar Yasar Partnership, an executive recruitment firm focused on communications and investor relations.
‘Companies have been prioritising communications with shareholders in difficult times for stockmarkets and have brought in experienced, powerful and sophisticated people from investment banking and financial research backgrounds as investor relations directors.
‘In addition, smaller FTSE250 companies, which have tended to have a corporate communications person who also looks after investor relations, are now more likely to have dedicated investor relations officers. Both sets of investor relations people are moving into corporate communications.’
Other recruiters report a similar movement, though there is disagreement about what it means. ‘Have we seen people moving from IR into PR? Yes. Is it a trend? No,’ says Dee Cayhill, a former vice-president of global communications for InterContinental Hotels Group who now runs Cayhill Partners, an executive search firm specialising in investor relations and senior-level corporate communications.
‘Investor relations leading the communications discipline has always happened in companies that view capital markets as their primary stakeholder audience,’ she adds. ‘There’s nothing new there.’ Cayhill sees the switching of roles instead as part of a wider movement resulting from the breakdown of the traditional division of communications roles into corporate communications, public relations, internal and media communications and investor relations.
‘There’s certainly a move towards companies increasingly requiring senior communications people who have more investor relations capabilities,’ she states.
‘We’re not seeing a trend of companies coming to us saying they want an IR person to lead corporate communications. But we are seeing them saying they want a corporate director who is as adept at running an analysts’ roadshow as they are managing corporate reputation or an internal change management programme.’
What’s driving this? One reason is the proliferation of social media, on which stakeholders cannot be easily segmented and communicated with differently.
Another is increased public scrutiny of business by politicians and the media, which creates a requirement for professionals who can explain complex financial issues to a wide range of stakeholders.
Sue Scholes, chair of The Investor Relations Society, says the development also has to be seen in the context of investor relations’ own evolution.
‘In the last ten to 15 years, we’ve seen IR grow as a profession in its own right,’she says. ‘People have come into IR looking to build a career there and also to use it as a basis for building a career in business. We have seen more companies, particularly in the business-to-business space, see that the IR person can take on wider responsibilities.’
Corporate communicators and agency PR professionals say they are seeing a lot more movement across the disciplines.
‘There’s an increasingly symbiotic relationship between the communications and investor relations functions,’ says Julian Walker, group corporate affairs director at engineering company Amec Foster Wheeler, adding that this is being driven partly by increasing regulatory requirements in the UK and the US.
Amec, which issues American Depositary Receipts and is therefore subject to US stock market rules, now has a disclosure committee, containing representatives from investor relations, corporate communications and its finance and legal departments, to review the regulatory compliance of all external communications.
James White, director at public relations agency MHP Communications, sees a similar trend. ‘Stakeholders these days are more connected and it’s getting harder to separate investors from regulators, political audiences and broader stakeholders,’ he says.
‘It’s helpful for corporates to have operators who are able to marry investment acumen with broader public relations, corporate affairs and digital media capabilities.
‘I’m not surprised that we’re seeing the emergence of people who are able to speak both the language of the investment community but also the broader PR and corporate affairs language. Investor relations people coming across into PR with those skills can make much of the roles more comprehensive.’
Such comments shine a light on the traditional differences between investor relations and corporate communications.
‘Corporate communicators have been somewhat scared and hesitant with investor relations people because they never spoke their language,’ observes Yasar.
‘Investor relations has been seen as a numbers-centric function and corporate communications as being all about words.’
Scholes believes such notions are outdated. ‘Investor relations is not just about numbers,’ she states. ‘It’s really a communications discipline. There’s now a greater appreciation among corporate communications specialists that they need to understand more about investor relations. But I think there’s also a better understanding among IR people that IR is a communications discipline, with some other things thrown in there as well.’
Do investor relations executives have all the skills and contacts to make an easy transition?
White believes not. ‘Actively managing analysts’ expectations, talking through an analyst’s model and making sure they have the right tax charge in there are things that only an IR director with intimate knowledge of the business and financial workings is able to do,’ he says.
‘Equally, a dedicated IR person won’t necessarily have had media-facing experience. If you don’t have media awareness and media contacts and slot straight into a PR function, that could leave you and your company exposed.
‘Investor relations people coming into PR are to be applauded. They typically have the ability to cut through the noise and get right to the nub of an investment proposition or a company’s strategic goal. That will work equally well with a media audience. IR professionals just need to be mindful that investors and the media are not the same and can’t be treated in exactly the same manner.’
Walker agrees. ‘Anything that helps a company get its message across to the broadest possible audience is a good thing,’ he says. ‘But what has to be remembered is that there are certain different disciplines. When you’re dealing in the investment community, the level of detail and level of technicality of some of the aspects of communications are different to what’s required for a more media-focused activity.
‘One size doesn’t fit all. The audiences do need to have tailored messaging. The two roles have to be aligned because investors read newspapers too. You have to think who is likely to read what the media write and factor that into the way that you communicate.’
Cayhill says it’s a mixed picture and one that is changing. ‘Five to ten years ago the traits that made a person a strong IR director would often be very different to those that made for a strong corporate communications director,’ she says.
‘When people think of IR, they think of a function that’s very detail-oriented, generally introverted, not front-facing and more comfortable with looking at numbers than getting out there and being a key spokesperson.
‘But increasingly at the senior end, there’s a melding, because it’s good for career paths if you can work across all the different disciplines.’
Yasar believes media contacts and skills can be picked up quickly by skilled IR directors, arguing that investor relations professionals have as much experience of co-ordinating key messages and campaigns as their corporate communications cousins.
‘They’ve just been using different channels,’ he says. ‘I don’t think this is a development that anybody should be worried about.’
Cayhill, meanwhile, believes corporate communicators can learn an important lesson from the progress of investor relations professionals into the communications mainstream.
‘There’s nothing better in terms of training for someone wanting to become a corporate affairs director than to spend one or two years in internal communications and the same in investor relations and media relations to really get that breadth of experience across all the communications disciplines,’ she says.
Chief executives increasingly want communications directors to sit at the top table. But to do that they have to be able to talk beyond communications across the business, commerce and finance. Corporate communicators struggle to do that but if you have IR skills it’s an easier transition to the top table.’
Whether the two functions will ever merge is another matter, however. ’I don’t think so,’ says Scholes. ‘Within the two roles, there will always be areas of speciality and somewhat different skills being required.
‘People with different backgrounds need to work together. But when we think about the future of investor relations, we definitely see it growing.’