Inside Investor Relations – Volume 5 – How should an IRO work with the C-suite management?
Within the corporate organization, the Investor Relations Officer (IRO) is one of the most interesting and challenging roles, and can offer a strong sense of accomplishment. Whether you are a junior IR staff or a senior spokesperson, to co-work efficiently with C-level executives is a crucial factor in being a successful IRO. The IRO encounters many different topics during their daily IR routine: the company’s long-term strategy, industry outlook, technology development, capacity planning and results/guidance. Preparing an IR SOP covering the above topics is definitely a great starting point for most IR officers, thus communicating and building an internal network within the company is essential to being an effective IR. Below is an overview of how an IRO can work and communicate with the C-suite management:
Board of directors
To ensure the long-term sustainability of a company, the Board of directors (BOD) and the chairperson oversee the overall strategy and consider the interests of all shareholders. As environmental, social and governance (ESG) is becoming a key part of many funds’ investment evaluation, it may also become the IRO’s responsibility to actively communicate corporate ESG efforts to the capital market while also introducing the latest ESG knowledge and trends to board members. From understanding the board election process to participating in BOD meetings, the IRO has to be familiar with not only the local governance regulations, but also international ESG standards. Interacting with global ESG rating organizations provides IROs insight into the criteria of their assessment processes. This is important to implement ESG best practices, from BOD to each employee and also help to improve the corporate’s overall ESG scores.
Chairman and Chief Executive Officer (CEO)
As the company’s leading representatives, the chairperson and CEO help to establish the corporate vision and goals, which serves as the foundation of the company’s long-term strategy. Whether being a technology innovator or a fast-follower, being a niche solution provider or a volume-driven manufacturer, the company’s long-term strategy and capital market branding is forged through the IRO’s efforts to communicate with the Chairman and CEO at the beginning of the IR program. After setting the tone of the company’s strategy, the IRO can then ramp-up the IR program internally with the Chairman and CEO’s support and start conversations with the rest of C-suite management to establish the IR SOP.
Chief Sales Officer (CSO) or Sales Director
To drive the company’s growth and meet revenue targets, the CSO is often the most knowledgeable C-level management regarding client acquisitions and industry outlook. From an IR perspective, sharing the company’s and competitors’ sell-side reports and buy-side investors’ feedback is a good way to communicate with the sales department. Besides the top-ten client contributions and sales-mix analysis, IROs should also regularly and actively update industry supply/demand status, new business opportunities, competitive landscape and sales rolling forecasts with the CSO. This helps to shorten the IR learning curve of understanding industrial dynamics and to form the foundation of financial guidance.
Chief Technology Officer (CTO) or Head of R&D
Though the importance of R&D differs across industries, in general the CTO not only uses technology to enhance current products/services, but also develops strategies to increase revenue and performs return-on-investment (ROI) analysis. Through collaboration with the R&D department, an IRO should establish a clear picture of the company’s future technology milestones, R&D pipeline, product roadmap and patent portfolio. Furthermore, the above R&D information usually echoes the company’s long-term strategy of expanding the total-addressable-market (TAM); strengthens the competitiveness of leading edge technologies and becomes one of the key messages for IRO to communicate with investors.
Chief Operating Officer (COO)
In charge of overseeing the daily administrative and operational functions of a business, COO is the key executive to improve operational efficiency. From capex/capacity planning, resource allocation, manufacturing process, inventory management to quality control, the IRO can learn extensive and detailed operations knowledge from the COO, who tends to be the most senior member of many core management teams with a strong understanding of the culture and history of the company. The IRO may want to focus on operational initiatives that lead to long-term profitability improvements during the communication with the COO, as this is of particular interest to the capital market.
Chief Financial Officer (CFO)
Being responsible for managing the finance and accounting divisions, in Taiwan, the CFO often acts as a spokesperson of the company and leads the IR team, especially in the large corporates. From daily communications with the CFO, the IRO participates in investor one-on-one/group meetings and results conferences. Summarizing meeting minutes, IR Q&A sessions and inputting investor information in the IR databank are initial tasks for every IRO. During the preparation of regular result conferences, the IRO needs to coordinate all C-level executives to discuss operational results for last quarter and form the guidance for the next quarter. From time to time, IRO may work on internal projects, including ESG, long-term ROE enhancement, M&A synergy simulation, corporate/project finance, new business investment evaluation, competitors’ performance tracking, supply chain monitors and inventory-day analysis. This requires financial, accounting, investment skills and extensive industrial knowledge related to the company’s core business.
The Bottom Line
The job description of an IRO covers a wide range of responsibilities from internal coordination to external capital market communication. Being a successful IRO, to communicate and collaborate with C-suite management efficiently would be the first priority to accelerate the establishment of an IR SOP and shorten the IR learning curve. Although it may take a lot of hard work to become a veteran IRO, it is still one of the most interesting roles and a unique career opportunity for its’ “top-down” perspective within the corporate organization.
QIC advisors consist of experienced professionals that have worked in international corporates, major sell-side and buy-side companies for many years. By leveraging our experiences in IR, capital market and investments, we help IROs to work efficiently whether within the corporates or facing the ever-changing capital markets. If you are interested, please reach out to us and discover ways we can help with your IR works.
Contact: yvonnehuang@qtumic.com