Blog : BOARD TALK
|Posted on February 15, 2016 at 12:00 PM|
FTSE companies are paying closer attention to the role of 'Head of Investor Relations' or IR, according to a survey just out by Korn Ferry, the talent and organisational consultancy.
Its conclusions are based on just 32 responses, but more than half (56%) of respondents had been in their role for two years or less, suggesting a high level of turnover. Over half (53%) were hired from other companies.
The research, based on a survey of heads of IR from FTSE 150 companies, "reveals that many companies are demanding greater strategic input, financial acumen, technical skills, and broader experience from heads of IR; and in return individuals can exert even greater influence and elicit higher engagement at Executive Committee level" it says.
Its conclusion is that the heads of IR are "gaining stature" in FTSE companies, although it does not mention salary levels. But two-thirds of companies surveyed (66%) maintained budget levels in the last financial year. A quarter (25%) reduced budgets and only 9% saw increases.
It is interesting that the variety of career paths to reach the position of head of IR is growing. While in the past many heads of IR had a background in only IR or communications, Korn Ferry's report found an increasing number of IR leaders who rose from financial services areas, including equity research and corporate finance.
Nearly a third (31%) of respondents had prior experience in investment banking, and a quarter (25%) are qualified chartered accountants. Nearly half (47%) of respondents had worked in more than one industry, with 19% having operated in three or more sectors.
"In many cases, we found that technical IR skills can be transferred across industries and that the broad perspective gained in multiple sectors is often beneficial" says Andrew Lowe, Principal at Korn Ferry.
Unsurprisingly, all respondents believe their business places a high or moderate value on the IR function. Two-thirds are confident that the function is viewed as a vital member of the executive team. But 34% see room for improvement, reporting “varying levels of buy-in at corporate centre and business unit level.”
Two thirds (63%) are not part of the ExCo but attend the meetings when appropriate. A third do not. Given the increasing prominence of the role, Korn Ferry expects to see the numbers of heads of IR who do not attend ExCo meetings to rapidly decline and become the exception.
Three quarters of respondents (75%) report to the CFO, with 9% reporting to the CEO and 9% to the head of Corporate Communications/Affairs (which seems a little bizarre).
IR teams remain small, "consistent with the broader global business trend of doing more with less" says the report. Two-thirds of their leaders have just one or no individuals reporting to them; 16% have two or three direct reports; 6% have three or four; and just 13% have five or more people reporting to them.
"It's a good time to be in investor relations" concludes Mr Lowe, who says the research reveals "a significant shift in IR leadership" - which can only be a good thing, one hopes, for better corporate governance.