Q4 Blog

In a recent edition of IR Alert, Jeffrey D. Morgan, CAE, President and CEO, National Investor Relations Institute cites “the top challenge facing IR now is regulation including moves to have companies become more transparent, governance changes and generally looking at corporate practices. Regulation is one of the key challenges right now. It’s evolving rapidly and where we’ll end up is not quite known.” 

What follows is some of his advice to IR professionals for keeping pace in this rapidly changing regulatory environment.  He also discusses current challenges and opportunities and ways to address them. 

CHALLENGES & OPPORTUNITIES

Combating External Communications 

Regulation is evolving so rapidly it has become one of the key challenges for IROs right now.  All of these regulations clearly have an impact on how companies are currently conducting business and IROs should be good at:

1. Staying at the forefront of communications and keeping on top of what is being said externally about the company.
2.  Taking that information back to management and incorporating this into your strategy for dealing with shareholders.

Doing More With Less

The current economy has imposed budgetary constraints on companies which has made looking for ways to “do more with less” another key challenge.  Some ways to be more efficient and effective include Notice and Access tools and making improvements to your IR and corporate website.  The IR website is the dominant channel for investor communications and is one of the first places that investors, analysts and the financial media go to for company information.  So it is extremely important that is conveys your investment proposition and outlines your business strategy so potential, current and long-term shareholders have current and up-to-date information at a click of a mouse.

NIRI understands the importance of the website, as they will be launching a new version of theirs in mid-July.   They want members to use it as a first access point and are slowly revamping how information is laid out.  For example, they will group information they put out in categories or ways members will naturally go about seeking that information. The changes are expected soon.

Shareholder Communications

Another challenge facing IROs is how they communicate with shareholders.  Social networking can increase audience reach and allow companies to get to know their shareholders better through direct interaction – as traditional press releases, earnings calls and corporate presentations can be viewed, shared and disseminated on Twitter and discussed on blogs.

Jeffrey sees IR as the gatekeepers in social media and with companies slow to adopt these tools, feels IROs are well positioned to take the lead on implementing this into their communications strategy. “I think IR is in position to work with it. Whether we like it or not, this will happen around IR people. It will touch IR in a way where you can’t be sheltered. So you will have to deal with it—and it’s a good idea to start in a position of leadership, instead of waiting for it to happen to you.”

To summarize, in the coming year, there are three areas that he feels IROs will have to improve their professional skills:

1. Legal – as the leader in FD compliance, IROs must keep apprised of all of the regulation changes and stay on top of understanding what those changes mean. 
2. Social Media – IROs “must understand those communication vehicles. It’s incumbent for any IR person to try blogging, Twitter and using social mediums to bring the discussion back to company. Become an expert in it—that’s my advice now. That also relates to the regulatory and legal side. By understanding this, you can understand how to use it in compliance with Reg FD.
3. Financial Education – IROs need to become educated on alternative trading systems such as dark pools to help them understand who is trading their stock.

All of the aforementioned are ways in which IROs can increase their importance within the company.  For example, staying on top of all the regulatory changes can help elevate you to a key resource within the company.  Secondly, being proactive and communicating in social media forums will help you build better relationships with shareholders and increase your company’s profile.  It may also help you address contentious issues and address them head on in a timely manner before they escalate into a crisis.  Lastly, keeping apprised of alternative trading systems will help you understand  who your investors are and may even provide insights on the hedgers in these areas.

Related posts:

1. From NIRI 2009 – The Evolution of Financial Communication
2. How to implement new Reg. FD web disclosure – a legal opinion
3. CICA’s Corporate Reporting research documents highly valuable to IROs
4. Trends and Best Practices in Online Communications and Social Media in Corporate IR
5. NIRI ’09 Session: Understanding IR Strategies Behind XBRL – IROs Evolving Role

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