The role of an Investor Relations Officer (IRO) is exceptionally demanding. The range of tasks can be enormous, and sometimes one loses track amidst the many to-dos. An IR strategy provides clarity and guidance – clarity about the IR goals and guidance on with what instruments these goals should be achieved.
Scope of IR Responsibilities
At the heart of an IR strategy is the development and definition of IR goals. To define these goals, it is first necessary to clarify what exactly is included in IR. Studies show that companies delineate this area differently. Some view IR solely as fulfilling regulatory requirements, i.e. as reporting and compliance, possibly complemented by measures to protect against activist shareholders. Others see IR more broadly, as a mediator between the financial community and management, attaching importance to dialogue and the monitoring of capital market participants. Finally, a third group also includes topics such as sustainability, management support, or also digital transformation within the scope of IR responsibilities. It is essential to have clarity about the exact scope of IR responsibilities before analyzing the current situation and formulating goals.
Analysis of the Current Situation
Once the scope is clear, the next step is to analyze the current situation to expose weaknesses. A recurring issue is investor targeting: How many roadshows are conducted compared to peers? How many conferences are attended? How often are the CEO and CFO present at these conferences? What conclusions can be drawn for IR if, for example, peers are much more frequently “on the road”? Interesting insights can also come from analyzing existing investments. How high is the investment from individual funds? Low? Or rather high? Where do the invested funds come from – Europe, the USA, or Asia? What goals for IR can be derived from these analysis results? Many other potential analyses can follow, depending on the defined scope and objectives: How many analysts cover the company compared to others? Is there a perception study? What needs have the investors expressed? How is your company rated by sustainability agencies? How is your company’s digital communication assessed? The results of the analysis reveal which areas of IR can be improved.
Setting Goals and Instruments
Once the challenges are identified, it’s time to set concrete goals. One goal category could be, for example, improved investor targeting, a higher market valuation and increased liquidity. Strategic goals could include proactive communication with investors, optimized shareholder structures, or better benchmarking. It is advisable to prioritize the goals that have been developed, as conflicts often arise during implementation. Time, money, and/or manpower are frequently lacking. In such cases, it is helpful to know which goals have the highest priority.
Measuring Goal Achievement
Last but not least, key performance indicators (KPIs) should be established to measure the achievement of the goals. After all, “What you can’t measure, you can’t manage!”
Developing an IR strategy is an extremely helpful tool for keeping an overview, working goal-oriented, and managing goal conflicts effectively. It doesn’t always have to be an extensive IR strategy. Even smaller strategies can develop long-term effects.