Experts debate benefits of rotating staff into IR units

NEW YORK: Close observers of the IR field agree that financial expertise is increasingly becoming its most vital qualification. But they disagree on how companies are bolstering the fiscal skills of their IR teams.

NEW YORK: Close observers of the IR field agree that financial expertise is increasingly becoming its most vital qualification. But they disagree on how companies are bolstering the fiscal skills of their IR teams.

Lisa Ryan, SVP and MD of executive search firm Heyman Associates, said that US companies trying to guard against an Enron-type fiasco have been rotating employees from their finance and operations divisions into IR more and more over the past four to six months.

"They feel that someone who has spent time in finance or operations really understands the business model, and that's what they need," Ryan said.

Given IR's unique mix of communications and economics, companies must take care to select well-rounded employees for the rotational stints. "They need someone who can understand the technical aspects of it," Ryan said, "but be able to communicate it to an employee that might be on the factory floor."

Carl Lukach, VP of IR at Dupont, is a poster child for the supposed trend. An accountant, he was rotated into IR for a two-year stint, thanks to his CPA talents.

"You have to be very capable at understanding at a really detailed level the financial statements," he said. "It's a natural place to have people that have a very strong financial acumen and knowledge in those areas."

At Dupont, a three-person team handles IR, including two professionals from the finance department and one from operations/R&D. All are on roughly two-year rotations.

Lukach acknowledged that the communications aspect of his IR role is a challenge. "That's my soft spot," he said with a laugh. "The three of us are lacking in the depth and knowledge of the PR function."

To fill that gap, he has "a strong, hard link" to a manager in the PR department who handles the financial media while Lukach covers investors. "We're both singing from the same hymnal," he said.

All experts, however, don't read the tea leaves of IR the same. Lou Thompson, president and CEO of the National Investor Relations Institute (NIRI), disputed Ryan's assertion that rotations into IR are on the rise.

"The trend is the opposite," Thompson said.

Thompson views IR as an essentially relationship-based field. He said that one- or two-year rotations were not lengthy enough to establish the meaningful connections that are necessary to build and maintain a practitioner's credibility with investors. And companies, he added, have already learned that lesson.

Thompson points to NIRI's yearly survey data to illustrate his point. In 1996, 21% of members reported being in rotational positions; by last year, that number had fallen to just 16%. Furthermore, the vast majority of those positions lasted three to five years, not one to two. Thompson does not expect either of those figures to rise in the upcoming 2004 survey.

Companies that choose to rely on rotational staffing also face the danger of losing employees who like IR so much that they move to another employer rather than leave the field when their rotation period is up. Ryan acknowledged that risk, but said that companies are fully aware of it and weigh it against their staffing needs.

"What it really says is that people are looking at IR as a career choice, as opposed to being in it for a brief period of time," said Thompson.

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