MARKET FOCUS IR AND PR: Narrowing the divide - The convergence ofIR and PR looks inevitable, but as Robin Londner finds out, there isstill a gap to be bridged if PR pros are going to work in IR, and viceversa

Convergence: It's one of the few buzzwords from the dot-com days

that survives in today's thoroughly re-vamped business dictionary of

useful terms. The communications industry, much-changed since those

rich, heady days of the late 1990s, still proudly carries the

convergence banner.

And the disciplines most often singled out as the next big

communications convergence duo are public relations and investor

relations. After all, both target internal and external audiences, both

rely on the media and face-to-face communications to help a client

achieve measurable goals, and both are essential to today's "consultant"

model of high-end, corporate public relations.

Lou Thompson, chairman and CEO of the National Investor Relations

Institute (NIRI), is one of many communications industry leaders who

predicts that PR and IR in agencies and major corporations will one day

be merged, with one communications leader reporting to the CEO. Because

the carbonation has fizzled from the stock market, some IR officers are

less inclined to use their time-honored method of proving IR results by

measuring increases in share price. Thompson, therefore, predicts a

greater IR emphasis on non-share-price metrics, such as quality of

management, relationships with customers, market share, use of

technology, and innovation.

Sound familiar to some PR measurement programs out there?

But the pendulum isn't swinging in just one direction. While IR moves

into the communications side of financial communications, PR is moving

into more financial analysis. Many companies are reigning in their

marketing spend, and demanding that PR agencies prove their worth. This

means it is no longer rare for the effectiveness of a communications

program to be measured by changes in a company's sales or stock price.

In an effort to prove valuable, PR people may also meet with the

formerly IR-exclusive audience of stock analysts and financial

publications. Even non-corporate practices, such as media relations or

product launches, may be more involved with a company CEO through media

placement or reporting project impact to the bottom line -

dollar-and-cent accounting that was once the bastion of financial


Accelerating the merge

Because the two disciplines are moving closer together, many agencies

have begun to integrate the practices.

"At PR21, we've layered our investor relations competency into our

business and financial communications portfolio of services, rather than

maintain a separate offering as we had in the past," says Robert

Hubbell, president and CEO of PR21.

Hubbell says the poor economy has decreased the agency's IR business,

but he maintains that the practice is important to an agency eager to

offer a full range of communications services to current and prospective


"The IR consultancy remains particularly valuable to companies in

special circumstances, whether mergers, bankruptcies, or battles for

shareholder approval, or for those contemplating their turn at the

public markets, pending favorable economic conditions," says


But despite agencies that offer both PR and IR services, the two usually

remain separate practice areas. There are still gulfs to be bridged or

gulfs unbridgeable for true IR-PR convergence. One prominent gulf is

something all communicators know a bit about: perception.

It's an uphill battle to help IR professionals realize the importance of

the PR function, and to help PR professionals understand the basic

language of IR, explains Deborah Radman, managing partner at KCSA Public

Relations, an agency with both IR and PR practices.

"There is a perception on the behalf of IR professionals, regardless of

how inaccurate, that PR professionals are not businesspeople and don't

understand finance or investing," says Radman. KCSA holds multiweek

training workshops on the subject of IR-PR integration, she adds.

To beat the conceit of IR pros that PR people don't know a share price

from a stock split, Radman advises PR folks to prove their financial

intelligence: "In representing publicly traded companies, the only way

for this to go away is for the PR professionals to demonstrate their

understanding of investing, and how the PR function fits into the

success of a company from a business standpoint."

The regulation gap

Another, more significant gulf between the two disciplines, is


Besides "truth in advertising" concerns, PR is not policed, while IR is

a regulated industry. SEC Regulation Fair Disclosure requires a company

to release material information to all audiences, and the stock and

commodities markets each have their own rules and requirements for

listed companies. As a PR industry expert jokes, "In PR, if you make a

mistake, you'll get embarrassed, not sued." In IR, a disclosure mistake

can cost a company millions not just in media or customer relations, but

also in a courtroom.

NIRI's Thompson says that PR workers may know their own ignorance, but

that doesn't mean they always take proper precautions to prevent getting

clients into trouble. One of his great frustrations, Thompson adds, is

PR consultants who give clients counsel without checking the IR rules

and regulations.

"They call after the fact," says Thompson. "They say, 'I have a client,

and here's what I told them to do. Am I okay?' For a firm to be

operating in the IR area, giving advice when they don't know what

they're doing, is unethical. If PR firms are moving into the IR area,

they need to hire people who know what they're doing."

Roger Pondel, MD of Pondel/Wilkinson MS&L, the IR practice of Manning

Selvage & Lee, says experience in the legal ramifications of IR is

exactly why PR company MS&L bought this IR shop a year ago.

"Finding executives who are disciplined in IR as well as PR processes is

one of the greatest challenges for recruiters today," says Pondel.

"But there's no getting around it: For the publicly owned corporation,

investor and public relations must marry. Marketing-oriented consumer

news can have a tremendous impact on a stock price, just as a company

announcing dire financial results can turn customers off."

If PR agencies are not interested in buying the IR capability through

acquisition of agencies or individuals, Thompson urges them to send

their practitioners to NIRI education events. Also, many schools - such

as the School of Continuing and Professional Studies (SCPS) at New York

University - offer night and weekend classes in financial topics. At

SCPS, an introduction to corporate finance includes such topics as

financial management, corporate growth, business failures, return on

investment, risk leverage, the time value of money, dividend policy,

debt policy, and leasing. PR practitioners can use such classes offered

by their own local universities to bone up on their knowledge of

financial terminology, or even the regulations surrounding financial


Money marks the difference

A major challenge for recruiters is yet another gulf between the

"converging" IR and PR functions: salary. According to the NIRI 2001

salary survey, the average annual cash compensation (salary plus bonus)

received by IR officers increased by 20% over the last two years - from

$120,500 to $144,900.

Meanwhile, in the PRWeek salary survey of the same year, PR salaries

went up by 17% on average, from $50,000 to $59,000, before

an average 9% bonus.

However, education - often a direct indicator of salary - is also a

differentiator between PR and IR. While PRWeek statistics show that most

PR practitioners hold a college degree (and that some have completed

graduate work), NIRI's numbers show that half its member IR officers

hold a master's degree, most often an MBA.

"IR is a hybrid," explains Marilyn Vollrath, president of Vollrath

Associates in Mequon, WI. "It's essentially a communications function

that requires a specialized knowledge base. From my experience, the

skill sets required for IR are the strong communications skills acquired

through PR training, combined with the financial knowledge acquired

through a business degree."

If PR people are unwilling to invest in an MBA, however, a form of the

aforementioned continuing education classes can be a way to garner the

education that can contribute to a higher paycheck. Also, KCSA-style

agency seminars or workshops teaching IR skills can be a way to garner

the proficiency that can contribute to a higher paycheck.

Gaining IR skills is in the interest of PR people, according to Jack

Bergen, former president of the Council of PR Firms and current SVP of

corporate affairs and marketing at Siemens. He says IR people are often

in front of the CEO and CFO to brief them before meeting investors or

other financial events.

"In my experience, the IR person is in front of the CEO ten times more

than the PR person," says Bergen. "I'm not saying investor relations is

a more credible enterprise than media relations, but it has more

acceptability within the corporate world because it uses research and

speaks a language people in the corporate world understand better."


Gaining my first position in PR was a challenge, because no matter my

credentials, what mattered most at the time was how fast I typed. PR

used to be viewed mostly as an administrative, secretarial function,

where recipes and stunts were the main stay to develop publicity.

Strategic messaging wasn't discussed. The focus was on the quantity of


Shortly after I entered the PR world, a friend of the family suggested I

switch into IR, pointing out that it was the most rapidly growing niche

of PR, with some of the highest salaries. The field wasn't widely known

then - my parents thought I was a stock broker.

In the early '90s, the biggest challenge in IR was educating management

teams on what it was and its benefits. During new-business

presentations, I spent the bulk of my time explaining the difference

between the buy side and the sell side, and how they worked


Today, IR is studied at the university level, and degrees are offered on

the subject. The profession has been elevated to the CEO's office and

the board room, and there is a firm understanding that communication is

an essential business component.

Everything that happens in the life of a public company impacts Wall

Street's perceptions - new product launches, regulatory comments,

litigation, and other crisis situations. Today's CEO understands the

positive impact communications has on a company's image and cost of

capital, and actively cultivates it.

In recent years, there has been a flattening of audiences, and the line

between IR and PR has blurred. IR professionals focus on both the

business fundamentals as well as industry trends. PR professionals are

aware of new product specs and their financial implications. This

convergence is even more evident when you see sell-side research

analysts and shareholders routinely quoted as industry sources, showing

up on broadcast programs as expert commentators, and when trade shows

are attended by investors and analysts along with the press. Messages to

shareholders, media, business partners, and employees alike, are

becoming more consistent.

Integrating IR and PR nets out to business communications. I've long

believed investor relations is the overarching umbrella to effective


As a communications professional with over 12 years of IR and PR

experience, I can tell you it hasn't always been this way in my


Corey Cutler, senior vice president Morgen-Walke Associates.

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