MARKET FOCUS: INVESTOR RELATIONS - Should financial PR pros wear two hats? IR and financial PR pros are supposed to give the same messages to different people - investors and journalists. Should a company’s IR and PR functions be filled by the sam

Call it the case of the two-hatted communicator.

Call it the case of the two-hatted communicator.

Call it the case of the two-hatted communicator.

With the stock market barreling ahead and e-commerce IPOs coming on like

a blizzard, the role of investor relations has become so important that

it sometimes seems to overshadow public relations.

Increasingly agencies and corporations either combine the two functions

under an IR chief or separate them and let them answer to different

officers - a chief financial officer or treasurer in the case of IR, a

marketing chief in the case of PR. However, the problem - media people

say and many IR and PR pros concede - is that either conflicting

messages emanate from public companies or there are difficulties dealing

with IR-weak practitioners.

It’s not easy to pinpoint the culprits for this problem. Try these:

Uninformed, financial types who know little and care less about media

relations. Informed, financial types who know about the media but think

that communicating with investors, pension funds and insurance companies

is more important.

PR people who don’t know much about IR and think that marketing is the

be all and end all. Clients who don’t take advantage of expertise in

their IR/PR agencies and call the shots their way, or else appoint

lawyers, accountants or investment bankers to head IR without giving

them PR training first.

This isn’t a blanket indictment, of course. It’s the bad examples that

make the noise - and create the confusion. It’s all part of the

circus-like atmosphere now being generated by the solid beat of the

national economy.

Many experts believe IR and PR should not be handled by the same


IR and PR pros say that the two functions should be covered by separate

people or staffs overseen by a senior executive who has taken the

trouble to learn something of each. This, they claim, will give IR and

PR practitioners the latitude to operate while being monitored by a

knowledgeable supervisor.

But is that optimum situation easy to achieve? No, it isn’t, these pros

say. Too many CEOs and CFOs tend to highlight IR over PR and that’s when

the conflicting messages begin.

Separating functions

Yet, separating the functions gives each the chance to work, experts

say. Often, the outside IR or PR agency comes in handy in such a


’We work as closely as we can with the client on both IR and PR although

our background is mostly in financial PR,’ says Lawrence Rand, senior

vice president at New York-based Kekst & Company. ’You have to remember

that today news is a moving target with the electronic media functioning

24 hours a day and so it’s easy to fall into a confused communications


Dave Senay, executive vice president and senior partner with

Fleishman-Hillard, St. Louis, says, ’As an agency, we have separate

departments because the market has demanded it. IR is highly regulated

by the SEC and the various stock markets, and that requires expertise.

But companies need PR, too, and that’s becoming more complex with all

the new media.’

Should companies place their IR function outside the communications

department or even the companies’ confines? The general answer to the

former is no.

But the latter depends on the size of the company and its budget. The

smaller the company, the more likely it is to use outside help.

Most media and PR pros agree that IR people who lack communications

experience or training do not work out very well. Those companies that

appoint lawyers, accountants or investment bankers to handle the IR

function are usually surprised when the media get a confused message or

complain about lack of cooperation. The problem is obvious - they’re

used to dealing with professional financial types, not media people

seeking straight, non-technical responses.

’One of the real problems is that obtaining the skills for both

disciplines is a huge headache,’ says Bob Ferris, IR practice leader at

Ruder Finn, New York. ’In agencies, it will take somewhat longer to

institute the unified message concept because the agency heads aren’t as

skillful or aware of IR as many of the young tyros they could bring in.

In corporations, I think it is more advanced.’

Lately, the confused message seems to center around technology companies

because so many people don’t understand the technology, says Dick

Holthaus, senior VP and senior partner at Fleishman-Hillard. ’The

financial people will depend upon the analysts and trade press to get it

across. But for the PR side, the trade and the general press is their

milieu and they are - if not ignored - delayed in being brought into the

process. Result: confused communications.’

And how do journalists feel about the situation?

’Some IR people are very smart and do a good job,’ says Kurt Eichenwald,

financial reporter for The New York Times. ’Others are blithering


The people I like most to deal with are those IR or PR people who do not

confuse their job with marketing. I find that when they do, they blow up

the company way out of proportion. They don’t really hear my questions

and so they can’t answer me.’

Media people feel frustrated when companies throw up roadblocks, use

regulatory rules as an excuse to keep silent or reply in a cryptic


Eichenwald recalls such problems during his two years of covering

Columbia-HCA, the big healthcare company that finally had to reorganize

after several troubled years. ’We reported in many stories about their

brewing troubles but Columbia-HCA would only comment rarely or in vague

terms,’ he says.

’Occasionally, they would cooperate by furnishing videos showing how

well children were being treated. This went on until they got caught and

had to reorganize.’

One reporter recalls the CEO and CFO of a leading food company, whose

bottom line alternated with profits and losses, telling him that ’things

are getting better.’ Although the company’s PR person was non-committal,

the promising statement prompted the reporter to expect a return to


But he was stunned to get the announcement of yet another losing


Greg David, editor-in-chief of Crain’s New York Business, says, ’Most PR

people are in a defensive position. Routinely, we are trying to talk to

the corporate executives but sometimes they shunt us off to IR


Keeping the message straight

How should agencies work with companies anxious not to send out

confusing messages?

’We try to give them both IR and PR counseling even though most of our

people come with financial background and then pick up the PR know-how

working here,’ says Kekst’s Rand. ’We work very closely with the client

to ensure that the messages going out from both departments are in


Says John Lockhart, president and CEO of Halsted Communications,

Ventura, CA: ’We use education as the main way of helping companies

avoid message confusion. We especially try to help those CFOs who aren’t

used to proactive communications - a positive outreach to the public.

But once they begin to understand its value, they are much more

interested in becoming facile with it.’

One of the innate problems IR people have - especially those without

much communications experience - is that they believe a ’no comment’ or

other vague response is best, Lockhart says. ’It’s the mind-set that

’you can’t get into any trouble for what you don’t say.’ ’

Smart companies are learning that that attitude doesn’t cut it anymore

and - more importantly - that their communicators must speak with one

voice, a voice that everyone understands.


Communications pros increasingly view investor relations as a viable and

lucrative career opportunity. According to a July 1999 survey by the

National Investor Relations Institute (NIRI), three out of four (73%)

senior IR officers describe their jobs as career positions (compared to

only 59% in the 1996 study).

NIRI’s survey shows that salary stats are up as well, with IR officers

receiving, on average, some dollars 120,500 in salary plus bonuses, and

IR counselors clocking in at dollars 153,200.

Counselors polled by NIRI expect their firms to focus increasingly on

four IR activities - oversight of IR web site content, international IR

for US companies, strategic planning and IR for non-US companies.

The popularity of IR has also influenced PR education. Cynthia Clark,

assistant professor at Boston University’s College of Communication,

says that a number of schools, including her own institution, have added

at least some IR training. The others include Northwestern, New York

University, University of Michigan and the University of California. -

Craig McGuire.

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