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
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
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.
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
’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. -