Korn Ferry Study Identifies Career Paths and Aspirations for Heads of Investor Relations
Los Angeles. March 22, 2016
Los Angeles, CA, March 22, 2016 - A recent study by Korn/Ferry International (NYSE: KFY), the preeminent global people and organizational advisory firm, points to how the investor relations (IR) function is evolving.
The October-November 2015 survey of IR heads at 150 FTSE companies showed that more than half (56 percent) of respondents had been in their role for two years or less, suggesting a high level of turnover. In addition, more than half (53 percent) had been hired from other companies, and of those who were hired from inside the company, nearly as many (22 percent) were appointed from outside the IR function as from within (25 percent).
“Prior to the 2008 financial crisis, the majority of IR leaders rose through the ranks via communications or finance roles,” said Andrew Lowe, a principal in Korn Ferry’s Global Financial Market Practice. “Today, we see an increase in the accessible pool of talent, as a number of financial services professionals now consider IR as an attractive career path.”
The study found that nearly one third (31 percent) of survey respondents had prior experience in investment banking and a quarter are qualified chartered accountants. Nearly half (47 percent) of survey respondents had worked in more than one industry, with 19 percent having operated in three or more sectors.
“We find that in many cases, technical IR skills can be transferred across industries and that the broad perspective gained in multiple sectors is often beneficial, said Lowe. “Although single-industry careers are increasingly rare, this deep expertise and knowledge is also highly valued.”
For their next move, 44 percent of respondents wish to remain in IR but with a more “compelling/differentiated scenario.” A sizable number (16 percent) aspire to become Chief Financial Officer, with a smaller percentage seeking to be head of Communications/Affairs, Strategy, or to take a role in an IPO.
In terms of reporting structure, 75 percent report to the CFO, and a small number (9 percent) report to the CEO, and the same number to the head of Corporate Communications/Affairs.
When examining budgets, despite demanding more strategic, broadly skilled heads of IR, two-thirds of companies are maintaining budget levels. A quarter have reduced budgets and only 9 percent saw increases. IR teams remain small, with two-thirds of Investor Relation Officers (IROs) having one or no individuals reporting to them.
In terms of engaging and retaining IROs, Lowe recommends stretch assignments. “IROs are attracted to challenging roles that involve such factors as international scope, group complexity, a shift in shareholder base, growth strategy, and added responsibilities for corporate communication or corporate affairs,” he said. “IROs also indicate that corporate support at the highest level (CEO/CFO) will allow them to add greater value.”
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