The multifaceted responsibilities of the IRO

THIS commentary is a sequel to the one that I contributed to The Business Times on Feb 21, 2020 titled 'Why firms need investor relations'. I got inspired after reading a paper titled 'The changing role of the investor relations officer'. It was co-authored by three management gurus - Bill McNabb, Dennis Carey and Ram Charan - and published in the Harvard Business Review on May 20, 2021. Mr McNabb is the former chair and chief executive of asset manager Vanguard, Mr Carey is vice-chairman of consultancy Korn Ferry and Mr Charan is a well-known author and business adviser. The article was published to promote their new book, Talent, Strategy, Risk: How Investors and Boards are Redefining TSR, which will be released in July.

I would encourage all CEOs and board members of large public-listed companies on the Singapore Exchange to read the article and their book when it is available. The authors suggest four ways the investor relations officer (IRO) job needs to change:

• Articulating strategy: The IRO role needs to do more than explain corporate strategy and practices. Instead, the IRO must connect strategy with the unlocking of long-term shareholder value.
• Intelligence gathering: The IRO should become an "intelligence agent", with the ability to pick up on the issues investors care about and the data that they use to make decisions.
• Cultivating the right investors: The IRO should actively seek out and cultivate the right investors for the company.
• Sounding the alarm: The IRO must also be able to alert the company's management when activists are arguing for change in white papers, or when analytical models suggest change is imminent or necessary. The IRO role must be an "early warning radar system when trouble is brewing".

To accomplish all this, the authors said that effective IROs need to possess high EQ with strong interpersonal skills. He or she must also be able to bring the right decision-makers together. This person also needs to have ready access to the C-suite and even to the board. And he or she must be empowered by the CEO to help the company mitigate risks, whether these be related to shareholder activism; environmental, social and corporate governance; executive pay; or board compensation.