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Welcome to Elevating Investor Relations, a new series on the evolving role of corporate investor relations.
While now well-established, how has the investor relations officer (IRO) role evolved over the decades, and what is its future direction?
Before the 1970s, this role was not commonly recognized as a distinct corporate position. Indeed, IROs in those days tended to be PR or corporate communications professionals who were then asked to take on shareholder relations as an additional part of their role. Often ex-journalists, these early IROs would write earnings releases, annual reports or their chair’s presentation. It was a pretty simple role compared to the IROs of today.
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According to Len Griehs, former head of investor relations at The Campbell’s Company, the role was a very different beast throughout the 1970s. “That was when investor relations moved from the responsibility of corporate communications to a more financial function,” he told IR Impact in an interview. “Then the bull market began in 1982. There was a lot of takeover mentality where firms were undervalued because stock prices didn’t perform well. This was an era when people started to feel they should pay more attention to investor relations”
From there, the role has evolved significantly to be a professional of its own. Most IROs now hold at least a vice president role, with an increasing proportion having direct access to key corporate decision makers.
IRO role amid c-suite transformations
This development could align with the progression of C-suite positions over the past century. It is possible that Investor Relations Officers (IROs) may eventually be designated as Chief Investor Relations Officers (CIRO).
It may sound farfetched but it’s important to remember that before World War 1, there was not even a single CEO at a US company or further afield. The title of “Chief Executive Officer” first came into common business parlance in the intra-war period, when the modern managerial style of running large corporations was established, with specialists hired to run various functions or divisions.
The prominence of the leading executive position increased post-World War II as businesses increasingly turned to the stock market to fuel their growth and to emphasize their competitive advantage against their peers.
During the 1960s and 1970s, the roles of Chief Financial Officers (CFOs) and Chief Operating Officers (COOs) became increasingly common and established within companies.In the case of CFOs, that emergence was driven by an increased demand for strategic financial planning and risk management within companies. As the financial regulatory landscape became more complex, particularly with the advent of rules governing 10-K filings coming into play in 1976, the role moved beyond accounting.
As businesses expanded in scale and complexity, the COO role emerged to bridge the gap between strategic planning and operational execution. Unlike the CEO, who sets the vision and drives corporate strategy, the COO ensures that business operations run efficiently and that strategic objectives are effectively implemented.
Throughout the 1980s, 1990s and into the new millennium, this trend continued as more departments became mainstays in the corporate model that dominated the North American and European markets.
Continued emergence of corporate leadership roles
As technology advanced, the need for internal leader for matters relating to technology grew. Enter the Chief Technology Officer (CTO) or Chief Information Officer (CIO), roles that emerged in the 1980s as firms had a growing reliance on technology to maintain their competitive advantage. At the turn of the 2000s, these positions also encompassed a need for management to take a lead on cybersecurity issues, as well as overseeing innovation, digital transformation and the internal governance of IT issues.
This was followed shortly by the evolution of the Chief Human Resources Officer (CHRO), who took point on personal management and compliance matters. One of the earliest examples of this can be found at Xerox: Anne Mulcahy, who started as vice president of HR from 1992-1995 and then transformed and elevated the department’s prominence in the company. In addition to subsequent roles as Chief of Staff and VP of Customer Operations, she had was appointed CEO in 2001 and went on to lead a historic turnaround. As our understanding of the need to manage human capital properly grows, so too does the prominence of the CHRO role, with the likes of Royal Dutch Shell now integrating the position into their C-suite.
In the 2000s, two more C-level roles emerged: the Chief Marketing Officer (CMO) and Chief Sustainability Officer (CSO). The former was a natural step as companies increasingly centered their efforts on consumers, using data-driven marketing and digital transformation as the cornerstones of their strategy.
Though it started in earnest in the US, with Target, IBM, eBay and HP all appointing CMOs by the late 2000s, the role rose to further prominence throughout the worldwide markets soon after, with consumer goods giant Unilever appointing Simon Clift as its first-ever CMO in 2008. Notably, each divisional head fell under his oversight to ensure that all of Unilever’s leading products pulled in the same direction.
Sustainability became an important focus for companies at that time, especially those whose stakeholders were increasingly concerned with ESG matters. The world’s first CSO was appointed in 2004: Linda Fisher, who became VP safety, health and environment as well as CSO at DuPont. There she oversaw the company’s first set of sustainability goals and birthed initiatives that cut the Delaware-based company’s environmental impact, such as bringing in sustainable materials and processes.
Strategic thinking and continued evolution
Aside from offering a corporate history lesson, what insights do these appointments provide?
- Roles can evolve from specialized areas to driving strategic thinking and competitive advantage. It is clear that while each of the disciplines mentioned above – technology, finance, human resources, sustainability, marketing and operations – were once specialist concerns that were increasingly recognized for their impact and importance. Each discipline has become a driver of strategic thinking, enhancing the competitive advantage of their organizations.
- IROs can add strategic value to their organizations in various ways. Whether it is by attracting quality shareholders as owners of their business, providing deep financial, capital markets and competitive intelligence to enhance decision making to spearheading change in sustainability and innovation or building a capital markets advantage, the role has the opportunity to directly and meaningfully influence the future of the corporation. The time is right for the role to evolve into a full C-suite position.
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