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Apr 30, 1998

Time's up

IR can't be learned by rote

Providing senior management with some form of feedback as to the real value of the IR function has to be one of the most important aspects of an IR officer's job. It may, as this month's cover story suggests, sometimes be necessary just to keep you in that job in the first place. But it shouldn't just be viewed as a means of rescuing an IR function under threat. It's an integral part of the job which many of those new to the profession overlook.

Perhaps that's understandable. Investor relations remains a relatively young, undeveloped business function in many companies - particularly outside of the US. Take a step back and look at the rapid increase in IR activity over just the past three years, in developed and emerging markets, and you'll realize just how quickly many firms are learning the ropes. Competition for capital is hotting up.

But learning about IR is the same as any other subject. Cast your mind back to school for a moment. You'll remember those students who were adept at cramming information into their brains and then spilling it back onto the pages, parrot fashion, in the exam. They might well have passed, but they were unlikely to attain top marks. If you asked them about the same subject a few weeks later, chances are you got a blank look.

The top marks, of course, go to those who develop a true understanding of a subject's background. The whys and wherefores; not just learning by rote. Those students can then apply that knowledge in an intelligent fashion, retain the lessons learnt over a longer period, updating themselves and those around them as circumstances dictate.

The same theories apply to IR. It's easy to pick out those companies that are simply going by the book; those who knew they had to get up to speed quickly and send out messages to the financial community. Sure, they're not doing anything wrong, but neither will they ever really succeed in the discipline.

The top marks go to those that know the background. They've taken the time to find out what fund managers and analysts want and they push the disclosure boundaries accordingly.

Nor do they rest on their laurels. Measuring the success of an IR program is part and parcel of this process. Constant evaluation is the key to success. Those that learn this lesson in IR at an early stage will find it much easier to stay ahead of the class in the future.

It will also make any examination by the financial community - or your chief executive - a whole lot easier.

Staff Writers

The staff writers on IR magazine are from our team of highly experienced journalists.