Bleak Economic Outlook Boosts Investor Relations Headcount
Bleak Economic Outlook Boosts Investor Relations Headcount
2 in 5 Investor Relations departments increased headcounts in the past year
Only 1 in 10 departments have reduced headcount despite a rise in economic negativity
Nearly half of Investor Relations professionals (49%) have a negative economic outlook, up 19 percentage points since 2010
2 in 3 state their most recent bonus was an increase on the year before
Investor Relations is an area of corporate communications that is experiencing strong growth, with 42% of Investor Relations (IR) departments reporting an increased headcount over the past twelve months, according to specialist marketing and communications recruiter EMR.
Research conducted among 480 Investor Relations professionals*, conducted in conjunction with the Investor Relations Society, found that 50% of financial PR agencies had increased their headcount in the past 12 months, as have 53% of organisations in the banking sector and 23% of in-house IR departments.
Negativity about the UK’s economic future has increased markedly in the past two years among IR professionals. Nearly half (49%) of professionals feel either somewhat or extremely negative about the economy in the next 12 months, up from 30% in 2010. This pessimism mirrors the British Chamber of Commerce recently downgrading the growth forecasts for the UK from 0.6% to 0.1% for 2012.
However, economic instability has actually contributed to growth in the IR profession as smaller firms work harder to attract investors who may otherwise be inclined to head to what are seen as larger and safer businesses. Kathy Boate, Head of Investor Access at Edison Investment Research says, “While we are providing more large cap coverage, we continue to address the ever increasing need for small and midcaps to communicate their investment case better to help with liquidity – volatile equity markets do tend to push a finite pool of capital to larger stocks as investors look to lower risk.”
Reasons for the IR Switch
The reasons people choose IR as a career paint a picture of an interesting and engaging area in which to work that is also well rewarded. It is also a discipline which attracts career movers from other areas of financial services such as analysts, sales and broking. Just 23% of IR professionals questioned had a pure IR background, with the rest coming from career paths including accountancy (12%), corporate communications (10%), broking (9%) and equity analysis (7%).
The largest reason people chose to move into IR was to seek a new challenge in a more varied and multifaceted discipline (50%), closely followed by career development opportunities (47%). Almost a third (32%) cited a higher salary and 18% were attracted by having more responsibility.
Andrea Abbate, Principal Consultant at EMR comments,
“The investor relations function holds a unique standing within a business – it provides direct access to the CEO, CFO and Board, and is often amongst the first to know of major corporate strategy changes, executive movements, and anything that would affect company share price. Therefore, the IRO holds a privileged and varied position within a company – a very compelling proposition to City professionals who have spent the majority of their careers sitting on the other side of the table.
“Career development, , more exposure to top-level business issues and being embedded into one company are emerging as driving forces behind these career decisions.”
Another lure is job security. In the sector, 77% of IR professionals feel secure or very secure. The percentage of IR professionals reporting feeling very secure has risen since 2010 from 14% to 20% in contrast to other marketing professionals who reported a decline in those feeling very secure from 17% to 11%.**
The research illustrates the fact that while many people enter the industry with prior experience in another career, salaries are strong even for those who have been working in IR for a short amount of time – 54% of professionals with between one and three years’ experience report a salary of over £50,000. Demonstrating the potential for a well remunerated long term career, the average salary of an IR professional with more than 10 years’ experience is £134,266.
The average bonus is 28.1% of salary, slightly down on the 28.6% reported in 2010. However, two thirds reported their bonus last year was an increase on the year before, with 12% reporting that it had significantly increased.
There are also strong opportunities developing internationally – something IR professionals are keen to capitalise on, as 83% said they would consider relocating internationally for a role.
On this, Kathy Boate, Head of Investor Access Investor Access at Edison Investment Research:
“Growth will come from both larger UK quoted capitalised companies looking to tailor offerings to address large domestic PCB shareholder bases, and both North American and Australasian quoted midcaps looking to broaden their investor base beyond their own markets. We have opened in Sydney, Berlin, Wellington and New York and are already helping UK clients on investor road shows in the North American market. We expect to see more North American midcaps looking to European investors and vice versa.”
Andrea Abbate, Principal Consultant at EMR concludes,
“Investor Relations is a profession that is really establishing itself as part of the mainstream and is seeing strong growth both in headcount and in recognition. The scope of the job, its strong job security and remuneration mean that it is a sector that is attracting a high calibre of professionals with a good mix of financial and communications experience as companies look to attract the best talent.
“Stakeholder relationships are now more important than ever and effective communicators with good financial knowledge are crucial to PLCs maintaining positive relationships.”