Investor Relationship (IR), according to business management terminology, is strategic management responsibility of business administration that integrates several business sectors like:
- Security laws
- Positive and comprehensive two-way communication between company management and its stakeholders
The Role Of IR Department In An Organization
For the modus operandi of IR, it is often called Shareholder Relationship Management. According to modern business management, Investor relation is maintained by an individual official department,who coordinates with stockholders, existing investors, as well as new investors about their query about the organization and its growth etc. They are called IR Officers (IRO) and they work for:
- Organize Shareholders’ meeting
- One to one meeting with company management and stakeholders
- Maintaining media control
- Stands responsible for company’s social profile
IR Department Works Closely With PR Department
Typically IR department is a sub-branch of company’s finance department mostly heading under CFO (Chief Financial Officer) or Chief Treasurer. In some instances, IR is entirely managed by PR department of a company. IR of a company also deals with updating of annual reports of the company in the official website to display and explain the growth and revenue generation graph of the company, via sharing of interactive data.
As a matter of functionality, one of the prime emphases of IR department of an organization is to remain focused on upcoming events and business policies related to fiduciary responsibility as well as organizational effect. To be precise, the corporate functionality of the IR department of an organization is to assess the manifold patterns of stock trading tentatively experienced by a public company as a consequence of a public disclosure.
IR Department Links With Finance Department
Contrary to general norms, IROs often report to CEO also as IR team of a company is found engaged in the consistent process of coordinating and strengthening company management with its stakeholders via clear and judicious communication for enabling an apparent assessment of company’s strategies and roadmap for near and remote future. This department works closely with financial analysis team as well as with corporate secretary of the organization to understand and explain the issues that can affect shareholder’s benefit as well as may affect new investment in the organization against their new issue issuance etc.
The Motives Behind The IR Programs: The Expected Effect
An efficient IR program can perfectly help an organization in achieving suitable recognition and professional credibility with its business community. Due to effective and comprehensive intervention and coordination of IR department, a company may expect,
- Enhancement of credibility and recognition
- Boosting of company’s social image
- Influences workflow in a positive way
- Enhances sales
- Increases revenue generation
- Establishes better relation of company in government segment
- With general media for gaining a better range of consumer support, etc.
Business Responsibility Of IR Members
As one of the members of the most senior management team, IR directors reserve their power to advise company management on various business administration niches. These are:
- Business strategy formation
- Organizing research for developing right strategy
- Developing presentation for retaining and professional outlooks of investors, regulators, analysts, as well as of financial journalists
- Analyzing the results of research
- Recommend a communication plan for improving the acumen of the company in the relevant financial community
- They also advise general management team on the potential impact on investors of crucial factors like mergers and purchases or changes in dividend policy, etc.
Precisely, IR, in general, maintains a role in combating crisis management like strategy development against corporate downsizing, alteration in management structure, defining/facing product obligation issues and managing industrial disasters.
Nitin Lahoti is the Co-Founder and Director at Mobisoft Infotech. He has 10+ years of experience in Design, Business Development and Startups. His expertise is in Product Ideation, UX/UI design, Startup consulting and mentoring. He prefers business readings and loves traveling. Follow him @nitinlahoti