On April 29, 2008, Order No. 200 of the Health and Social Development Ministry was issued including the profession of IR specialist in Russia's qualifications list. Official recognition of the IR specialist profession in Russia became possible owing to an initiative of Russia's Financial Communication and Investor Relations Association (ARFI, former AFBID).
This is quite a typical situation when an investment bank or a consultant tells shareholders or a company's CEO: "You need to hire an IRO." And the manager asks: "Who is an IRO? What are his or her functions? Where can we recruit one? How much should he/she be paid? To whom will one report?"
Everybody knows what PR is, but IR has been a mystery for the general public and in particular for many issuers going to IPO or public markets.
Of course there should be serious arguments for such kinds of decisions. Last year our association conducted research on "The IR Profession: Formation, Development Trends and Prospects," and then after discussions with market participants we sent an official address to the Health and Social Development Ministry.
We surveyed the IR community's experts. Among them were not only Muscovites, but also regional specialists, including employees of regional and municipal administrations, which also raise funds.
We had to answer the following questions: who IR specialists are, what their functions are, and how much they should be paid. We had to evaluate the IR services market dynamics, what is in demand now, what will be in demand in the future, and which services are "overheating" the market. For instance, the survey revealed that there is a demand for IROs' and IR agencies' ratings.
By the way, the ministry made a number of amendments to our proposal. For instance, a few functions have been included, such as control over achievement of specific key-performance indicators in the IR sphere.
As a result, there are currently four job titles. Three of them are included in the list of managerial positions: IR director, IR officer and head of IR department. This confirms the strategic role of IR within a public company. There is also a junior position called IR specialist.
According to ARFI's research, the strategic goal of an IR professional is "to build and maintain the long-term sustainable relationships with shareholders and investors." A basic component of investor relations is disclosing information related to the company's activities, corporate actions, corporate governance, as well as other material information that would be likely to affect stock markets once it becomes known to the public.
It turns out that one must have a financial or MBA education if he/she wants to be a head of the IR department. I doubt that all Russian IR specialists' education meets such standards, but this issue can be solved quite fast. It would be worse if an IR specialist needed to have a state IR degree. This could really lead to a collapse. Legalizing a profession for every IR specialist is a very important fact; it means that his role in the investment process and the development of the stock market is finally recognized.
According to headhunters, our issuers want to "buy" qualified specialists. IR positions are on the same level as a financial director's position. The selection is being held by the majority stakeholders, and it often happens without the HR department's participation. So we are not talking often about the education of the specialist in the company; this happens mainly in "blue-chip" companies, for instance, RAO Unified Energy System has been regularly conducting corporate training for IR specialists in its subsidiaries and has prepared a procedural framework for IR departments.
Recognition of the profession will allow formation of a system of education, and preparation of qualified employees for Russia's issuers. This will also allow Russian IR specialists to improve their qualifications.
I am not sure whether companies will make changes in their staff structure, but it is evident that new standards for the issuers have emerged. There is no need to start from scratch the way the pioneers in Russia's IR sector did. So on behalf of the association I represent, I congratulate all IR specialists for the official recognition of their profession!
This is quite a typical situation when an investment bank or a consultant tells shareholders or a company's CEO: "You need to hire an IRO." And the manager asks: "Who is an IRO? What are his or her functions? Where can we recruit one? How much should he/she be paid? To whom will one report?"
Everybody knows what PR is, but IR has been a mystery for the general public and in particular for many issuers going to IPO or public markets.
Of course there should be serious arguments for such kinds of decisions. Last year our association conducted research on "The IR Profession: Formation, Development Trends and Prospects," and then after discussions with market participants we sent an official address to the Health and Social Development Ministry.
We surveyed the IR community's experts. Among them were not only Muscovites, but also regional specialists, including employees of regional and municipal administrations, which also raise funds.
We had to answer the following questions: who IR specialists are, what their functions are, and how much they should be paid. We had to evaluate the IR services market dynamics, what is in demand now, what will be in demand in the future, and which services are "overheating" the market. For instance, the survey revealed that there is a demand for IROs' and IR agencies' ratings.
By the way, the ministry made a number of amendments to our proposal. For instance, a few functions have been included, such as control over achievement of specific key-performance indicators in the IR sphere.
As a result, there are currently four job titles. Three of them are included in the list of managerial positions: IR director, IR officer and head of IR department. This confirms the strategic role of IR within a public company. There is also a junior position called IR specialist.
According to ARFI's research, the strategic goal of an IR professional is "to build and maintain the long-term sustainable relationships with shareholders and investors." A basic component of investor relations is disclosing information related to the company's activities, corporate actions, corporate governance, as well as other material information that would be likely to affect stock markets once it becomes known to the public.
It turns out that one must have a financial or MBA education if he/she wants to be a head of the IR department. I doubt that all Russian IR specialists' education meets such standards, but this issue can be solved quite fast. It would be worse if an IR specialist needed to have a state IR degree. This could really lead to a collapse. Legalizing a profession for every IR specialist is a very important fact; it means that his role in the investment process and the development of the stock market is finally recognized.
According to headhunters, our issuers want to "buy" qualified specialists. IR positions are on the same level as a financial director's position. The selection is being held by the majority stakeholders, and it often happens without the HR department's participation. So we are not talking often about the education of the specialist in the company; this happens mainly in "blue-chip" companies, for instance, RAO Unified Energy System has been regularly conducting corporate training for IR specialists in its subsidiaries and has prepared a procedural framework for IR departments.
Recognition of the profession will allow formation of a system of education, and preparation of qualified employees for Russia's issuers. This will also allow Russian IR specialists to improve their qualifications.
I am not sure whether companies will make changes in their staff structure, but it is evident that new standards for the issuers have emerged. There is no need to start from scratch the way the pioneers in Russia's IR sector did. So on behalf of the association I represent, I congratulate all IR specialists for the official recognition of their profession!