Today I am presenting at the CMA Leadership Conference in 
Vancouver.
As part of the presentation, here are links to previous blogs referred to in the presentation.
Whether you have attended the presentation or not, these blogs are key on The Road to CFO.
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This Blog was written by David Calusdian, Executive Vice President and Partner at Sharon Merrill, a Boston-based investor relations strategic consultancy.
A special thank you to Dennis Walsh at Sharon Merrill for co-ordinating this valuable piece for CFOs on an important topic.
As the new CFO of a publicly held company, somewhere on your extensive “to do” list is implementing an effective investor relations program. Whether or not the IR function was a well-oiled machine when you arrived, or virtually non-existent, there are key areas you need to address immediately to ensure that you are effectively taking the IR reins. So here are six steps for success as you accept responsibility for the IR function.
1) Understand your shareholder base. Research the investment styles of your shareholders to determine why they may have bought shares– and what might cause them to sell. See what type of investor concentration you have in your shareholder base. Identifying whether your shareholders are weighted toward a growth, value or income investment style, for example, can offer insight as to what they are expecting the company to achieve near or long term. Also investigate whether there are known “activist” firms among your shareholders, and what catalysts usually cause them to initiate a proxy fight. Make it a priority to speak with your shareholders by phone as soon as possible, and then meet them in person within your first few quarters as CFO. Also consider an investor perception audit to understand the sentiments of your shareholder base — and identify any misperceptions about the company — to most effectively build your IR program.
2) Review (or create) a disclosure policy. A comprehensive disclosure policy guides a company’s communications with the investment community. Make sure that as the new CFO, you are comfortable with the disclosure philosophies outlined in the document. For example, maybe it is time to revisit the company’s guidance policy or disclosure committee processes. Ensure that the corporate spokespeople listed in the disclosure policy are still appropriate. Make certain that you understand all of the communications channels at your company. For example, is the company tweeting, hosting its own Facebook page or maintaining a corporate blog? You want to know every disclosure outlet that may be supplying investors with information directly from the company.
3) Develop your IR Plan. Conducting investor relations without a plan is akin to venturing out on a journey without a destination or a compass. The first step is to determine your plan’s goals, which should directly correlate to the company’s IR needs (e.g., a more diverse shareholder base, greater sell-side coverage or even enhanced credibility). Then, to achieve those goals, develop a strategy that takes into consideration your company’s messaging, investor targeting and outreach. 
In scheduling your investor meeting calendar for the year, determine which covering investment bank would be most appropriate to introduce you to investors in a particular geography. Then layer in a couple company-sponsored roadshows where you can introduce the company to potential new sell-side analysts as well as additional targeted investors. Dovetail your roadshow schedule with your conference calendar. Determine which conferences would be the most effective for you to attend, and then proactively solicit invitations.
4) Develop investor positioning. At the foundation of your IR plan should be the company’s IR message, and the mortar that holds it all together is an investment thesis that aligns with your long-term business model. The key messages within all of your communications to the investment community should answer the question, “Why should investors buy the company’s stock?” Develop an investment thesis that is specific, financially focused and conveys the company’s value drivers. Stay away from general statements like “strong management team” and “positioned for growth.” Instead, highlight more concrete factors such as market share potential, end market growth, margin enhancement opportunities, and your ability to reinvest cash for value creation.
5) Establish or review the IR website. Your company’s IR website is one of the most important destinations for investors seeking information. Without consistent oversight, it can oftentimes become outdated or contain inaccuracies. Make sure that your site has all of the features and content investors have come to expect on IR sites, such as “push” notifications, robust Frequently asked Questions, investor presentations and a quarterly results tab complete with conference call transcripts. Some companies also are now complementing their IR website with social media tools, like Twitter and SlideShare, to broaden their communications.
6) Establish a news release pipeline. Investors buy stocks on information. So it’s important to have a regular stream of news about your company to build awareness, enhance credibility and create buying opportunities for potential shareholders. There is no “right answer” as to how often you should issue releases, but a substantive (i.e., not fluffy) release every few weeks usually keeps companies on investors’ radar screens. If you have an IR, PR or marketing professional in the organization, discuss the news release strategy with them and how it ties into your corporate goals. If you are on your own in this endeavor, meet with key operations people to determine which upcoming corporate milestones would be newsworthy. Remember, if the primary audience for the news release is the investment community, make sure it is written with them in mind. In other words, tone down the technical mumbo jumbo and marketing superlatives and explain how the announcement fits in with the company’s strategy for increasing shareholder value.
A public company’s valuation is dependent upon its financial performance as well as the communication of those results to investors through good investor relations. As the CFO, it’s your responsibility to make sure that the IR program is well executed. By completing these six steps, you should have a solid foundation in place from which to build an effective IR program for your new company.
Sharon Merrill assists corporate clients across the U.S. and internationally in planning and executing critical communications that resonate with stakeholders and deliver desired results in virtually any situation an enterprise may confront. The firm serves private and public companies primarily in the life sciences, technology and industrial sectors. Practice areas include investor relations, crisis communications, transaction communications, reputation and issues management, and presentation and media training. The Sharon Merrill team has earned wide recognition for corporate communications thought leadership, as well as dozens of industry awards. To learn more about Sharon Merrill, please visit the company’s website at www.InvestorRelations.com, or its thought leadership blog at http://blog.investorrelations.com/.
Last week I wrote that No Employer wants a Stale CFO. While we can agree that a Stale CFO is not desired, staying Fresh takes hard work. The most important thing for a CFO to do to stay Fresh is to budget.
When I ask CFOs why they do not make staying Fresh a priority, the usual excuse they give is that they don’t have the time, or they cannot get (or are afraid to ask for) approval for the expense.
A CFO needs to budget time and money to ensure that they stay Fresh.
How can a CFO find the time and money?
New CFOs are in the best position to find the time and money when negotiating their new CFO Employment Contract. As part of a new employment agreement, asking for a budgeted amount for conferences and other professional development gives a Chief Financial Officer the flexibility to find relevant learning and networking opportunities to stay fresh and further develop themselves as CFOs and as experts in their industry.
Employed CFOs that have not spent the effort to stay Fresh really need to get out of their rut. If you’ve been CFO with a company for 3 years but haven’t spent the time and money on staying Fresh, convincing your CEO that you need to start spending time and money on this could lead to quizzical looks. You may want to use the argument that you’ve spent all this time applying your previous experience, and now you need to upgrade your skills to better service the organization.
Whether a new or incumbent CFO, you need to believe that staying Fresh adds value to your current employer, and that your employer needs a Fresh CFO to get the best value from you.
Now that you’ve committed to spending time and money on improving and developing yourself, what are your options?
Conferences – Getting out of the office and in front of other people is not only a good change of pace, it can provide you with formal and informal learning opportunities and networking that will can add value to you and your employer immediately. CFO focused events, such as the AICPA CFO Conference or CFO Rising or even specialized CFO Conferences for your industry (e.g. the CFO & Finance Managers Conference by the Council of Insurance Agents & Brokers) are excellent opportunities for learning, development and thinking about how you can apply what you’ve learned. I also recommend that you attend Industry conferences that are not finance focused so you can better understand the business and industry you currently serve.
Training – Specific training, either on a new subject or as a refresher, whether in a class room or as a webinar, can certainly allow you to stay fresh. Proformative has excellent webinars on relevant CFO topics on a regular basis, as well as an up to date list of CFO relevant events across the country.
Peer networks – CFOs can learn a lot from their fellow CFOs. Groups such as The CFO Alliance (which has meeting in cities around the USA) as well as local FEI chapters can provide learning and networking opportunities that are worth your time.
Licenses – I tend to see too many inactive CPAs. If you’ve went through the effort to get your CPA in the first place, find a way to get your employer to agree it’s valuable and pay for it. Make this cost a part of your Fresh CFO budget.
Coaching – Athletes do better with a Coach. So will you. Getting a CFO Coach can allow you to have the individualized attention and support you need to be the best CFO you can be. Putting this cost into your budget ensures you will continue to improve.
How much do you budget to stay Fresh?
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Yet many CFOs do not keep themselves fresh.
When I ask CFOs why they don’t find the time for conferences or training or coaching or personal development, they answer “I can’t find the time” or “I’m too busy”.
That, my CFO friends, is nonsense. You know it, and I know it.
And your employer knows it too.
Think back to all the important things that happened in your career and in your life. If they were really important, you always made time for them.
I have met a number of CFOs (who happen to be CPAs) that ‘forget’ about Continuing Education, until they ‘forget’ to file the Continuing Education report with their State Board, and get ‘reminded’, and then try to fill their dance card with useless or irrelevant PD courses.
So why don’t CFOs make time to stay fresh?
Reasons can include (but are certainly not limited to):
Combine a Stale CFO with an average CFO job tenure of 3 years (at best), the Stale CFO is a likely candidate to be unemployed for a while once the inevitable happens.
What can a CFO do to stay Fresh, add value to their current employer and be desired by their next?
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Sounds like a silly question. Finance and HR functions are necessary organizational support functions. Companies require both Labor and Capital for success. Yet turf wars and egos impact many companies and the individuals that work in them. (Read: What do CFOs want from HR?). How a CFO manages their relationship with Human Resources is very important to their success (Read: Road Map to Successful CFO Relationships).
Interestingly, my recent blog on Human Capital Reporting Standards shows a new intersection where Finance and Human Resources can work together, building on each other’s strengths.
If this subject interests you, a recent article in CFO.com by John Boudreau called “Does Finance Play Second Fiddle to HR?” is worth reading. In his article, Boudreau states that his research shows that HR feels that their work is more strategic than Finance feels.
To Boudreau’s credit, he does realize that the results of his research does not make sense compared to what
would be expected, and provides answers as to the reasons for the difference in how HR and Finance feel about being strategic.
Who’s work is really more strategic? If you want to know the answer, ask the CEO and ask the Board. Until objective research can be done using the approach I mentioned, let`s look one subjective criteria.
Who becomes CEO? If HR was really more strategic than Finance, Vice Presidents of Human Resources (or as we see this title being used more – CHROs) would be promoted to CEO of organizations. While tracking CFO Moves, I see CFOs that get promoted to CEO, either on a permanent or interim basis. I haven`t seen many VP HRs becoming CEO.
Who do you think is more Strategic – Finance or HR? Why?