AS A trained cynic, I look for what is not said in public statements more than what is said to get a sense of what the real news is.
Case in point, the appointment of Jeff Morgan as the new CEO of the National Investor Relations Institute (NIRI). Here’s an extract from a Q&A prepared by NIRI to explain the appointment to its members. The emphasis is mine.
Q. Why was Jeff Morgan selected to be President and CEO of NIRI?
Jeff currently serves as Executive Vice President for the Futures Industry Association (FIA), a trade association based in Washington, DC. He has a solid financial background and uses it extensively in his work at FIA. Jeff has strong contacts in Washington and around the world, through his work at FIA, and has extensive experience in managing senior staff as well as a multi-million dollar budget.
The FIA serves more than 180 corporate members and is representative of all organizations that have an interest in the futures market. FIA provides research, publications, knowledge management, public policy and representation to legislatures and regulators.
Jeff also serves as chief staff executive of the Institute for Financial Markets (IFM), which is a non-profit educational institute serving the futures and securities markets, and is an independent outgrowth of the Futures Industry Association. IFM is responsible for exam preparation, general education, ethics and professional conduct training.
Jeff’s vision for NIRI’s future strongly impressed the selection committee, and the Board, and we look forward to working with him in the future. It was thought by the selection committee, and supported by the Board, that Jeff Morgan’s skill set was well-suited to the future of NIRI.
Jeff has strong association management experience as demonstrated by his Certified Association Executive (CAE) designation and his recognition as an American Society of Association Executives (ASAE) Fellow.
Nothing against Mr. Morgan, but apparently communication skills aren’t part of NIRI’s future vision for IR.
In my next post I plan to explain why a “financial background” is soon to become much less relevant to an IR job.
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I’m sorry but I have to strenuously disagree. You are usually spot on regarding IR issues but your lack of knowledge about XBRL and its benefits cripple your position.
XBRL opens up even more opportunities to financially trained IR folks, who will help analysts get acclimated to XBRL better than PR flaks and will help analysts do deeper dives. XBRL will place the numbers front and center on the story of a company’s value — having finance savvy folks who can numbers will be even more critical since you can’t hide the numbers anymore.
T,
Why do I feel like you’re proving my point? If you “can’t hide the numbers anymore,” why do you need someone to provide them, explain them or talk about them?
Surely, historical accounting statistics then become far less relevant than a company’s competitive advantages, which PR folks are more adept at explaining than finance folks.
My point is that once numbers are more transparent, more questions always follow and financial savvy IR types are probably better able to handle those and answer more accounting specific questions, including how specific accounting treatments influence the outcome of specific costs, revenues, restructuring charges, other writedowns etc.
If you were a CEO, would you trust this to someone who could not engage analysts in the numbers? That would be pretty risky in my book.
T,
You say:
“specific accounting treatments influence the outcome of specific costs, revenues, restructuring charges, other writedowns etc.”
Isn’t that one of the things that will be self-evident from the use of XBRL? We’re not just tagging the financial statements, but also the footnotes and the MD&A, and even the proxy statement. It’s all machine readable data that can be sliced and diced and analyzed on the fly across hundreds of companies.
I think that oversimplifies things a little. While XBRL will help data stand on its own, it doesn’t completely eliminate the need for discussion. XBRL answers the “what” about financials but not necessarily the why. The why part is still best articulated by folks with the background to explain why certain accounting policies were used. This need will only increase as US companies eventually transition from US GAAP to IFRS.
I don’t disagree that there will still be financial questions, just far fewer than there is now.
At the same time, the emphasis will likely shift to more of a forward-looking qualitative perspective. Non-financial factors will become much more important. Much less focus on what, and much more on “why” and “how.”
Can an IRO with a financial background do that? Sure, they can. But a financial background is not a prerequisite. And I think that opens the door to those with experience in articulating corporate vision and competitive advantage. People with an ability to communicate.
And I will readily admit that some of the best communicators I’ve met had financial backgrounds. But they’re the exception rather than the norm.
I’ve just posted on this subject without seeing this thread. Don’t mistake XBRL for template reporting, where everyone makes the same kind of disclosures.
XBRL provides all the flexibility that exists today – but as an instant, electronic link to analysts. So IROs will want to make sure that their XBRL disclosures are analyst-friendly. And that they are getting the right messages out. More at http://www.corefiling.com/insight/20071221-1230.html
Bottom line: XBRL needs IROs to be better communicators. Better *financial* communicators, supporting analysts in their efforts to utilise all this additional information.
In other words, more questions, not less, I suspect.
John,
That’s an excellent post on your blog. I don’t disagree that there will be an increased need for IROs to have a financial background during the transition to XBRL and IFRS. There will be many, many more technical financial accounting questions during this period.
I’m thinking beyond the transition period. And that’s where I think there’ll be much more value in having someone in the IRO position who is more strategic than tactical, proactive rather than reactive, forward thinking rather than backwards thinking. People who understand the importance of perception.
In your post you paint a picture of an IRO who actually is somewhat like this. I just don’t see that in my day to day work.
Dominic
Aha. So, in the long term, we’ll need IR professionals who are financial experts, disclosure experts, completely across the strategy of the corporation and gifted communicators.
Not sure I can disagree with that.
But it sounds like a pay rise will be in order!