The IR-plan – best friend of the budget process

The IR-plan – best friend of the budget process

Times of great uncertainty normally mean that the budget process includes large or small cutbacks. How the savings will affect your part of the organization depends on how well you can argue for your department’s needs and your ability to back the arguments with facts.

Last year we wrote about the importance of having an IR plan as a map and compass over the planned IR activities for the coming year. (See here). A comprehensive IR plan includes, in addition to the planned activities, also a set of measurable goals. A major difference between financial communications/IR and other disciplines is that the former to a great extent can be measured. Examples include share price performance relative to peers, share turnover, volatility (both in general terms as well as in conjunction with reporting earnings), number of shareholders (in total or segmented in to different investor groups) or “soft” factors such as number of investor contacts, inquiry response time etc. A long term, elaborate and well composed IR program can have a major impact on the valuation of a company.


By setting goals and plans for implementation and combining these with quantifiable performance measurements, it is possible to assess the ROI of the IR effort. To achieve a fair valuation is a long term process that requires a long term commitment from the company management. Hence, it is important to commit resources, both human and financial, for these purposes in the long run.

Or as Tom Ryan and the late Chad Jacobs put it in the book Using Investor Relations to Maximize Equity Valuation –”Currently, many CEOs and CFOs dismiss IR as too costly or unnecessary. That’s a precarious stance on a communications function that, at its best, can lower a company’s cost of capital and, at its worst, can destroy management’s credibility, as well as hundreds of millions of dollars in shareholder value”.

In other words, the next time the IR budget is on the table the question should not be how much it can be downsized but rather if you can afford not to spend more.


/Mikael Zillén, @mikaelzillen
Senior Advisor & Digital Specialist
+46 762 13 00 40 | mikael.zillen (@)
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