From IRO to CFO: Charting the Best Path Forward

Many effective leaders invest in charting their own career paths and, from time to time, contemplate their next moves. For those leaders currently in investor relations officer roles, there are a wide range of paths forward, including careers in corporate finance, communications, and strategy. Among all these potential next steps, a CFO position is by far the most coveted with a plurality of IROs envisioning themselves as one day filling this top spot. Given the importance of the CFO and the role’s second-in-command positioning relative to the CEO, the competition is fierce, and landing a finance chief job is no minor feat.

For IROs to effectively maneuver this big step forward, they’ll need to develop a robust resume and take a thoughtful approach to expanding their current role within their organizations. Let’s explore the skills, responsibilities, and accomplishments that can help an IRO successfully transition into a CFO role.

Build specific hard and soft skills

While there is no singular blueprint for obtaining the CFO role and no discrete set of skills that will guarantee success in the position, a trifecta of key capabilities can help set aspiring IROs apart from other candidates.

• Real-world corporate finance experience. Obviously, to become the chief financial officer, an IRO needs to have significant finance experience. To be clear, relying on an MBA earned 15 years ago or financial modeling work from one’s time on the sell side won’t cut it. IROs should seek to cultivate the kind of real-world corporate finance experience that companies value by pursuing deeper involvement in all manner of corporate finance matters. Commonly, IROs have ownership of financial planning and analysis (FP&A) within their organizations. This type of hands-on involvement in budgeting, planning, and forecasting can go a long way toward demonstrating capabilities for the CFO role.
• Treasury and debt management expertise. Beyond FP&A, IROs are often well positioned to acquire responsibilities pertaining to treasury or even to take ownership of this function. Investor relations leaders who find themselves with the opportunity to be more involved in this capacity should enthusiastically embrace it, as this can help cultivate rare skills that will pay dividends in the CFO seat. Even for IROs who don’t fully oversee treasury, demonstrating heavy-handed involvement in debt raising, debt investor relations, and cash management is critical to showcasing expertise that extends beyond equity assets, which is table stakes for the IRO.
• Strong team leadership skills. While this may also seem like a no-brainer, team leadership is too often a glaring gap in many IROs’ resumes. Since IR teams are notoriously lean, few IR leaders have opportunities to manage large groups of direct reports, if any at all. By contrast, CFOs are known for directing large teams, requiring differentiated leadership capabilities. IROs often need to be creative about developing their own management repertoire, especially if growing the IR team isn’t an option. IROs can look for opportunities to mentor non-direct reports or to manage individuals outside of the IR function. Taking this initiative allows IROs to build the leadership, communication, and teamwork and collaboration skills organizations want at the top along with the emotional intelligence required to become a truly effective leader.

Create opportunities to take on additional responsibilities

To graduate to the CFO role, IROs need to demonstrate responsibility for key tasks. In some regards, IROs have more control over the skills they cultivate than over the responsibilities that fall under their purview, however, determined IROs can and must find ways to influence both areas. By being an advocate for oneself and consistently demonstrating excellence, IROs can grow their pool of critical responsibilities in a productive way.

• Management and board reporting. Regular reporting to senior management and the board of directors delivers benefits in both directions. The IRO gains insight into the inner workings of the highest echelon of corporate oversight. At the same time, senior leaders gain direct exposure to the IRO and, ideally, will recognize and appreciate the IRO’s unique skills and abilities. Typically, when IROs report regularly to management and/or the board, they address topics including competitive intelligence, corporate valuation, stock market behavior, buy-side impressions/feedback, and ESG. If someone else is already responsible for reporting to the board on these topics, it would behoove IROs to appeal for the opportunity to take this on, instead.
• Corporate strategy reviews. While the strategy setting and review process varies from company to company, leadership teams typically conduct some sort of analysis or refresh on an annual basis. IROs need to ensure they have a seat at the table. As with management and board reporting, the advantages are mutually beneficial. Investor relations leaders can contribute meaningfully to the review process by sharing shareholder perspectives regarding the company’s strategy and execution as well as insights into industry goings-on. And, by hearing the discussions that inform the company’s strategy, IROs can more effectively relay the business’ investment narrative to investors.
• Managing the majority of investor interactions. On paper, investor relations is responsible for managing most investor interactions, however there is nuance to how this plays out in practice. New-to-role IROs are, understandably, dependent on their CEO and CFO to lead conversations as they get up to speed. Additionally, many investors see interactions with the IRO as merely a steppingstone to obtain access to senior leadership. The goal for any IRO pursuing a CFO role should be to become such an indispensable asset that investors no longer feel a strong need to speak directly to the CFO or CEO. Achieving this level of value takes years, if not decades, but it is a critical indicator of CFO-readiness.

Establish a track record of accomplishments

If controlling one’s responsibilities is challenging, controlling one’s accomplishments can be even tougher. In many cases, building a comprehensive set of experiences as an IRO may require purposefully pursuing IR roles at different companies. IROs who are serious about a future as a CFO can significantly bolster their resumes and showcase a broad set of valued CFO-level attributes by proactively seeking out opportunities to play a key role in different scenarios.

• Mergers and acquisitions. Undoubtedly, the decision to pursue M&A is out of the control of the IRO. Those IROs who do find themselves at companies executing M&A will find that the circumstances unlock a tremendous opportunity to develop new skills and gain experiences. IROs should, accordingly, involve themselves as much as possible in the coordination with the counterparty (buyer or seller), investment banks, legal advisors, and consultants. Doing so will not only help the IRO tell a stronger, more effective story to investors, it also translates into first-hand knowledge of the ins and outs of the M&A process that is so critical for a CFO to possess.
• Leadership transitions. Similar to M&A, changes in leadership are uncontrollable and often unpredictable. While these situations can be stressful, they present opportunities for IROs to step up and lead. Effective IROs should leverage these periods of tumult to expand their responsibilities within the organization—especially if the CFO role is the one in transition. This may include taking on any one or more of the aforementioned CFO duties, such as board reporting or treasury oversight. Furthermore, any leadership transition presents an opportunity for the IRO to become an even more valuable asset to investors, as a tenured IRO can typically provide far greater insights than a brand-new CFO. Finally, by playing a heavy role in the onboarding of a new senior executive, IROs can demonstrate their grasp of the business, their executive presence, and their professionalism.
• Various crises: While no one hopes for crises, the unfortunate truth is that they can represent blessings in disguise for advancing one’s career. In the IRO role, career-defining crises can come in many different flavors such as investor activism, lawsuits, regulatory investigations, accounting issues, and cybersecurity breaches, to name a few. As with M&A scenarios, navigating crises familiarizes IROs with the process, the stakeholders, and–very importantly–the “do’s” and the “don’ts” in any sensitive situation. When similar crises inevitably recur down the road, it is tremendously beneficial to have prior experience. Indeed, IROs with a significant track record of navigating corporate dilemmas often enjoy greater success in their pursuit of the CFO role.

Take the IRO job description to the next level

Certainly not all investor relations officers have an interest in one day becoming finance chiefs. But, for the many who do, going above and beyond the standard IRO job description can make every day in the office much more rewarding, fulfilling, and exhilarating while paving the way to whatever is next on the career path.

If you’re an IRO looking to expand your capabilities and excel in your position for any reason, reach out to our team. We offer coaching, hands-on support, and strategic counsel to help you take on greater responsibilities, navigate turmoil, and develop the broad set of skills that will lead to the greatest possible success today and in the future.