We are looking for a new IR leader. Do you recommend someone with a communications or a finance background?

Achieving the right fit is important. Here are some considerations

IR professionals should be able to provide a link between operating performance and future financial results. It should help investors determine a valuation that accurately reflects the company’s current challenges and future growth prospects. Therefore, being able to talk to the numbers is imperative and requires a good understanding about your company as well as the markets it serves. As the primary investor contact, the IR professional also need excellent communication skills.

Education and years of investor relations experience are more predictive of future performance than whether the person came from communication or finance. You want the IR professional who is a better communicator than the average accounting/finance professional and better at accounting and finance than the average communications professional. There are many well-rounded investor relations professionals who meet these criteria.

Marketing and strategic planning are other important attributes of investor relations and are frequently overlooked. Successful IR programs are grounded in sound analytics, peer comparisons, measurable objectives, and timely monitoring which requires someone to be as comfortable with performing quantitative as well as qualitative analyses.

IR professionals also need a very good understanding of the financial markets and securities regulations. Some IR professionals started their careers as securities analysts and a few have law degrees. However, a majority of IR professionals become more knowledgeable about the financial markets and SEC regulations on the job.

Consider investor relations a team sport requiring a very good understanding of accounting, finance, communication, marketing, planning, financial markets and securities law. The answer to your question depends on what your investor relations activities need to achieve in order for your stock valuation to accurately reflect your company’s current challenges and future growth prospects. This will help you determine what internal and external resources are required as well as any adjustments that become necessary.

Echoing Phyllis's comment above from a slightly different angle; I was having lunch with a colleague today who just came free from their IR role (acquisition), and I joked seriously that even though I had a decade more experience, I couldn't do their job.

Narrowing the description; you *need* the finance tools, as talking the talk is a pre-req.

Generalizing on Finance people; there are two types. The unfiltered who do a great job of escalating and driving change...and the ones who do a good job of clarifying and presenting. As the former, I can appreciate the skills of the latter. The knowledge that goes into being a good IR person (mondo cross-functional experience) is important but can be learned. IMHO, the reflexes of filtered vs. unfiltered is not so easy to learn, so that's where I'd concentrate (and again to Phyllis's point, a track record is immensely telling).

KP