Today, at Dell, Tyson leads a 10-person department that has been tagged one of the best in the country by experts like Connecticut-based strategic consultancy Greenwich Associates, which recently ranked Dell's IR No. 1 among technology companies. As head of both IR and corporate relations (a role she assumed in 2004), Tyson reports directly to Dell's CEO. "The typical view had always been that investor relations was really just PR for investors, and even today a lot of companies still don't realize how important IR can be for them," Tyson contends. "A lot of senior executives don't get the role of IR in their own company."

"Credibility is key," she adds. "Can people take the investor relations officer's word as much as the word of the CEO of the company? I'd say that's true right now of fewer than 50% of companies–maybe only 30%."

So what should investors, Wall Street and, for that matter, companies want from investor relations these days? Well, it's not the pabulum many IR departments could get away with only five years ago. Now, after the financial collapses at erstwhile giants like Enron Corp. and WorldCom Inc. and thanks to the regulatory demands for corporate transparency that followed, IR managers have been thrown into the center of corporate efforts to repair tattered relations with cynical investors and regulators. They are increasingly being asked to step up as essentially surrogate CEOs when it comes to presenting the public face of the company, an integral player in top management who can talk the company's talk as knowledgeably as the chief exec. "At a company like Dell, for example, you don't get a better answer out of the CEO than you get from talking to someone in the IR department," says Steven Fortuna, a senior vice president and sell-side analyst for the computer sector at Prudential Equity Group. "That's the way it ought to be. The IR people need to really be able to dive into the competitive dynamics of their business. They need to be reliable, too, so you aren't blindsided."

That's certainly how Blair Christie, 32, sees her job as IR director for Cisco Systems Inc., another award-winning IR operation. Amid the meltdown of tech and telecom market capitalizations in 2000 and 2001, the Cisco IR team began to take a hard look at what it could do to rebuild trust in the company, particularly among technology investors. "We talked about how we could make our data more trustworthy and transparent," recalls Christie, "and we came up with the idea of adding a cash flow statement to our press release. We were one of the first companies to do this, with most companies waiting until 45 days later when they'd file their 10-Q."

While she doesn't report to the CEO like Dell's Tyson, Christie sits on Cisco's disclosure committee, where she has to sign off on the company's numbers. She also reports directly to Cisco's CFO. "These days, you can't just be a liaison," says Christie. "You're also becoming more of an advocate for the investor within the company, as well as bringing the concerns and interests of investors to senior management to help align them with corporate goals."

The 41-year-old Tyson agrees that if run properly, an IR department should really be a "two-way street": Beyond just providing accurate information to investors and analysts, IR also must inform senior management about the thinking of investors, and about how their management decisions may affect the company's stock price. "In the new environment, with Sarbanes-Oxley and all the corporate scandals, the IR department has become increasingly important," says John Webster, managing director at Greenwich Associates, which recently re-introduced an annual rating of IR operations, based on a survey of several hundred sell-side industry analysts.

Indeed, while the IR director is not one of the statutory positions that must sign off on a company's books under Sarbanes-Oxley, the SEC notes that the new law requires IR to operate with a high degree of transparency. This new obligation becomes more exacting as an IR director's access and answerability to the CEO increases. "In general, Sarbanes-Oxley requires [executives] to be much more upfront and accurate about the information they pass along to investors, so even if the IR director isn't signing on the dotted line, you don't want them pulling punches or pulling the wool over anyone's eyes," says Greenwich's Webster.

AS TRANSPARENT AS THE LAW ALLOWS

Ironically, the legal pressure from Sarbanes-Oxley does not always produce more transparency at companies that already have high standards, according to Louis M. Thompson, president and CEO of the National Investor Relations Institute (NIRI). He notes that, since the law's enactment, IR and legal departments at some companies are at loggerheads over how much information must be released versus how much information satisfies investors. "A lot of our people say that legal wants them to comply with the letter of the law?? 1/2 and no more," Thompson says. "That's not good enough. You need to be making your company transparent for investors."

Over at General Electric Co., one of the first companies to establish an IR office back in the 1960s, the head of the investor relations department "ordinarily" comes from the company's finance department, and after a period of about three years, generally gets promoted to the position of CFO at one of GE's subsidiary units. "Director of IR is a very high posting at GE," says Joanna Morris, the current holder of that title at GE. "As director, I report directly to the Chairman/CEO and, of necessity, am aware of business decisions as they occur, as well as of the strategies behind them." While GE has a long history of emphasizing the importance of IR, Morris says that Sarbanes-Oxley has also played a role in elevating the office at companies, including at GE. "In anticipation of the environment that produced the Sarbanes-Oxley legislation, we were actively increasing our interaction with investors before it even passed," she says.

GE, one of the largest issuers of corporate debt in the world, recently expanded its seven-person IR operation by establishing a separate office in 2002 for dealing exclusively with fixed-income investors. Like GE's IR operation in the 1960s, this office–which is headed by Aris Kekedjian, and based in Ireland–could be a harbinger of things to come at other large companies that do significant debt issuance. "We have a large fixed-income investor base that we would like to broaden, and that we need to keep informed," says Kekedjian. "A separate office helps us to accomplish that."

While many executives may still view IR as a cost center, Greenwich Associates' Webster insists that a good investor relations office should be viewed as an asset that can free up senior management to actually manage the company. "The job of IR is to figure out what an investor's agenda really is, so that meetings with top executives will be as high-value for both sides as possible," he says. "As a CEO, you could easily spend your life in front of investors." On the other hand, a tuned-in IR director is able to ration the time of the CEO and CFO, Webster explains. "But this is not a matter of simply being a gatekeeping personal assistant to the CEO or CFO," he quickly adds. "It has to be much more proactive than that. The investor relations director's job goes the other way too, because they can also tell the executive how important various major investors are."

HOW CREDIBLE ARE YOU?

"Having our CEO on the road 365 days a year is not the best use of his time," agrees Dell's Tyson. Accordingly, Tyson and her staff help figure out "where we can hit the best density of investors. Then, we'll pull from a large pool of executives, bringing in key people from different areas as necessary."

So which virtues should be considered best practice in IR? As Tyson indicates, the credibility test is the No. 1 bar an IR operation must pass. A quick second: accessibility–whether investors can reach the right people in a timely fashion. No. 3–part of the newer skill set–might be the ability to discuss the business of the company and the various pressures on its marketplace. "People in IR need to be really savvy about the business, and not just a mouthpiece for management," says Cisco's Christie.

After knowledge comes consistency, says Prudential's Fortuna. "You need to be able to get the same quality of information and depth of knowledge about the company from whomever you are talking to in the IR department," he says.

A debate still ensues over the most effective chain of command. NIRI's Thompson reports that 28% of the IR directors in his organization report directly to CEOs, with another 70% reporting to either the CFO or treasurer. Thompson recalls that 20 years ago most IR directors reported not to the CEO or CFO, but to the head of public relations. "For many companies back then and until recently, IR was just a sideline to corporate communications," he says. "No longer. Now, it's clearly seen as a part of a company's strategic finance operation."