David discusses annual report effectiveness and the key areas beyond benchmarking which we use to add trust and transparency to develop unique reports.
I have just finished writing an annual report submission for the 2012 CorpComms awards. I noticed that last years annual report winner was SAB Miller. Having just finished our annual benchmarking of the FTSE 100, I thought I would just check how they scored. The answer is only about half way up the ranking. Is our ranking wrong? Or perhaps the judges at the awards have got it wrong. The truth is that neither statement is true. It's simply that both measures have very different assessment criteria.
What's my point?
I am increasingly frustrated by the way in which benchmarks have become the absolute measure of the effectiveness of an annual report in many people's eyes. They are seen as the measure of best practice and the driving force behind the briefs that are issued. I am not against benchmarking per se. It is a helpful, even important part of what we do, but we have to remember that it is only a comparison of one report against another based on regulations. It has no relationship to whether audiences are getting the information they want. Or whether there is any relationship between trust and reputation and the quality of communication they receive. And remember that although benchmarks are presented as scientific, they are actually very subjective when you look at how they are conducted.
When you review a number of leading company reports, we can see their thinking is dominated by concentration on what the Jones' are doing. The result is that most reports look the same. The lack of imagination and creativity is astonishing.
Or to put it another way, just because you are putting a highly compliant annual report out there, it doesn't mean that anyone is reading your narrative, trusts you, or believes you will succeed.
Of course it's not easy or always possible to measure the relationship between communication and reputation, but we have to do better than rely completely on benchmarking alone. The reason for this is clear; for the most part corporate reputations are on the floor. Corporate narrative is mostly poorly written and sounds increasingly hollow as audiences go elsewhere to find out what is happening within companies. If the annual report is to remain a meaningful business tool and not just a legal obligation, the way in which they are approached needs a good shake up with far greater use of digital channels.
We like to think about four key qualitative areas when helping clients form a brief:
- The market and sector context for the company
- The company's context. Every business is in a different stage of its growth cycle. Each has it's own challenges or successes. This has a direct relationship to an investor's point of interest
- What audiences are looking for from annual reports. This is why we have conducted biannual research with Thomson Reuters into institutional investor opinions
- Benchmarking against peer groups.
This is, in our opinion, a far better way to assess best practice. It is only by considering all of these areas that a balanced view can be formed when writing the brief and deciding the priorities for the coming season.
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