29/03/2016

Reporting effectiveness? A little research could help a lot

BY Simon Lake

Everyone has a view on the annual report, its relevance, timeliness, content, structure and purpose; the debate has been raging for a long time. Many changes have been made by organisations to ensure the report is an authentic, truthful and accurate representation of a company so that investors, primarily, and other stakeholders including employees, can understand performance, governance and value creation; in short, that means what the company does, how it goes about its business, what it believes in and if it is worth investing in the management to deliver against their objectives.

“The Internet has reduced print and distribution costs because shareholders are choosing to receive reports online…”

By its nature it is a complicated legal document and for this reason reports cost a lot of money to put together. The Internet has reduced print and distribution costs because shareholders are choosing to receive reports online, but the content still has to be compiled, written, edited, audited, legally vetted and designed so that it represents brand guidelines and is legible and logical in its presentation.

I am not sure anyone knows how much time and money companies spend every year on their reports. It’s a lot though. At a rough guess the UK top 350 total is well over £50 million. Over 10 years this amounts to £500 million.

However, despite all this recurring investment, it is still difficult for many companies to establish if all the effort was worth it in terms of communication effectiveness. Yes, they have produced a legally compliant document on time and a message that fulfils all the criteria for investors, but they are not sure at all if it is understood, reinforces or changes perceptions or even whether it is good or bad.

“…it is still difficult for many companies to establish if all the effort was worth it in terms of communication effectiveness.”

My point is that very little meaningful face-to-face research is undertaken specifically by companies amongst their investors to establish the effectiveness of their reports; does the business model explain value creation clearly enough? Are risks and mitigation clearly explained and are the strategy and objectives understood? These are all fundamental questions that could benefit from audience insights so that companies understand more what their audiences think about their reports and their specific communications needs.

And to make the point even more powerfully, companies probably spend significantly more on postage every year to ensure that their shareholders receive their printed reports and ancillary documents than they do on discovering if what they are actually sending is worthwhile. That doesn’t seem the right balance, especially as a little spent on research could save significant amounts of money in the long term and have other worthwhile benefits.