Why do some annual reports succeed in communicating with their audiences and others fail? What makes excellent annual reports stand out from the large numbers of mediocre ones produced at great cost, often by companies that should know better?
Although disclosure requirements vary from country to country, the basics of producing a good annual report remain the same internationally. This article focuses on the input of the communicator, the designer and the investor relations executive who, each in his or her own way, has a contribution to make toward producing a report of excellence.
Different levels; same basics
A few words about annual reports in general. They run on so many different levels -- not just from company to company, but also from country to country. Some are required to be published by law; others, coming from unlisted companies, have more leeway and appear as pure PR documents. The key issues to be addressed by one company may be totally different from those addressed by another because of the industry that it is in and the conditions it operates in.
In addition, disclosure requirements vary from country to country and the focus of the non-statutory section also will differ depending on investment patterns and on the accountability to different stakeholders.
Having said that, the basics of producing a good annual report remain the same internationally with the elements of writing and overall design saying to the recipient, "Take this report and read me."
The role of the communicator
Ideally, the annual report should be "a labour of love" for the communicator, but, sadly, in many cases, it becomes just "a labour." Why? I believe that this happens whenever the communicator hasn't established a firm policy of direction from the outset.
A man with whom I have worked for many years has evolved a basic checklist of questions which he addresses prior to the start of every annual report. I call it "John Cammell's Checklist" after its initiator and the questions he uses are as follows:
* What is our corporate personality?
* What is our reputation?
* What are our strengths?
* What are our weaknesses?
* What steps have we taken to increase earnings?
* What external factors have impacted on us?
* How have we performed as a business?
* How have we performed in the community?
* What were our greatest accomplishments during the year?
* What problems did we encounter and what steps are we taking to solve them?
These are all questions that your wide spectrum of readers would like addressed.
Obviously, you have to check with your management as to what key messages they want to put across; check with analysts as to what issues they want discussed in the report; check on the perceptions that the financial community has about your company.
This process will help you evolve themes for the publication; it will help capture the image and the spirit of the company and unite the design and the contents. (For example, see Chevron Corporation, 1990 and 1991.)
The readability of the report is the responsibility of the communicator. So many reports are written in "legalese" or "financese" that one might as well be trying to decipher a document in a foreign language! Simple, readable language, with the minimum of buzzwords, technical jargon and platitudes is all that is required -- and the same goes for any language or languages that you are publishing in.
The communicator who coordinates the production of an annual report has a responsibility to the target audiences when it comes to relevance and readability. The reports that don't score well in the excellence stakes are the ones where the "upfront" copy section seems to have been written by the management and only for the management.
Two examples of reports which, in my opinion, have a readability element about them -- and would appeal to the financial person, the employee, the shareholder, or to the potential investor, are Hewlett Packard's 1991 report and Toyota's 1991 report for English consumers. …