Delivering more value to your readers
It’s been another hectic reporting season. We’ve have had the pleasure of working with some great teams who’ve put their heart and souls into crafting and presenting the story of how their organisation creates value. But at this point in the year, there’s always that little nagging voice asking, Do these hefty publications create value for the readers too? Do they get what they are looking for?
The Annual Report season is slowly beginning to stir. As we're done reminiscing over the year that has just passed, the scouting for upcoming milestones and touchpoints begins. Committed to learning from our experiences, we continue our 365-day journey of annual reporting. During the course of six articles, we've presented our most essential takeaways regarding performance, purpose, ESG, exposure & opportunities, words & visuals, and format. And last but not least, we've gathered some of the last important advice and insights to ensure you're ready for the reporting season 2023.
Last year, we asked some of the key audiences of annual reports this exact question. And their answers pointed in fairly different directions. As consultants and co-writers, this left us thinking:
Are we doing this right? Could companies communicate their stories in a way that creates more ’return on investment’? With so many target groups involved, how do we make the report interesting and relevant for them all?
Trends in Danish corporate reporting vol.2 – Understanding Key Stakeholders
Let’s look at two key stakeholder groups:
- The professional investors and analysts who, before the annual report is published, monitor industry reports, financial news and the company’s quarterly reports, and are in direct contact with its investor relations team.
- The company’s key or potential employees, for whom the annual report supplements stories from the website, social media and news-streaming networks.
Widely differing needs
Our survey showed that what these two main groups usually want and expect from an annual report varies considerably in at least three core areas:
1. Lofty purposes or a clear bottom line?
Employees are interested in the company’s objectives and emphasise the importance of the year’s results being linked to and used to support the main stories. However, that is not the first item of interest on an investor’s wish list. For them, a clear bottom line is crucial – and many of them have a keenly developed scepticism about overly general or fluffy purpose statements.
2. ESG – solid data or credible principles?
Employees and investors basically agree that ESG factors (Environmental, Social, Governance) create value for a company. But their views on how these results can and should be reported vary. Investors usually want standardised, well-defined data that facilitates benchmarking against other companies. Employees are more focused on the company providing a credible view of its ambitions and performance. In their view, the principles and reasoning behind initiatives have higher priority than high-tech measuring systems.
3. Precise information or engaging content?
No one objects to an attractive, well-designed annual report, but even on that point, the two groups’ priorities differ. Investors give top priority to clarity, focus and easily accessible information. Employees, on the other hand, like to be included and engaged – by relevant stories, captivating images and interesting graphics. They are less interested in technical terms and data-heavy tables.
More value for money?
So how should a company address such widely differing wish lists when efficiently communicating important messages to its stakeholders? Our survey underlined three important points that everyone should consider before revving up their reporting machinery once again.
First, take extra care to understand stakeholder landscapes and the needs and interests of individual target groups. Naturally, companies have plenty to tell, but their heartfelt stories only create value if their target groups’ burning questions are answered first. That involves the company remaining in constant dialogue with stakeholders and being ready to gear its communication accordingly.
Second, view reporting as more than a permanent fixture anchored in the corporate calendar by one standalone publication. Your company creates value all year round, and that should be reflected in more continuous communication – a dynamic narrative that is constantly developed and can be summarised in an annual report.
Third, as a logical consequence of the first two points: differentiate communication more to suit individual target stakeholders. They are all interested in how the company creates value but as they prefer different kinds of content and presentation, more frequent small communication products that hit home with target groups are better than one publication that falls short of several marks.
The investment culture has become increasingly democratized over the past ten years. Private investors are a growing stakeholder group, whereas your annual report should soon consider catering for this segment alongside professional investors and analysts.
The worry is that communicating responsively – continuously and with differentiated messages – requires even more resources. Not necessarily. Not if you think ahead and organise communication holistically and cohesively. For example, with one team responsible for defining, maintaining and rolling out the main story about how your company creates value – throughout the year and on all relevant platforms.
In fact, the relevant question here is: Can most companies get more from the resources they are currently spending on their annual reporting? Based on both our survey and our many years of experience in the field, our answer is a resounding YES.
The challenge – or opportunity – obviously lies in converting the group of new private investors, potentially your new shareholders, who usually don’t read annual reports. This calls for communication on performance to be easier for a non-specialist audience to understand.
Using our study Trends in Danish corporate reporting vol.2 — Understanding key stakeholders made in collaboration with Simple Revolution, we asked analysts, investors and key employees how a company should make compelling annual reporting. The article is written by Nanette Hale, Simple Revolution.
You can read the full findings in our study, Trends in Danish corporate reporting (vol. 2). Understanding key stakeholders.
Trends in Danish corporate reporting was produced in collaboration with Simple Revolution, Marketminds and the Confederation of Danish Industry.