The evolution of the annual report: From financial report to corporate personaby Kathryn Herr
Annual reports have evolved over the years from a dry vehicle for conveying information about a company’s financials to a critical tool to communicate corporate strategy. An expertly communicated annual report has the power to influence the way your company is perceived by those who matter most.
There are challenges to unleashing the full potential of the annual report, however. To make corporate financial information more accessible and easily understood, SEC regulations have attempted to standardize the delivery of key operational and financial information.
But there is still plenty of opportunity to effectively leverage this piece as a vehicle for expressing your company’s vision, mission, and values. The annual report is one of the most widely read communications your company will release. So, there are plenty of benefits to rethinking your firm’s customary approach.
Factors that Influence Stakeholders’ Perception of the Annual Report:
It is obvious that the content of the report influences how investors and other stakeholders view your firm’s reputation. But what is not so obvious is that how you understand the content is not the same as how your investors interpret the content. An annual report is a great time to practice your corporate storytelling skills.
Of course, investors will zero-in on financial performance, but the way in which this information is presented will affect perceptions. The Letter to Shareholders and the Management Discussion and Analysis sections of the annual report offers an opportunity to share a transparent and honest discussion of market conditions, corporate strategy, and investment priorities.
Being transparent and honest in your communications is not as easy as it sounds. Internal expectations based on previous performance can affect how you view this year’s performance. Corporate strategy and market conditions may be in flux.
For these and other reasons, it can help to bring in external corporate communications experts and marketing specialists to provide a clear-eyed perspective on the annual report message. Just as you use auditors and financial experts to ensure the accuracy of your financial reporting, it can also help to have experts to support your messaging.
The sweet spot for content is delivering an annual report that accurately conveys the facts, gets the message across, and effectively communicates your company’s past performance and future expectations.
Design alone won’t save terrible earnings. So, don’t spend a lot of time putting together a slick design hoping to distract stakeholders from the unfortunate truth. Still, your company’s annual report should be consistent with your corporate brand.
The most successful and admired companies find subtle ways to stamp their identity throughout the report. For example, Warby Parker, an online eyeglass company, created an interactive annual report in the form of a calendar with 365 company milestones and figures. Keep in mind that through consistency and authenticity, the annual report can really work together with other corporate communications to manage your firm’s reputation.
One other factor to consider that has ramifications for how your stakeholders perceive your company is how and when you deliver the report. Of course, timely filing of the annual report is table stakes. But also consider utilizing additional delivery channels including video and interactive infographics.
In addition to the above general guidelines, you may want to revisit these excellent tips about how to make your annual report one of your best assets including:
- Think of the annual report as your “financial brand” for the year: This way you can repurpose parts of the report into other communications documents, such as facts sheets, the proxy, and the investor deck.
- Design your annual report to be easily segmented: Make it easier to repurpose stand-alone parts of the annual report for social media, for instance, by making the report easier to separate into parts.
Yes, annual reports serve several purposes. They provide a company’s financial information, amplify a company’s marketing message, and remind shareholders of a company’s strategy. But first and foremost, firms need to think of the annual report as a key tool in their corporate reputation management toolbox.
The annual report is an important vehicle for connecting with investors to give them more than just a financial picture. Annual reports can—and should—also give clear insight into your company’s vision, values, culture, and internal operations.
Ultimately though, the annual report is only one part of a wider corporate communications strategy. We specialize in helping to construct your corporate narrative at Audacia Strategies. There’s no substitute for having a clear picture of what your company stands for and where you are going. Contact us today and let us help you bring everything into focus.
About the author
Kathryn “Katy” Herr is the founder and CEO of Washington D.C.-based Audacia Strategies. Katy helps companies deliver compelling business transformation stories clearly, credibly and consistently.
A results-oriented executive, Katy has significant expertise working with senior leaders and cross-functional teams to communicate, develop and implement high impact strategies to achieve their transformative goals. She brings substantial experience with companies undergoing organizational and cultural transformation and a proven track record in developing successful business relationships, achieving stakeholder engagement and aligning for operational success.
© ReportWatch 2017
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