The financial crisis sharpened the focus on annual reporting and highlighted significant flaws in its effectiveness as a tool to determine the overall health of a company. These revelations led to companies trying to take a more comprehensive and transparent approach to reporting, and the emergence of Integrated Reporting (IR) as a viable alternative to the traditional reporting model.
IR may still be in its infancy, but best practice is already clear. Here we outline some key pointers for effective Integrated Reporting.
Preparation is key
An Integrated Report needs careful planning. From the very start you need buy-in from leadership; key decision makers will be required to review and sign off all information relevant to their function. By assigning information owners from the start you also establish accountability, which typically leads to transparency of information.
Consider forming steering committees too and delegating tasks to project managers to make sure each step is followed. It may even be worthwhile to employ a dedicated IR professional to oversee the project throughout the year.
Know your audience
Next, you need to gather an understanding of your audience as this will guide the content of the report. Think about what they want to gain from it and why, what their long-term needs are, and how you can structure a report to meet these needs. Your audience will likely comprise multiple stakeholders, which is even more reason to know them all before the actual writing begins.
Look to the future
Annual reports focus on a business’s past financial performance and related activities. While these details are important, an IR should also be viewed as a communication that introduces your company’s future plans, both financial and non-financial. This has the benefit of setting targets which your stakeholders can hold you to, providing you with a major incentive to get things right.
Be clear, concise and convincing
The way your integrated report is written has a huge impact on how it’s received and therefore the influence it has on the reader. This is where copywriting best practice needs to be enforced, and why enlisting an experienced copywriter is so valuable. Like any good writing the report needs to be clear, concise and convincing to keep the reader engaged.
When reporting on remuneration, be sure to note how this relates to the company’s long-term success. This is where the wider strategy and KPIs come in. If you intend to use qualitative or quantitative data it is vital to make sure it’s backed up by sources, or credibility is lost. Overall, it’s wise to apply the KISS principle – ‘keep it simple, stupid’. State what your business is currently doing and where it intends to go.
Audit and improve
A report retains its value for a long time after being published, as you can learn a lot from those produced in the past and the feedback that was gained. Consider and act on responses, especially negative, to strengthen future reports. If some sections aren’t adding value don’t be afraid to cut them completely. Similarly, if something is well received, keep it in but evolve and update the content. It may be worthwhile to select five areas for improvement based on the previous year’s document, so that you are showing a commitment to constant progress.
Producing a successful IR requires dedication, an inclusive view of the business and a clear understanding of its future direction. The above processes are essential first steps towards integration, and we can help your business to bring them all together.
Talk to us today about the benefits of IR and our work in this area.