'Sharp and simple' - tomorrow's annual report

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The Independent Online
FOR A document that, although broadly distributed, is about as widely read as those door-stop bestsellers by Vikram Seth and others, the annual report has been attracting a great deal of interest lately, writes Roger Trapp.

Against a background of conviction that the internet and other aspects of information technology are going to kill off the traditional glossy report and accounts, designers and other consultancies that do good business out of preparing them have been coming up with various plans for alternatives. But hitherto, little of the discussion has probed below the surface and looked at the real purpose of the annual report.

It is this gap that the latest publication from the Centre for Tomorrow's Company is seeking to plug. As an organisation that, after its faltering initial steps in the early 1990s, has become a prime mover in putting flesh on the bones of the stakeholder concept, it has done a good deal of probing around the issue of reports' purpose and value.

"Sooner, Sharper, Simpler", published last week as a consultation exercise for developing a better way forward, sets out clearly that the centre, headed by Mark Goyder, believes that the purpose of the annual report is "for the board to give an account of its stewardship of the enterprise".

The document identifies two audiences for the annual report. The primary one is the company's shareholders, and the primary focus of the report is accordingly the value created for those shareholders.

The secondary audience is the company's stakeholders - customers, employees, suppliers and communities, including stock analysts, the media, policy makers and commentators.

With this in mind, the document says that "companies now need to review their annual reports, in terms of their concept, their content, their delivery and their timing, and ask how effective a part they play in the total process of communication with their audiences". It suggests the development of a draft "scorecard' as an aid in the process of evaluation.

The document also recommends that companies move towards the concept of a "core" report summarising the story "for all these audiences in a compelling and accessible way". This would involve stripping out far more of the detailed information than is done today.

A report's information should be divided into "obligatory disclosure" and "voluntary disclosure", says the document, and it should be published separately, either on an on-line website or in booklet form, for those who request it.