https://www.fhevents.net/favhouse/frontend/reg/thome.csp?pageID=56&eventID=1&eventID=1

In January this year we blogged about the offer we’d made to Mr Druckman, to take the findings from the IIRC’s Discussion Paper on integrated report and develop a communication and design response to the challenge.

http://www.wearezephyr.com/blog/2012/01/19/put-designers-on-it/

With our knowledge of producing financial and sustainability reports and the many, so called, best practices out there, we thought we had a powerful contribution to make on top of views provided by the usual suspects of regulators, accountancy firms and investment houses.

Mr Druckman, to his credit, admitted he didn’t really know what to do with our offer and by the looks of the outline content for the Smart Sustainability Reporting conference, not many other sustainability specialists would do either. The debate continues to be about reporting standards and frameworks, rather than individualised reporting that builds on best practice to produce a meaningful, substantiated and differentiated piece of brand communication.

We assume that the sub heading of this conference, Transforming your strategy into a competitive advantage, refers to the role that broad, deep and integrated reporting can play in building reputation, growing engagement with stakeholders and increasing sales – that kind of competitive advantage. But there is no mention of brand in the conference outline.

Yet brand is fundamental to competitive advantage and those involved in sustainability reporting should do more to align themselves with it. The big hitters in Sustainability that everyone quotes are companies like Marks & Spencer, Unilever, Timberland and The Co-Operative, who have made sure sustainability is central to what they think, feel, do and promise as a business. And their reports have become a subset activity of that.

More companies should apply brand thinking to their sustainability and integrated reporting. It will help to explain what matters to them as a business, it will enhance their credibility because the reporting style will feel true to them and it should go a long way to ensuring the content of the report is better understood by more stakeholders.

Disappointingly, she doesn’t fully explain on her website why doing both is better but her offer, and the name that encapsulates it, pretty much sum up our view of how brilliant communication is created.

You see, words without design thinking intertwined are lacking in punch, often too long, self-indulgent and inaccessible. They can feel afloat without a central idea to tie them together.

Design without copy intertwined is reduced to wallpaper, a process of prettification or embellishment. Meaning design too can feel afloat without a central idea.

Get design and words working together, however, and your communication will hit home with a central idea, one that’s executed well from all angles.

At Zephyr, we’re as involved with content as we are design. Whilst some design studios might think it’s a good result getting finished copy to design with, we tend to see it as a constraint on where communication might go.

We’d rather get around a table with our client’s writer – or our own – and work on the brief together. It means we can let our imaginations run wild as a team. Messages are prioritised and between us we can devise the central communication idea, one that will work as a springboard for everything that needs to be said.

The idea could be a word. Or it could be a graphic feature. Either way, it is the concept that writer and designers all have to work hard at to reinforce. The result is always better communication. There is far greater clarity for audiences about what they’re being told.

So much for teenagers living their lives on Facebook, they do have other better things to do it seems. Just like employees who more often than not have big workloads, short timescales, are in demand and highly pressurised. And yet their companies hopefully expect them to be on the intranet swapping knowledge and breaking down silos as well.

You see, with all this technology around enabling people to generate, share and comment on content, companies compulsively want to produce intranets with the bells and whistles of social technology built in. But do these tools get used? And when you’re replacing your pre-historic intranet with a new one, is it really sensible to get social straight away? Facebook, you see, wasn’t built in a day.

To our mind, there’s nothing worse than a brand spanking new intranet, shining brightly with wikis, forums, blogs, tweets and Facebook updates, that isn’t being used by employees. It’s only slightly better when you see the same familiar faces from HR and marketing, trying to get the conversation underway.

But let’s not give up on intranets being social too easily because when they do come to fruition the positive outcomes can be many.

Companies really have to think closely about whether a social intranet is what they need. Are employees desperate to share their opinions? Or would they really prefer some regular content from the senior management team? Is the prevailing culture open and discursive? Do the majority of employees feel comfortable expressing their views publicly? Will the senior management team join in or shy away?

Once you’ve decided that social is the way to go then you need to start engaging employees with the possibilities straight away. You can’t expect them to simply get social when the ‘Go live’ button is pressed. ‘It’s coming, it’s here’, doesn’t cut it I’m afraid.

Definitely find some champions but don’t just rely on their good will, make the intranet and its vibrancy become part of their job spec or incentivise them with a return on their time investment. And don’t turn to the same old people. Identify the social media users out there in the real world who know how the game is played.

Last but not least, let employees know how the game is played, within the parameters of your company intranet. We’re taking a guess here, but uninhibited posting on your intranet isn’t the kind of social you’re really after.

But recently we’ve been in discussion with two clients with barely any internal communication channels at all, or at least only very informal and irregular ones. So we’ve been faced with the rather lovely challenge of determining where our clients should start, with the added note that there isn’t too much money to spend on our inventions.

In the case of one client, the request to have an intranet fairly quickly led to the conversation of whether one was necessary. If it was a depository of company information they needed then let’s build a very good one of those and think more innovatively about social media channels we could use to build the discussion and innovation processes they were also looking for. Intranets can quickly become monoliths that employees rarely visit, therefore some leaner, separate tools with very specific purposes might be a good way to go.

Another discussion, this time for an NGO, focused a good deal on the question of appropriateness. How do you reach out to employees in the field who wouldn’t want to see too much money being spent on internal communications, since this diverts funding away from the organisational cause? But how do you also deal with growing complaints that internal communication didn’t happen and the managing body was too remote from the whole.

In this instance, developing a perfectly pitched internal brand appeared to be the starting point from which to build appropriate communications bit by bit.

Sometimes it might be better to slam dunk employees with internal communication if they’re not accustomed to it, wow them with the inventive medium you use as well as the message. But on the other hand, that may raise too many questions and certainly set expectations for communications in the future. So, on balance, probably a gradual build is best. These are recessionary times, after all…

As previously blogged, the IIRC is underway with a Discussion Paper on integrated reporting, collating the views of anyone with an interest – either for or against – in this becoming the standard form of reporting.

Following publication of the Discussion Paper, we imagine the IIRC will pull together a team of people from listed companies, regulators, accountancy firms and investment houses, to deliberate on the best way to take integrated reporting forward.

But in our view it could well be design that helps companies get over their resistance to integrated reporting. Designers have as significant a role to play as the list makers and box tickers from the aforementioned groups.

A design team could resolve how the interdependencies of social, environmental and financial performance are presented. It could determine how the calculations behind performance figures are laid out. It could also define the best overall structure of an integrated report, with the aim of ensuring the majority of people, not just a tiny minority, are effectively taken through the full range of performance information an integrated report contains.

We’re waiting on the IIRC’S new head of communications to come on board in March before we pick up with the IIRC again. Hopefully our discussions will lead to some early sight of contributions made to the Discussion Paper. And also a project that gives Zephyr a central role in the further reinvention of annual reports.

If you’re a corporate communication designer and/or strategist interested in having a role in this reinvention too, then please get in touch.

Not only are the Great British Public up in arms about the gap between executive pay and the average employee, but most are dumbfounded by executives continuing to receive large scale pay outs when the company they lead has demonstrated significant failures.

One of the projects suggested for the Financial Reporting Council’s Lab – a virtual space for companies and investors to develop better reporting together – is the remuneration report. The project aims to evaluate the effectiveness of these reports, assessing the length of disclosure relative to materiality and importance, and to determine best presentation of how much is paid and for what incentive triggers. It’s also going to consider the BIS ‘Executive Remuneration’ Discussion Paper, from September 2011.

Ed Milliband has quite simply suggested an employee representative sits on the Remuneration Committee. Yes! That surely would help ensure ‘appropriate and balanced’ remuneration for executives and their senior teams. Appropriate and balanced are two words lifted from a FTSE 100 company’s remuneration report. Does that mean appropriate and balanced relative to other executives in other companies or relative to average employees? We think we know.

Part of the problem seems to be a common set of people sitting on Remuneration Committees from one company to the next, meaning the same high levels of pay reoccur without enough consideration of particular circumstance. So this year remuneration reports might begin to spell out who’s on the Remuneration Committee and where else they govern on the subject. This would be a helpful bit of transparency revealing just how close knit the decision-making is on the subject.

Deeper, more detailed explanation of what executives have achieved in order to receive their rewards would be another great bit of transparency, creating a more explicit joining of the dots between the Operating and Financial Review and Remuneration Report.

Whatever happens, you know the press are going to be all over remuneration reports this year. There’s too much news hidden within them to go to waste.

The IIRC do a great job on their discussion paper website explaining why integrated reporting matters, clearly making the point that the current reporting model doesn’t explain critical interdependencies and that disclosure gaps remain.

www.discussionpaper2011.theiirc.org

Integrated reporting as they see it:

“…brings together material information about an organization’s strategy, governance, performance and prospects in a way that reflects the commercial, social and environmental context within which it operates. It provides a clear and concise representation of how an organization demonstrates stewardship and how it creates and sustains value. An Integrated Report should be an organization’s primary reporting vehicle.”

Whilst we agree with the essence of this, we can’t help thinking there are a few interconnected elephants in the room that need acknowledgement, as they’re fundamentally holding back progress on integrated reporting. They are:

• Companies aren’t in sufficient control of the interdependencies inherent within their business and don’t feel comfortable highlighting that fact in their reports
• The interdependencies are complex and ever-changing making it difficult for business leaders, let alone readers of annual reports, to get their heads around
• When interdependencies are so intertwined everything seems material, so writing a shorter less complex report, as most stakeholders are calling for, seems something of a far off dream

But we can’t off course just give up because it seems too hard. There’s a chart that The IIRC use in their discussion paper website that explains exactly why not. It’s brilliant:

The World has changed reporting must too

It shows how in 2011 compared to 1975, Standard & Poor’s place diminishing importance on physical and financial assets as principle indicators of value. Only 19% of value is calculated based on physical and financial assets in 2011, compared to 85% in 1975.

So if a business wants to be recognised for its true value, it needs to get disclosing and furthermore untangling for its stakeholders the many interdependencies that impact its strength.

The NOMS winning event was a two-part awards ceremony (held over two simultaneous days) that recognised the best work of prison and probation services employees targeted with changing the lives of offenders.

Working within a budget of £30,000 and a four week schedule, together we reached 60% of the 70,000 NOMS employees via an event e-zine, nominee films, promotional materials and of course the event itself. Judges of the CorpComms awards described the NOMS event as “great bang for the buck” and commended the “thorough and intelligent” approach to employee engagement.

This project was one of the first iterations of the Changing Lives brand we created for NOMS so we are particularly pleased with this recognition and indeed that the brand itself was shortlisted in the Best Rebranding Exercise category.

We continue to enjoy our work with NOMs on internal communications during a period of significant policy change at the Ministry of Justice (the government department NOMS supports). Changing Lives, the brand, is proving its strength and importance as a unifying force for the NOMS organisation as its role gradually evolves.

See our NOMS changing lives case studies here >>

If a company believes the links exist and have measures to demonstrate them, then they’ve more than broken the back of the challenge. But they’re nonetheless still faced with the difficulty of how they present these links to the outside world.

Reports (unfortunately) are entirely linear pieces of communication, whether they’re presented in print or html. Yes you can jump around them finding the bits you want but essentially they’re always put together as a progressive argument with each section dealing with a fairly singular aspect of the business. The cumulative effect of all sections is intended to be a complete view of the business.

When it comes to integrated reporting it’s a holistic view you have to convey, which is where a medium such as motion graphics might come in handy. On screen at the same time you can be communicating the subtleties of financial, social and environmental performance whilst also indicating the relationship between all three.

Imagine an analysis in motion graphics form, for example, of the mid- and long-term impacts a company has as a consequence of an increase in manufacturing output. They generate jobs but at the same time raise CO2 emissions. They increase revenue and maybe also profitability but also become subject to greater environmental taxes and negative reputational issues.

Motion graphics would be a fantastic means to illustrate the dilemmas involved in growth, helping demonstrate the reasons behind the choices that have been made and conveying a range of impacts over time.

Realistically, motion graphics are not going to get past the auditors as a formal report but communication in this form will likely ensure more people take an interest in the breadth of accountabilities a company has, and why we need them to address these responsibly for the greater good of people and planet as well as their profit.

Conscious of the endless stream of white papers and exposure drafts addressing the effectiveness and future of narrative reporting, the Lab instead is an environment where management and investors can come together to experiment with new reporting formats that offer a tangible step forward in effective communication.

This is promising for three reasons:

• Firstly, because of the intention to bring management and investors together to experiment with such things, not just the regulators and commentators ( the ones responsible for the mountain of white papers produced to date);
• Secondly, because the ‘new’ word is being used. That suggests to us the potential for completely fresh approaches to reporting rather than more tinkering with existing systems;
• Thirdly, because the onus is on effective communication not just disclosure of information. As the FRC highlights in its brochure on the Lab (see link below), investors are frustrated by a reporting model that often leaves them struggling to understand the underlying performance of an entity. That’s despite all the information companies now pour into their annual reports!

http://www.frc.org.uk/images/uploaded/documents/frc%20lab%20leaflet%20final1.pdf

Let’s hope the FRC can achieve the outcome that it seeks. It’s surprising annual reports have existed so long without evidence “from the capital markets that a given reporting format is valued”.

But surely the Lab would benefit from more institutional investors on the Steering Group to help them do it?

The membership list contains, in the main, the same old suspects (regulators and commentators) and not enough of the members you’d hope for given the Labs aims. More of the likes of Bank of America Merrill Lynch on the team would demonstrate that the capital markets really do have an interest in improving reporting and stepping out of their closed environment to share more of the process behind the decisions they make.

But nonetheless, we’re keeping our fingers crossed that the FRC Reporting Lab shakes things up a bit. There have been way too many white papers repeating the same old ideas for improving reporting and too few corporates that have been prepared to take, even incremental, risks to produce better reports.

And if any of them is expecting different outcomes from saying and doing the same old things, they’re mad. The FRC is perhaps the first amongst the mad to do something about it.