Who says quality is hard to quantify? As Director of PR/Marketing at the Diabetes Research Institute Foundation, Lori Weintraub puts together a smoking annual report,
and the proof is plain to see. In one instance a philanthropist read the report and promptly donated $10,000.
The year-end document tells the corporate story, expands upon past themes and sets the tone for the coming year. Yet there is less room than ever in which to pack in all that
information. According to the 2004 Annual Report Survey of the National Investor Relations Institute, the percentage of pages devoted to financials increased to 63% from
57% in the past two years, while narrative pages dropped to 26% from 35%.
So, how can you tell the whole story succinctly and accurately? "My best annual report experiences have occurred when we developed the concept and theme early in the year,"
says Tom Gahm, VP/director of public relations at The Integer Group (Des Moines, Iowa), who gets the key themes nailed down in the first quarter of the fiscal year.
Gahm initially gathers input from sales, product development and R&D executives as well as the CEO's office. He then turns that information into an outline, which is sent
back to the CEO for approval. Even with such an early start, Gahm knows his messages will still be on target at year's end. "You know they will be applicable ... because this is
the direction the company has set its sights on for the year. This is where the budget dollars and other resources are going."
Jeff Walsh goes one step further. Walsh, senior director of external communications at CNH Global, a Chicago-based manufacturer of agricultural and construction
equipment, lays the groundwork for the annual report no less than four years in advance. "The company always has a strategic direction, it has a long-term business plan, and that
plan forms the basis of our ability to anticipate what will be the basic message in the coming years," he says.
While others may see an annual report as a mere summation, Walsh says his four-year plan gives him the chance to serve a larger purpose by telling a consistent story
throughout a longer-term period. "We have always seen the annual report as an integral part of the PR business plan, rather than as a stand-alone item," he says. "And tried to
leverage it into other PR activities, so a theme may be initiated and then elaborated throughout the upcoming year."
It's a sentiment that is echoed by many communications executives: A consistent year-end story becomes possible only when PR plays a central role in monitoring and assimilating
all the different corporate activities and weaving them together into a single, coherent story.
"In my experience the PR department was focused on crafting an integrated message for the organization to ensure that there was no disconnect with what the organization was
telling investors, customers, employees, interested community publics," says Richard Puffer, former director of corporate communications for Sonoco, a $2.8 billion
international packaging company.
Isobelle Surface, VP/director of communications at Odyssey House, a private non-profit social services agency in New York City, has limited space in which she has an
awful lot to communicate--with just a $15, 000 budget.
"We have to address our major donors and the people who refer folks to the agency," she says, adding that the organization must also address the board's concerns and issues
related to substance abuse and mental health.
To make sure it all fits into the space allotted, Surface picks a single theme and uses it as a lens through which to view the entire organization.
Last fiscal year, for example, she talked about how the agency is devoting part of its $20 million budget toward diversity efforts. "It's not talking about the issue as 'an
issue.' Rather, it is saying: This is what we do, this is why we do it, this is how your money helps," Surface says.
Don't forget that the annual report is still very much a vehicle for communicating year-end numbers. Given the regulatory restrictions imposed by Sarbanes-Oxley and Reg FD,
PR can no leave it to financial executives to simply insert those numbers without any explanations.
"It is up to PR to give people a clear idea of just where these numbers came from, and where continued good performance will come from in the future," says Jeff Wilhoit, VP of
the Financial Relations Board, a Chicago-based IR firm specializing in financial communications.
This means PR execs must speakfrequently with their IR counterparts. There have got to be decisions between the CFO and the head of communications, otherwise the annual
report risks painting a portrait that is not just unconvincing, but factually untrue.
"A PR message can't be built around the idea that the company is number one, when the financials clearly show that they are losing market share," Wilhoit says. This holds
doubly true in the current environment, when financial communications must be squeaky clean. "After all, this is an official document. It's an official company record."
But what if PR gets it wrong? What if the press releases throughout the year have been announcing new products and new deals, building a narrative of success, when, in fact,
the implied promise of these evolutions has not yet paid off?
"The annual report is where that needs to be squared and made right," Wilhoit says. "This is the time to say: 'Here's what we tried to do, here's what didn't work and here is
what we need to work on.' Investors and other constituent audiences understand that things don't always work out. The annual report is a chance to own up to one's mistakes and set
things right."
CONTACTS: Tom Gahm, 515.247.2663, [email protected], Richard Puffer, 843.383.8380, [email protected], Isobelle Surface, 917.817.3739, [email protected], Jeff Walsh,
847.955.3939, [email protected], Lori Weintraub, 954.964.4040, [email protected], Jeff Wilhoit,
312.640.6757, [email protected]
Mail no more
The average print run for the annual report has steadily decreased during the past eight years, with a significant drop since 2002. Still, more reports than ever are being
filed online.
| Print run: | Percentage of reports filed online: |
|---|---|
|
1999: 95,600
|
76%
|
|
2002: 92,700
|
89%
|
|
2004: 61,900
|
95%
|
Annual Costs
- Doing more with less: The median budget for an annual report is $103,500, down from $124,900 in 2002. Yet the average cost per copy in 2004 increased to $3.91, up from
$3.73 in 2002. - Who manages the annual report? 64% of firms say IR leads the way, while 21% rely on corporate communication.