Foster J. Effective Writing Skills for Public Relations
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Finance matters
The chairman’s statement, he says, is becoming ‘formulaic’: by the time
it has passed through ‘lawyers, spin doctors, and compliance officers he
might as well have asked a machine to do the job’. It is time, he argues,
that companies got a grip on annual reports and returned them to first
principles: a full, clear, no-frills statement of the business and a frank
assessment of current conditions.
As a first step, annual reports should be halved in size, and politically
correct waffle removed; the environment would be better served by
allowing the paper to ‘remain on the trees’. But however well intentioned
all that may be, it is easier said than done. Let’s look now at the possibili-
ties for making the annual report more readable, more creative and above
all a more cost-effective communications vehicle.
An international view
Leading PR professional Toni Falconi, founding chairman of the Global
Alliance for Public Relations and Communication Management, has long
experience in producing annual reports for major companies. Signor
Falconi, Past President of the Italian Public Relations Association (FERPI),
says that the issue of reporting annually is at the very core of self-expres-
sion, its ability to tell a story of a company's achievements to influential
publics.
He feels it is a mistake for PR executives to be only involved in their
traditional roles of responsibility for design, format, distribution and pro -
mo tion. Their skills would be much better employed if they were concen-
trated on content, with views on financial, social and environmental
issues.
Signor Falconi gives substantial support to Bill Jamieson’s views. ‘In
general, today’s reports are not very useful as they are mostly written by
experts who know more about the company than appears in print. They
are not written for the influential publics.’ The question of language, what
the report says and how it is expressed, is crucial: the PR professionals
should be capable of interpreting technical and specialised jargon,
including financial terms and statements, and making it readable and
understandable. Otherwise, he asks, what other purpose is there for the
PR person? Since most PR people fail to understand properly an annual
report’s specialised content, they are less able to interpret it, and subse-
quently transmit the information in a way that satisfies neither the reader
nor the company.
Returning to Jamieson’s theme, he reiterates that reports should be
much thinner and more readable. In-depth analysis, charts and
specialised data should be left to the website for the experts to extract the
information they need.
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THE ANNUAL REPORT – VITAL
COMMUNICATIONS LINK
The increasing level of regulation dictating what must be included in
annual reports is actually causing them to communicate less effectively,
according to Peter Prowse, of Waylines Consulting. ‘I’ve been involved in
analysing the communications effectiveness of annual reports since 1990,’
he says. ‘Every time there is a new set of regulations such as those
following the Sarbanes–Oxley Act introduced in the USA in 2002, compa-
nies have to comply with yet another list of requirements.
‘The result is more words and extra pages, but less useful communica-
tion. Take the HSBC annual report for 2006–2007 as an example: the Royal
Mail had to limit the number of copies that postmen could carry, in order
to prevent back injuries.’
The HSBC report in question runs to 454 pages. Barney Jopson, who
writes about accountancy for the Financial Times, devoted a whole page
article to the HSBC report on 13 April 2007, shortly after it was published.
He wrote: ‘Company executives worn down by red tape blame regulators
for mandating reams of disclosure to “protect” shareholders without
consulting investors about what they would like. Regulators, meanwhile,
wonder just how com mitted companies are to telling the truth.
Shareholders say both could do better.’
Europe’s response to Sarbanes–Oxley is the International Financial
Reporting Standards, which came into force in the European Union in
2005. It takes 133 pages of notes to explain them.
‘Because they need to tick all the compliance boxes,’ says Peter Prowse,
‘large companies now include information about corporate and social
responsibility, employment policies and directors’ remuneration. The
manager or director responsible for the content of the annual report goes
through a checklist of things that have to be covered. The really important
messages that a company should be delivering to its shareholders start to
take a back seat.
‘The result is a thick document that complies with all the regulations,
but nobody has the time or the inclination to read it. It looks like every
other big company’s annual report and communicates very little about
the organisation’s personality: what makes it different and where it’s
heading.’
The chairman’s statement
For most readers, the most important part of any annual report is the
chairman’s statement. It sets the tone and, according to shareholder
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research carried out by Peter Prowse, it is the one part of the report that
readers will read and remember. Frequently, it’s the only section to be
closely examined, giving as it does an overview of the company’s perfor-
mance over a year and suggesting future prospects.
A well-written chairman’s report will be produced with the reader in
mind. Warren Buffet, the second richest man in the world and CEO of
Berkshire Hathaway, achieves this by aiming his report at just two of his
shareholders, Doris and Bertie, who also happen to be his sisters.
‘They are a smart duo,’ Warren Buffet told the Financial Times, for
Barney Jopson’s article. ‘They’ve got practically all their money in
Berkshire Hathaway, so they’re interested. And they don’t want to be
talked down to. I pretend they’ve gone away for a year and want to know
what’s happened. They want to hear what I’m worried about and what
I’m pleased about,’ he says. ‘Then, when I’m through, I take their names
off the top of the report and put: “To the shareholders of Berkshire
Hathaway”.’ The result is a frank and folksy report that is lapped up each
year by retail investors.
Models of good practice: Tesco and WPP
Retailers often seem better at communicating than companies in other
sectors. Peter Prowse holds up the Tesco annual reports for 2007 as good
examples of clear communication. ‘Tesco of course suffers from over-
prescriptive regulation, just like anybody else,’ he says. ‘However, the
company is thoughtful and imaginative in the way it gets its messages
across to shareholders.
‘First, Tesco doesn’t try to get everything into a single volume. It
produces three separate reports: an annual review and summary financial
statement (60 pages), the annual report and financial statements (112
pages) and the corporate responsibility review (84 pages). This makes
picking up any one of the three less daunting, and gives you three
different and attractive front cover photos to choose from.’
The disadvantage of this approach is that it is not immediately obvious
where you can find the chairman’s statement. The message from David
Reid, Tesco’s chairman, is actually in the annual review and summary
financial statement, but doesn’t appear until page 39. The hunt repays the
effort: the Tesco chairman’s statement is clear, to the point, specific, and
puts the past year in the context of the company’s strategy and plans for
the future:
We are delighted to be able to report strong results in what has been a
challenging year. Sales have increased by 10.9% to £46.6 billion,
Group profit before tax is up by 20.3%. Underlying profit has grown
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by 13.2% to £2,545 million. Underlying diluted earnings per share are
up 11.6% and the full year dividend, which now benefits from our
rising flow of property profits, is up 11.7%.
As always, our results this year have been produced by a clear,
consistent, well executed strategy. Tesco is a growth company and the
strategy is designed to deliver good growth and performance, while
maintaining focus on investing for the future.
Elsewhere, the Tesco reports make good use of headings and subhead-
ings, to point the reader towards important information and grouping
information in relevant categories: customer, community, operations,
finance and people. Figures are brought alive with colourful, easily-
understood graphs and charts, and the people and locations shown in the
bright, eye-catching photo graphs are identified, as in: ‘Far right: Carol
Sargeant, Pitsea Extra, UK.’
Figure 20.1 Oriental style sets the design tone for WPP’s annual report and
accounts, 2006. The report’s visuals were reflected in the impressive AGM
stage-set
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Another sector which, as you would expect, can produce first-rate annual
reports is the communications sector. The PR and advertising group WPP
achieves clarity on several levels in its report for 2006, starting with the
list of contents, which is refreshingly clear: Who we are, Why we exist,
How we’re doing, What we think, Who runs WPP, How we behave, How
we’re rewarded, and so on.
For the benefit of most readers who aren’t investment analysts, the
report also includes a section entitled: ‘The fast read for a quick, pre-
digested, highly-compressed version of this annual report, read the next
five pages.’ For those with the time and the inclination, the full report
runs to 190 pages, longer than many popular novels, but still less than half
the length of HSBC’s 2007 report.
Phillip Lader, WPP’s chairman, and chief executive Martin Sorrell,
make it clear who they are writing for in their joint letter: ‘Dear share
owner,’ they begin, but their letter runs to seven pages, two pages longer
than the compressed version of the whole report. Like Warren Buffet, they
know who they are writing for and don’t shy away from using the second
person ‘you’:
WPP’s twenty-first year was a model year, our best yet, with key
measures exceeding any previous year. Our performance conformed
closely to the financial model we have developed, with revenues
rising 10% and profits 15%. Most importantly, total share owner
return improved, with your share price rising by almost 10% to
690.5p over the year and dividends rising 20% to 11.21p. Pleasingly,
your share price has advanced a further 9% to 757.5p at the time of
writing.
Like the Tesco annual report, WPP’s is well structured and clearly sign-
posted. Its appearance, however, is quite different, relying on fine art-
style illustrations to create the report’s look, coupled with moody black
and white photographs of directors and other key executives. The charts
and graphs show the performance data perfectly clearly, but in a much
more muted tone than in the Tesco report. Throughout, WPP’s annual
report shows how designer and copywriter can work effectively together
to deliver an uncompromised series of messages.
Contrast the Tesco and WPP approach with that found in annual
reports from most of the other 100 largest companies, reviewed in Peter
Prowse’s annual review of companies’ reports. ‘Lacking in personality
and often underestimating the intelligence of the reader, the majority tend
towards bland, uninspiring copy, full of banal statements. Some drift
away from important shareholder information and become a platform for
criticising policies or legislation enacted by governments.’
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Effective writing skills for public relations
Figure 20.2 Strong typographic treatment to provide both impact and clarity
in WPP’s annual report and accounts for 2006. Chinese artist Feng Fen’s
influence appears in the drop initial for opening page of CEO’s report, an idea
followed in later sections
Figure 20.3 Tesco gets its 2007 message to shareholders in three ways: (l to r) Annual Review and Summary Financial Statement;
Annual Report and Financial Statements; Corporate Responsibility Review
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Figure 20.4 One of the six Tesco telecoms centres across the UK pictured in
the Annual Review
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Others are poorly structured and suffer from poor design, as well as
turgid writing. The effectiveness of a company’s annual report as a means
of communicating with its publics depends greatly on design and how
information is presented. Good design means high-level creative input,
with the designer and the writer working closely together to a shared
brief. That takes good planning and a lot of time, and only comes at a
price.
Design and presentation
Most shareholders, and indeed the majority of all those who are sent
annual reports, will look either for financial results and the dividend, or
for photographs of people they know. Then they give up: in the bin
goes the report that directors, accountants and PR people have slaved
over for months. The stodgy report tightly packed with grey type unre-
lieved by headings and typographical tricks is the biggest turn-off of all
time.
The effectiveness of a company’s annual report as a means of commu-
nication to its publics depends largely on design and how the information
is presented. The worst possible course is to dig out last year’s copy, just
change the date on the cover and print it in a different colour. Good
design means high-level creative input that only comes at a price.
Something like £180 million is spent each year on printing the country’s
annual reports, says Tim Taylor, marketing director of annual report
specialist Butler & Tanner. With an expenditure like this, much care and
attention is needed on design and content.
High unit cost
A company can spend as much as a quarter of a million pounds on its
annual report. A full-colour, square-backed print job on high-quality
paper running to 100 or more pages for 50,000 copies could cost even
more. If an optional summary report (or a corporate and social responsi-
bility report) is produced as well, that could increase the price, since the
full version will go to City analysts and institutions, to journalists and
overseas investors. A cost of more than £10–15 a copy would not be
unusual. The annual report might turn out to be a waste of money at 75p
but be good value at a fiver or more, says one former plc finance director.
It all depends on its merit as a communications medium.
For trade associations and smaller companies, lower print runs can
mean a far higher unit cost, particularly if expensive, quality materials are
used. The relatively high cost per copy of a lavish production is often
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justified by using the report as a corporate brochure for the year, so saving
the expense of regular updating and printing.
There is scant evidence that creative design ideas necessarily reflect
companies’ claims for being innovative enterprises. This is borne out in a
survey of Europe’s top 100 companies by Peter Prowse, published in 2004
under the title of The Company Report Report, which was critical of their
creativity and production values: ‘Quality of design is poor and at times
completely lacking.’ The survey reports that the average number of
photographs and other illustrations fell from 57 to 44 in just two years.
Prowse, who now runs Waylines Consulting (peter.prowse@waylines.
co.uk) says that in publishing that survey, they tried to show what works
well and what doesn’t. It may not mean, he says, that an excellent report
must necessarily cost more than a mediocre one. ‘Enlightened companies
realise that they are saddled with having to print a detailed document so
they might just as well produce something that does the best possible job
for them.’ Those companies that are close to their markets tend to lead the
way forward in producing cost-effective annual and interim reports.
Nowadays, of course, most sizeable companies produce their reports
online through their websites, and shareholders are constantly encour-
aged to opt for information in digital form. The more that trend continues,
the lower overall costs will turn out to be.
Electronic communications with shareholders
The Companies Act 2006, which came into force in January 2007, brings
important changes to the way in which companies can utilise the internet
to communicate with their shareholders, reports investor relations consul-
tant Richard Bowler of Langbourn Communications. ‘Previously, compa-
nies could ask shareholders if they wanted to receive communications
electronically but the take-up was usually as low as 5 to 10 per cent. Now,
once the right legal mechanisms are in place, the company can assume
that shareholders are happy to receive information electronically unless
they specifically state otherwise.’
First they need to check whether their articles of association already
permit them to communicate electronically with shareholders. If not, they
have to pass a resolution and then write to all shareholders asking if they
would prefer information in printed or electronic format. If a shareholder
fails to respond within 28 days the company can assume that the share-
holder agrees to have information in electronic format, that is via the
company’s website.
Because it takes time for companies to change their articles of
association or to get a resolution passed it is unlikely that they will feel the