Post #65
March 1, 2023
Claire Bodanis
Claire considers why annual report awards are at best a good night out, at worst detrimental to advancing the cause of good reporting.
Regular blog readers will know that my recently departed lovely Dad had a distinguished veterinary career. What you won’t know, because I forgot to include it in December’s blog tribute, is that he was also a Baron of Sealand. Sadly it’s not hereditary – although being neither the eldest nor a boy would have ruled me out twice over in any case – so the title died with Dad. However, we have kept the proof of title where Dad himself displayed it, so that as many as possible would see and be amazed at this great honour. Yes, my friends, it has pride of place in my parents’ downstairs loo.
Brits amongst you well get the reference – but for those of you lovely readers who don’t hail from these shores, let me explain. Dear Dad was very fond of a joke, and for his birthday some years ago, my eldest brother presented him with the Baronetcy of Sealand. If you’ve never heard of Sealand, it’s an abandoned World War II fort some seven miles off the coast of Suffolk in the North Sea. It’s been occupied since the 1960s by the family of perhaps the greatest practical joker of all, British Army Major Roy Bates, who declared it an independent principality; the British government has largely turned a blind eye. Sealand keeps its economy afloat partly by the sale of honours. Wannabe aristocrats don’t even have to set foot in the ‘country’ (now what does that remind me of…). And at £35, beautiful registration certificate included (perfect for downstairs loo-hanging), it really is a snip.
I’d forgotten about Dad’s ‘title’ until I was up in Scotland visiting Mum last weekend, and it prompted me to consider starting my own rollcall of honours for the downstairs loo. Prominent amongst them would definitely be annual report awards. In fact, given how many reporting awards there are, and how indiscriminate, they’d probably take up every inch of every wall, and the Baronetcy of Sealand would have to find a new home.
I appreciate I shan’t make many friends with this opinion, including amongst some of my own clients, but before you stop reading in disgust, I do urge you to hear me out. Those of you who’ve read my book, Trust me, I’m listed, on how to do corporate reporting well, commissioned by the UK’s Chartered Governance Institute, will have read my comment that awards should be treated with caution. But I was rather more circumspect then than I am now, having recently been subject to the dangers that annual report awards can present to the cause of good reporting.
I assure you these are no sour grapes. Quite the opposite: I am currently trying to help a number of clients improve their reports in the face of internal opposition based on last year’s reports having won a couple of awards. The very necessary improvements are being blocked by the argument, from less enlightened colleagues, that ‘It won an award so it must be good, and doesn’t need to be changed’. Aside from the point that reporting expectations and regulation evolve all the time, it sounds rather arrogant to reply ‘Well, who gave the awarding body the authority to proclaim your report the best? Did the judges even read it properly? And I’m guessing you entered it for the award in the first place, so it’s hardly an objective analysis of what’s good in listed company reporting, is it?’
Fortunately, I have grounds for making such a bald statement, having been a judge myself a few years ago.* I have some sympathy with judging panels; it’s no mean feat reading four FTSE100 reports cover-to-cover, and four FTSE250 strategic reports, in a week, particularly if you actually have a day job. In fact, I spent the entirety of a train journey to and from Scotland resisting the siren call of Dick Francis and instead reading, marking up and annoying my fellow passengers with my frequent tutting and intaking of breath as I scribbled yet another exclamation mark in the margin of a particularly poorly written page. Typos; made-up words; vague, unsupported statements; meaningless graphics – they were all there, and these eight were supposed to represent the cream of the crop, ruthlessly sifted out from the full FTSE (unusually, this set of awards was not self-entered). And I still had to spend another day finishing them off when I got home again.
Ever the school swot, I did actually read them, but I know that at least one of my (far more eminent) fellow judges didn’t. We were judging the two awards on consecutive days, and the offer of a drink after the first day’s judging was refused because of the need to spend the evening reading the other four which hadn’t even been opened yet… And if that isn’t persuasive enough, I refer you to the CEO who said of his own award-winning report: ‘It’s the worst report we’ve ever done, and I don’t believe half of it’. (Which makes you wonder why he signed it off in the first place, but let’s not go there.) And yet some of these awarding bodies even have the temerity to name their awards ‘Best Practice’! (For a pithy summary of why this concept is anathema to good reporting, from none other than Sir Donald Brydon, please see my March 2020 blogpost.)
Now of course, some (in my opinion) really good reports do actually win awards; but whether it’s luck or not, who knows, considering the ones sitting alongside them. It’s also true that winning awards makes people feel good – and that the prospect of being recognised for their hard work may spur some people to do even better. Not to mention the single most important benefit of awards ceremonies: bringing reporting folks together, celebrating all the hard work we do and having a jolly good time. But (in my opinion), the potential benefits of such scenarios are far outweighed by the drag on reporting progress caused by celebrating the mediocre, or the frankly substandard.
Sounds like a lot of opinions… what makes my opinion any better than anyone else’s?
That is precisely my point – no one’s opinion is more than just that; an opinion. While many people kindly call me an authority on reporting, it’s not as if we reporting folk are doctors with our own version of the UK’s General Medical Council, which licenses us and upholds standards on behalf of the industry. For reporting, there is no such body that has the authority to proclaim this or that report better than those of its peers. And (in my opinion) nor should there be, because unlike in medical practice, there is no ‘gold standard’ of what a report should look like or what it should say. What makes a report a good one is whether or not it meets a particular company’s objectives for reporting, and whether it tells that company’s story in an engaging and meaningful way (while, of course, complying with all the regulations). What works for one company, therefore, may well not for another.
So, while it’s great fun to dress up in black tie, go to a fancy dinner and hang out with our mates in the business nattering about reporting, why not find another excuse to do that? Perhaps an annual ‘celebration of reporting’ party? I don’t know. But what I do know is that it would benefit us far more to drop the pretence that awards themselves have any intrinsic value. In fact, given what I’ve seen of how they can hinder real progress, I’d go so far as to say we should abandon them altogether, and free up the downstairs loo for genuinely amusing – and entirely harmless – accolades.
Let’s find a better way to celebrate our reporting efforts. Ideas anyone? Answers on the proverbial postcard…
* For the record, I accepted the offer despite my scepticism, in the belief that the shortlist had been created from a thorough review of the whole of the FTSE by a reputable investor organisation that had been paid well to do the job properly. Fortunately one in each category was objectively good – clear, well written, well signposted, easy to read – so I didn’t have to bow out on principle rather than support an award to a poor report.