Wednesday 10 January 2007

Improving shareholder understanding

Are you feeling depressed now that the after-effects of Christmas have settled firmly around your waist, and the bills have started to come in? If not, here’s a foolproof way to make yourself as miserable as I am. Just consult one of the many helpful guides to the Business Reviews that companies will soon have to produce as a consequence of the EU Accounts Modernisation Directive. You know, the new things that replace the Operating and Financial Reviews that our next Dear Leader briefly made mandatory in the interests of improving shareholder understanding, then made voluntary again in the interests of reducing the regulatory burden on business.

There’s going to be an awful lot of stuff in these new-style reports about KPIs. Not a Saudi Arabian savoury snack, but Key Performance Indicators. Even if you choose a blindingly simple one like market share, you’re going to need to provide masses of legalistic gobbledegook explaining how and why this has been calculated.

Then you must tell shareholders about all the risks and uncertainties affecting your business, on the assumption that they’re too thick to work these out for themselves. No, don’t make me laugh, it’s dangerous for a man in my condition. I’ve actually been trying to do this for my clients for years, but as I’ve mainly worked for food, drink and clothing businesses, I’ve come across the slight problem that the key risk, apart from blithering managerial incompetence, is actually the weather.

And try telling that to shareholders or the media. Because when things go badly, they all share a fixed, smug belief that “only lousy managements blame the weather”. Small wonder that most therefore bend over backwards to avoid mentioning it at all. As a result, you get statements like this: “Successful implementation of our long-term growth strategy and excellent tactical promotional initiatives delivered impressive like-for-like sales growth of 7.5% in the final quarter.”

When the reality was: “Since this was the hottest and driest summer since records began, it would have required ineptitude on a truly Prescottian scale to fail to shift more beer / ice cream / bikinis than in the same period last year, when it chucked it down every day. So, although we underperformed the market by our usual impressive margin, even we managed to do moderately well.”

I’ve only one remaining ambition in PR. To write a Business Review containing a truly comprehensive analysis of ALL the risks and uncertainties affecting a business, up to an including thermonuclear war and an asteroid impact. Anyone out there willing to let me have a crack at it?

Keith Hann is a PR consultant who feels that laughter is, on the whole, preferable to uncontrolled rage.

Originally published in The Journal, Newcastle upon Tyne.

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