DescriptionAccording to research carried out by Ernst & Young, 35% of all investment decisions are based on nonfinancial attributes. A substantial body of literature deals with the management and measurement of nonfinancial assets. This book, by contrast, focuses on best practice in disclosure:
- How do companies present their vital resources in annual, quarterly, and corporate citizenship/sustainability reports and also in other publications and on their web sites?
- Do they provide a coherent, consistent, and convincing view of resources like management quality, brands, and intellectual capital?
- And how should they proceed to make stakeholders grasp what makes them a valuable investment, a preferred supplier of goods and services, or an employer of choice, and also a good corporate citizen?
These are the core questions addressed in Reporting Nonfinancials. The book presents both best practice in nonfinancial disclosure and a pragmatic framework for action. It shows practitioners how to optimize the impact of their intangibles by first analyzing their companies’ strengths and then improving their disclosure through annual, quarterly, CSR, and other reporting formats. It also helps investors and other stakeholder groups evaluate the quality and relevance of information provided by companies. Thus it is important for both executives and outsiders.
Introduction: Goodwill and Blue Skies?
Getting a Grip on Nonfinancials.
Closing the gap between book value and market cap.
Step 1: Classifying nonfinancials.
Step 2: Adjusting to regional priorities.
Step 3: From consciousness to action.
PART I: THE WHY.
1 True and Fair View?
The Glaring Deficiencies of Financial Reporting.
The old economy’s reporting paradigm.
Change reporting, not accounting.
Getting form to follow function.
Nonfinancials: The overheads of the 21st century.
2 Open Sesame?
Nonfinancial Reporting between Pressures, Paradoxes and Potentials.
Pressures: Regulators, investors and public opinion.
Paradoxes: A singular lack of clarity and concreteness.
Potentials: Professionalisation on the march.
PART II: THE WHAT.
3 Competitive Value.
Brands, Customers and Markets.
A. BRANDS: ENGINES OF GROWTH AND REPUTATION.
Calculating brand value....
...and reporting on brand equity.
Rescuing the brand: Reporting as a part of crisis management.
Strategies for product....
...and corporate brands.
B. CUSTOMERS: THE KEY ENTREPRENEURIAL ASSET.
Customer orientation: Beyond lip worship.
Customer loyalty: Beyond retention.
Customer satisfaction: Early warning system or success barometer?
Customer commitment: Showing true grit.
C. MARKETS: TARGETING NICHES, SEGMENTS AND SECTORS.
Marketing metrics: From market share....
...to sectorial insights.
Marketing strategy: Between brand positioning....
...and financial results.
SUMMARY OF COMPETITIVE VALUE.
4 Management Value.
Strategy, Governance and Outlook.
A. STRATEGY: AN AMALGAM OF PROCESSES AND VISIONS.
Systematising strategy: Concentrating on targets....
...and on market trends.
Strategy as a structured process....
...and as an exercise in restructuring.
Strategy derived from the vision of a leader....
...and his insights on markets – or hers.
B. GOVERNANCE: SHADES OF TRANSPARENCY.
Regional pressures and structural differences.
Are governance premiums sufficient incentives for coherent reporting?
Reporting approaches: Between formalism....
...and hardcore information.
C. OUTLOOK: FORECASTING AS THE ULTIMATE CHALLENGE.
Between expectations and regulations.
Inputs and outputs: Systematising forecasting.
Uncorking the champagne – or biting the bullet.
Paths to growth and glory: Unorthodox approaches.
SUMMARY OF MANAGEMENT VALUE.
5 Human Resources Value.
Productivity, Motivation and Potential.
Can people be capitalised? Ambitious concepts, modest results.
Leveraging human resources: Pinpointing indicators....
...and reporting coherently.
A. PRODUCTIVITY: PROMOTING EFFECTIVITY AND EFFICIENCY.
Ways to productivity: The cultural factor.
Factual approaches: From basic documentation....
...to a strategic overview.
Focusing on the essentials.
B. MOTIVATION: WILD CARD FOR EXCELLENCE?
Corporate culture: The backbone of motivation.
Mobilising employees: Between satisfaction....
C. POTENTIAL: PROTECTING PROPERTY AND HARNESSING TALENTS.
Exploiting intellectual property: Defensive and offensive approaches.
Managing diversity: Qualitative solutions....
...and quantitative evidence.
Training: An investment in superior performance.
SUMMARY OF HR VALUE.
6 Ethical Value.
CSR, Sustainability and Stakeholder Dialogue.
Good ethics=superior financial performance?
Evolution of reporting: From accounting to assurance.
A. CORPORATE SOCIAL RESPONSIBILITY: CHARITY OR POLICY?
Reporting trends: Quantity and quality on the rise?
...and concentrating on core business.
An emphasis on issues....
...and on mission.
B. SUSTAINABILITY: BETWEEN TRIPLE BOTTOM LINE AND REALISTIC TARGETS.
Reporting between minimalist requirements and maximalist demands.
From triple bottom line....
...to challenges and dilemmas.
Setting targets and executing strategies.
C. STAKEHOLDER DIALOGUE: CONFLICT-SHOOTING OR WIN–WIN STRATEGY?
Curing corporate myopia.
Systematising processes, developing indicators.
Addressing specific issues....
...and systematising consultation.
Ethical value: A must or a sham?
SUMMARY OF ETHICAL VALUE.
PART III: THE HOW.
7 Says Who?
Addressing Stakeholders and Facing Issues.
Low standards of accountability....
...and cultural proclivities.
Focusing on audiences: Communities, employees....
...the financial community.
Focusing on specific issues....
...and tackling general concerns.
Dialogue as an ongoing process.
Dialogue perspectives: From evasiveness to civic sense.
8 New Wine in New Bottles?
Strategy, Structure and Style.
Strategy: From fundamental questions to an integrated approach.
Structure: The road to clarity and materiality.
Style: From story-telling to substance.
Coherence, brevity, accountability.