We use cookies to make this site as useful as possible. Read our cookie policy or ignore.

Lengthy annual reports and board packs create a poverty of attention

30 January 2018 by Henry Ker

Lengthy annual reports and board packs create a poverty of attention - Read more

Having too much information on an organisation is as bad as having too little

Nobel-prize winning economist Herbert A. Simon once said ‘a wealth of information creates a poverty of attention’, arguing that as the data available to us increases, our ability to digest and understand it becomes strained. Never is that more true than with company information.

In this month’s Governance and Compliance we explore this maxim on two fronts: the annual report and board packs.

While other companies’ annual reports continue to grow with each passing cycle, HSBC recently cut theirs by an impressive 44%.

I spoke to Ben Mathews, group company secretary at the bank and the man behind this project, who gave some insight into the problems facing corporate reporting and how to tackle them – not least because ‘at one point, the Royal Mail was limiting the number of HSBC annual reports that its delivery people could carry at any one time.’

‘There is still a problem where … the annual report is seen as the entry and exit point for any information regarding a company,’ Mathews says. With each new regulation comes additional requirements for disclosure, pushing the volume of information beyond a manageable level.

One of the main purposes of the report, to satisfy various stakeholders about the company’s performance, is becoming buried in minutiae that could easily, and more effectively, be disclosed in another way.

Hopefully HSBC will be the start of a movement in reporting which actually prioritises comprehension over obfuscation.

ICSA, in tandem with Board Intelligence, have begun a project examining the current state of board packs. Chris Hodge, ICSA policy advisor, outlines the initial findings: ‘Nearly three-quarters of all respondents believe that their board packs were currently too long … large organisations are producing an average of 2,000 pages of information for their board members to absorb every year.’

Not only is the cost in terms of staff resource an unnecessary burden on companies, but as Simon Osborne explains: ‘If the board pack does not provide board members with a clear, truthful perspective of the company’s recent history and foreseeable future, then the directors have little or no chance of discharging their duties effectively.’

That is a serious problem. A dramatic rethink is needed on the amount of information that is actually necessary, before our attention is killed off all together.

Henry Ker is editor of Governance and Compliance

LATEST ARTICLES

Preparation is key

Preparation is key

29 August 2019

A joint publication from the FRC and the ICAEW recently provided practical suggestions for audit committees and boards of smaller listed and AIM quoted companies seeking to deliver high quality financial and risk reporting. Read more...

Loose Change

Loose Change

28 August 2019

There is good news at last for the FTSE pension funds-but is it too late?. Read more...

Add to Cart

Add to Cart

28 August 2019

The EU Commission focuses on the misuse of intellectual property rights in latest e-commerce competition enforcement. Read more...

Interview: Alan Calder

Interview: Alan Calder

27 August 2019

Founder of IT Governance and CEO at Vigilant Software speaks to Governance and Compliance about cybersecurity threats and how to navigate the landscape. Read more...

On the Radar

On the Radar

27 August 2019

What are some of the challenges for assurance, procurement and risk managers, and what role does technology play?. Read more...

Building Alliances

Building Alliances

27 August 2019

The journey behind the making of the University Hospitals of Derby and Burton NHS Foundation Trust. Read more...

Guardians of Truth and Future

Guardians of Truth and Future

27 August 2019

Takeaway lessons from the ICSA Annual Conference 2019. Read more...

A Laundry List for Business Growth

A Laundry List for Business Growth

27 August 2019

Anti-money laundering measures can lead to growth creation, as well as loss prevention. Read more...

Level Playing Field

Level Playing Field

27 August 2019

The way sport is governed has been put under the spotlight as stakeholders become increasingly vocal due to repeated failures. Read more...

Company Culture

Company Culture

27 August 2019

In order to attract the best candidates the values of an organisation are more crucial than ever before. Read more...

Have your say

comments powered by Disqus

Advertisements