The Annual Report

About this time every year, big corporations, and the design studios that serve them, begin gearing up for a yearly ritual, the annual report. The seeds planted n in the dead of winter, will flower prolifically this spring with a bumper crop of 64 page brochures. In preparation for the harvest, I dusted off a pile of last year’s reports to see where the art of annual report design was leading. My collection, a pile of over a hundred, appeared in my mailbox last spring with the numbing regularity of Publisher’s Clearing House dispatches. Reexamining that tower of expensively printed paper, I am struck with the level of proficient mundanity they demonstrate. American corporations are spending an estimated $4 billion annually on design, photography, production and distribution of annual reports. But despite the huge investment, they are not using designers to rethink the way their publications work; instead they have limited them to producing decorative public relations campaigns.

An annual report contract is a prize plum to many print designers. The annual is often the one corporate publication on which management is mentally prepared to expend significant resources — or sufficient resources depending if you are the designer or the manager. There is a budget allocated each year and a precedent for the expenditure (reports can run from around $2 to as high as $10 per copy). Often the AR is the only regular project for which the corporation will go to an outside consultant. In addition, professional egos may boost the desire for an especially slick presentation, as they are perceived as a point of comparison between companies and a direct representation of the management. Designers are not necessarily hired to rethink the problem or reorganize the information, but rather are seen as a tool for sprucing up the CEO’s gospel. In a panel discussion on Annual Reports (CA, Sept 91) Edward Kanarkowski, a VP of ADP noted…“Our chairman likes to know his message is going to have the right packaging, but design can no way run the book.”

The annual report as we know it has been required since the Security and Exchange Act of 1934 demanded business be more forthcoming after the debacles of the stock market crash. Since then the report has been transformed from a financial statement into a major public relations project. It is perceived as a forum for management, especially the CEO, to directly address the stockholder and the analyst. From its’ earliest days, companies have used the annual to put a positive spin on the year’s numbers. “It is no exaggeration to say that it is difficult to find one out of ten annual corporate reports which is complete, clear, and fundamentally honest; and probably there is not one out of five which is not misleading, ambiguous, vague, or evasive,” snarled Harpers journalist Anderson Farr in 1934. As the annual report’s role as a promotional tool has grown, the veracity of the content is increasingly called into question. As with the rhetoric of the political campaign, the audience tends to view the message critically, i.e. read between the lines (or through the designed surface) in attempt to decipher the hidden meaning that is glossed over. Fifty eight years after Farr had chastened companies for their ambiguous reportage, John Byrne of Business Week remarked…“Given the show-biz nature of some reports, its small wonder that so many people view these corporate missives with skepticism, if not outright suspicion.”

Aside from the general level of skepticism with which they are often received, recent surveys reported in the Wall Street Journal have indicated that of all annual reports mailed to stockholders, over half are never even opened and of the half that are less than half of those are ever read. Other studies have indicated that the average reader who actually cracks the spine spends only five minutes or less looking it over. Analysts routinely report reading only the financial information at the back, bypassing the rhetorical front section’ all together. All of which reveals a level of cynicism, boredom, or disinterest that hardly justifies the enormous effort and expense.

What is all the more remarkable is the amount of time and money shoveled into an object which lasts only 12 months and is obsolete by the time it is printed — the actual numbers have gone out to the analysts a month before publication. The luxuriously printed brochure becomes merely a monument to the management of the company. As Carol Squires notes in a critique of annual report photography, “It’s one time when a corporation can tell its own version of reality with no pesky journalists or unfriendly outsiders interpreting the information.” Flipping through any of the books gives a pretty good idea of the management-centered view of the world. If mentioned at all, employees are usually referred to more as troublesome logistical data than corporate brethren. Caterpillar Corporation devoted exactly one sentence to their bitter labor dispute with the UAW that has devastated striking communities in the mid-West. The few employee photographs to be found are embarrassing constructions of fictional racial and gender diversity; diversity that apparently stops at the office door. Executive portraits are uniformly white and male.

In the crop of annuals I reviewed (chosen by a very unscientific semi-random sample from the Fortune 1000) the format was monotonously consistent. Management is highly aware of the expected form, and aside form the occasional oddball stunt — like McDonalds’ pseudo-newspaper — few of the reports deviated from the standard 8.5 x 11, 64-78 page, glossy photographic variety. Designers were rarely allowed to restructure the form or use of the brochures. While almost every report boasted recycled papers (usually recycled coated sheets or in the financial sections only), not one reduced the dimensions or page count significantly with more thoughtful planning. And while most companies crowed about their international perspective, only a minuscule number offered multilingual versions to back up their claims.

As is often the case with corporate clients, the base problems — how to get financial information to the public, how to reduce the amount of energy and waste involved, how to better address the wildly diverse markets the annual report is supposed to conquer — are off-limits to the designers. Barred from redefining the use of the object, designers skills have been relegated to either redecorating, packaging, creating illusory difference, or to constructing an elaborate a corporate masquerade. For instance, General Motors lost over 1 billion dollars last year, yet their annual report addresses issues of growth and revitalization with hardly a word about the plant closings or the 70,000 former GM employes on the dole this year. Corporations are paying designers to produce packages to hold managements self-marketing.

Despite all the money flying around, the packages that businesses are getting from their designers are pretty mundane and pedestrian ones. While claims of “innovation,” “efficiency” and “quality” pepper the language of every report, the design is practically indistinguishable from one to the next. Companies adopt fancy design to signify innovation, not to be innovative. It is a clear example of the fetishization of design. Management either makes a statement by the absence of design, i.e. “We are a plain old company, plugging along, your money is safe in our careful, conservative hands.” No wild, irresponsible behavior here. It’s the adoption of a folk personna, a Ross Perot “it just that simple,” sort of thing. (For an example of this see the Wrigley’s report that looks as if it came straight out of the word processor.) Or on the other hand, management adopts the daring, break-the-rules approach. This category encompasses the designer-look signifying “we are young, bright, bold, innovative. We have ideas.” (See the MCI report that co-opts its style from a Pepsi commercial.) The presence or absence of premeditated design becomes a signifying quality of the report.

Decoration, marketing image and propaganda are not terms we graphic designers usually feel comfortable associating with our profession. We often relegate that kind of activity — lifting our noses disdainfully — to the distasteful fields of marketing or advertising. Yet because we are barred from the informational problems of the annual report, the work that designers do is primarily marketing or advertising driven. It is certainly not problem-solving in any conventional sense of that phrase. The real role of much of graphic design is grafting elaborate identities onto products. In the annual report, the product is broadly the corporation, and specifically the management team, but it could just as easily be a computer, a candy bar or a pair of jeans.

Articles with titles like “Annual Obfuscation,” “Deciphering Annual Reports,” “Show Business as Usual”, in the business periodicals belie the conventional attitudes toward annual reports. The popular press refers to them as phoney PR stunts which are designed to hide the hard facts. Designers are not spared in these diatribes. Design is perceived as the candy-coating covering the bad news. Its another case of design being marginalized by business -– and seen by both sides, management and audience, as at best a superficial face-lift or at worst a smoke screen. In most cases the creative work of the designer is rightfully dismissed, the real creativity is attributed to the accountants in their masterful manipulation of the books.

© Michael Rock