CEOs worldwide: ‘Choose value creation’

Integrated Reporting with the EFQM Management Document
PostedMarch 02, 2016, in  Step 5: improve & innovate
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There is a remarkable ‘mind shift’ happening among CEOs worldwide. The ‘quarterly thinking’ must step aside for long term vision based on the principle of ‘value creation’. With it, Integrated Reporting is being given an important nudge in the right direction.    

Eco system

‘Today’s culture of quarterly earnings hysteria is totally contrary to the long-term approach we need.’ Signed: Larry Fink, CEO of Blackrock, one of the largest Investment Firms in the world.  In an open letter addressed to fellow CEOs, Fink denounces short term thinking, which is at the expense of long term value creation and therefore forms a risk to investors. According to Fink, companies are not aware enough of the ‘eco system’ within which they operate. Companies should pay more attention to the impact of (technological) innovations within their industry. 

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Source: www.picserver.org (Creative Commons 3.0)

Call for change

Also from another corner there’s a call for change. From the Pricewaterhouse Coopers Global CEO Survey 2016 it is clear that Fink is not alone: ‘CEOs are seeking to better measure the impact and value of innovation and key risks for stakeholders. (…) They’re also looking to better communicate a range of ‘softer’ issues in a reliable and consistent way across multiple channels.’ 

Good news for the male/female CEOs: the solution is already available. Integrated Reporting is the perfect instrument to communicate on ‘softer issues’. 

Integrated Thinking

Integrated Reporting is an effective method for reporting on both financial and non-financial results. A company’s performance is described integrally, in the broadest sense of the word. There are no fixed procedures or performance indicators, instead there are thematic guidelines:

  1. The organization creates value for itself and others;
  2. This value can be categorized in six sources: financial, manufactured, intellectual, human, social and relationship and natural capital;
  3. There is a clear vision on the process of value creation in the short, medium and long term.

An Integrated Report doesn’t only show ho wan organization is performing, but also the way decisions are made. How are trends, chances and risks assessed and translated to the organization itself? What are the (possible) consequences for business processes, both financial and non-financial? Integrated Reporting is therefore the impact of Integrated Thinking, the holistic monitoring of the organization. 

Continuity

Through Integrated Reporting business processes are followed critically and where possible, improved. Stakeholders are closely involved in that and that is good for continuity. So Integrated Reporting offers plenty of opportunities, but how do you handle that? How do you integrate it in daily operations? How do you ensure that it does not lead to unnecessary additional reporting requirements? With the EFQM Excellence Model a ready-made solution is available. The EFQM Model has been proven effective in creating a self-learning organization that is better able to meet the expectations of all stakeholders.

EFQM Management Document

The EFQM Model takes shape on the basis of a number of practical tools. One of these is the EFQM Management Document, a report which explains how an organization implements its strategy. Since the EFQM Model takes an integral approach, the EFQM Management Document is ideal as the basis for Integrated Reporting.

With the EFQM Management Document the call of CEOs gets an appropriate response. But what is it exactly? And what good is it? More next week...

 

 

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PostedMarch 02, 2016, in Step 5: improve & innovate
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