Why Job Seekers Should Read Annual Reports
Posted on August 5, 2009 by Atul
By Rusty Weston
In this post-Enron era of mandated transparency, corporate annual reports offer greater insights to a broader range of stakeholders, not just investors.
Though annual reports suffer from an excess of glossy prose and
disclosures, savvy corporations realize that it's not just financial
analysts and investors reading between the lines. Increasingly, job
candidates are mining annual reports to better equip themselves for
interviews and to gauge the corporate culture.
"The strongest candidates are the ones that dig into annual reports," says Lori Blackman, president of DNL Global, a Dallas-based recruiting firm. "The job candidates' objective should be to help grow the company."
Here are some questions job seekers should keep in mind when reading an annual statement:
- Is the company profitable? Which lines of business turn a profit and which underdeliver?
- What are the company's biggest business or market-driven challenges?
- Does the company focus solely on executive compensation or does it
tout an equity distribution plan for rank and file workers, too? - Does the company discuss its commitment to talent management?
- Does the company express a preference for home-grown rather than acquired talent?
- Does the company have a commitment to global diversity? Is this
commitment reflected in their choices of directors and executives? - Does the company have a viable global growth strategy?
- Is the company committed to building greener, more energy efficient operations?
- Does the company support volunteerism and creative philanthropy?
Profitability. The good news is you don't have to be an MBA
or financial analyst to make sense of the numbers. There are a wide
range of articles on the web and various books available about how to read financial statements and annual reports.
If
a company is privately held, it is not required to disclose its
financial results, however, few companies keep their success a state
secret and there may be press releases or newsletters available that
share the information.
Sharing the wealth. Few companies take the opportunity to
talk about what they do for employees, apart from discussions about
funding pensions or other required disclosures. This is a mistake. Job
seekers are potential stakeholders who want to know what's in it for
them, too.
Talent Management. In General Electric Co's annual report,
Jeffrey Immelt, Chairman & CEO, devotes considerable space to human
capital initiatives. "We don't want thematic leaders who move from
subject to subject," Immelt writes. "They can't build. All of our
compensation and succession planning values long-term commitment." I
don't think you have to be a Kremlinologist to read between the lines: GE wants depth, rather than breadth, in its leaders.
Home grown preference. Honeywell states in its annual report
that 65% of its top positions are filled with internal candidates. As
an outsider entering the organization, would you have a harder time
than a long-time Honeywell employee of jumping to the next higher level
within the organization?
Global Strategy. If the company lacks offices, customers or
suppliers beyond its home country, it lacks a global strategy. A
company that boasts of growing international revenue is committed to
sustaining a global presence. Both Honeywell and GE, for instance, will
see nearly half of corporate revenue come from outside of the U.S. this
year.
Global Diversity. While GE is one of the standard-bearers for
global growth and human capital investment, Pepsico is unrivaled for
its commitment to global diversity. From its Indian CEO Indra Nooyi, to
its "Ethnic Advisory Boards," to its discussion of diversity and
ownership culture, Pepsi 's commitment is more than skin deep. Does the
potential employer simply talk a good game?
Good Citizenship. Baxter touts its place on a list of "100 Best Corporate Citizens" by Corporate Responsibility Officer
magazine. A wide range of employers engage in innovative philanthropic
initiatives. Aflac, for instance, established a children's cancer
center in Atlanta and sells 'plush' ducks to raise money for hospitals
that treat children with cancer. Again, does the employer have anything
to tout and if not, why not?
While you could ask a hiring manager or a recruiter many of these
questions, assuming you're granted an interview, you might be better
served to kick the tires first. If the company is committed to talent
management – it's in the annual report. If it's not there, perhaps that
should tell you something about the company.
Of course, annual reports are just one tool among many. Paul Zellner, Managing Director of Russell Reynolds, a
recruiting firm in Chicago, recommends listening to replays of
quarterly analyst calls for a discussion of key business issues facing
the company. If you want to impress a hiring manager or recruiter,
Zellner says, prepare yourself to express this idea: "This appears to
be your [company's business] issues … Here's where I have been
helpful in solving these kinds of problems."
Reading annual statements, which are typically available in the
investor section of a corporate website, is a bit drier than surfing
business articles or corporate brochures. But, in effect, job seekers
should view themselves as investors -potentially investing the best
years of their lives in this company.
Blog courtesy of My Global Career.
Filed Under: Jobs
