Corporate Eye

Transparency and the Sustainability Agenda | FTSE 100 Website Reviews

Chris Milton — Wed, 10 Mar 2010 09:49:36 +0000

General Industrials is one of those catch all phrases within the London Stock Exchange. It’s not quite an “and everything else” hold all, but neither is it particularly specific about what the companies do. They just do industry.. generally.

There are only two General Industrial companies within the FTSE 100: Smiths Group, and Rexam.

Smiths focuses upon threat & contraband detection, medical devices, energy, communications and engineered components, while Rexam is the world’s second largest consumer packaging group and a leading global beverage can maker.

There’s no particular reason for them to be in competition with each other, other than the fact they both fit into this “other” category.

Smiths Group Website

General Layout, Look And Feel

There is an immediate difference between the layout of the two companies’ websites. Rexam is big and bold with a certain artistic flair to it and a swish to divide up the page into different portions.

Smiths Group, on the other hand, is a lot more straightforward in its presentation, preferring a standard typeface displayed in square boxes and columns.

This isn’t an artistic critique, it’s a simple observation that the way the Rexam website is presented engages and draws the surfer in, while the Smiths Group one communicates a much drier atmosphere.

This being said, both use accepted website presentation within their respective Corporate Responsibility sections. Rexam abandons its swish for a single column of text (though not immediately), while Smiths Group simply continues using the same layout.

A Good Breadth of CSR Content

Both Smiths Group and Rexam have some good points about their websites which other companies would do well to pay attention to. Corporate Responsibility is on the homepage of both, and both cover the basic ground of community, workforce and environment.

Both also have a respectable number of documents available for download, including precursor CSR reports dating back to 2002 and various other policies and reports.

While these show a good breadth of understanding of CSR, it is in the level of detail that a gap opens up between the two.

For example, Rexam publishes the contact details of their Director of Corporate Responsibility and has a handy little FAQ and Glossary, which gets quite in depth in places.

On the other hand, Smiths Group repeats its Code of Business Ethics in both the Corporate Responsibility and Corporate Governance sections. This is a good sign that it understands CSR is more than just an adjunct, but it’s a shame that they’ve missed a trick.

Rexam Website

A Good Story Missed In Its Telling

Smiths Group certainly has some valuable and useful sustainability stories to tell. Their online Corporate Responsibility Report for 2009 is well laid out and contains some useful facts and figures for analysts to get their teeth into.

Rexam, on the other hand, only produce PDF reports, not interactive versions, and have missed a few years making it difficult to build up a consistent picture.

This is the big trick so many businesses still miss, including both Smiths Group and Rexam.

Online websites should no longer be about the virtual shop window of static HTML. They should be media rich giving stakeholders a precise, interactive and up to date (though not necessarily immediate) insight into the business’ concerns. This includes but is not limited to sustainability content.

However, the mechanism to make this happen does fall within the sustainability agenda: transparency. This could well be the biggest challenge for 21st century business, making those who are genuinely open and honest the winners, warts and all.

^{Picture Credit: I dream of steam by mugley from flickr under Creative Commons Attribution Share Alike License.}

Fonts Really Do Matter

Susan Gunelius — Wed, 10 Mar 2010 01:28:12 +0000

Research by Hyunjin Song and Norbert Schwarz (via Neuromarketing Blog) proves that the fonts used in ads, marketing materials, and documents really do affect consumer behavior. The title of the research report says it all — If It’s Hard to Read, It’s Hard to Do: Processing Fluency Affects Effort Prediction and Motivation.

In multiple experiments, consumers were provided a set of written instructions related to the use of a product and asked to estimate how long it would take to perform those instructions. The results were always the same. Consumers who were provided instructions in simple fonts (such as Arial) estimated that the instructions they read would take half the time to complete than consumers who were provided the exact same instructions in a more creative font (such as Mistral) estimated.

Clearly, the takeaway from this study is obvious. If you want consumers to perceive your brand, your message, and any instructions you need to deliver as quick and simple, you should present that information using a simple, easy-to-read font. However, a similar takeaway could relate to overall brand perception. Certainly, a light and fancy script font delivers a different brand message than a sans serif, bold font. However, when you add on the effects that your font choice can have on the readability and response to your brand messages, font choice jumps up in the list of importance.

Furthermore, the font you use in your brand messages and so on can affect consumers’ motivation to respond the way you want them to. The last thing you want is for the font you choose to deter people from the actions you suggest in your ads and marketing materials. In other words, don’t let a font stand in the way of your brand and your business.

What do you think? Is your brand easy or hard? Does your font match?

What Makes for Effective Investor Relations Sites? Part 12: Remember the Debt Side of the Balance Sheet

John Palizza — Tue, 09 Mar 2010 10:27:16 +0000

Most company investor relations web sites are entirely equity oriented and ignore the company’s debt. I’m not quite sure why this is, as many companies have a significant part of their funding that is derived from the credit markets. Perhaps it comes from the fact that most corporate debt is held by institutional investors who have access to proprietary trading screens, or perhaps it derives from the fact that the banking and treasury department is often separate from investor relations, but you can look long and hard before you find much information on most companies’ web sites that relates to their debt.

Click to enlarge

By failing to more publicly disclose this aspect of their financial structure companies are doing a disservice, certainly to retail holders of their bonds, but also to holders of their equity. Debt burden, that is, the total amount of debt your company has, is important information. As is your debt maturity schedule, which will tell investors when your debt comes due, cash flow requirements and how much immediate refunding risk you may have. Rating agency debt ratings are handy shorthand guides to a company’s overall credit quality and also merit attention. In short, there are many important items of information regarding a company’s debt that go into an investment decision, regardless of whether an investor is a debt or equity holder. Usually this information is spread out between the balance sheet, cash flow statement and regulatory filings, or sometimes, in the case of Debt Ratings, not disclosed by the company at all. It doesn’t make sense for a company to force investors to hunt for the information when the company has it readily at hand. Therefore, a well thought out section informing investors of a company’s debt profile should be included in effective investor relations web sites.

One company that does a pretty good job with their debt information is ENI, the Italian energy company. The screen shot that I have included shows a main debt page discussing their debt policy and overall debt levels. Other pages, which can be seen listed on the left of the page, debt rating, maturity (and currency) profile and the schedule of maturing debt. More companies should do this.

eBay Launches New Green Brand Message

Susan Gunelius — Tue, 09 Mar 2010 02:30:37 +0000

“The greenest product is the one that already exists. Choose to reuse with the eBay Green Team.” That’s the new slogan for eBay’s new environmentally friendly brand message, and the debate is going strong — is eBay greenwashing or is the new eBay green message appropriate?

According to Greenpeace (via the New York Times), reusing items can benefit the environment, so the new brand message is valid. Items listed for sale on the new Green eBay site are either pre-owned or sustainable as determined by eBay’s green team who qualifies all listed items.

Greening eBay is just one step the company is taking to try to recoup the profits they’ve been losing in recent years. Other niche eBay sites have launched with more coming in the pipeline.

I think the question now is whether or not the new Green eBay will attract new customers to shop with eBay or if it will just shift existing eBay users to the new niche site. In other words, will a green brand message drive significant amounts of business to eBay?

Green marketing has lost a bit of its fanaticism over the course of the last two years as economic problems took precedence in consumers’ minds over environmental problems, so it could be argued that a Green eBay message is a bit late. On the other hand, there is that old saying, “better late than never.”

I should mention that the eBay Green Team blog ties in very nicely to the new Green eBay site, complete with green news and information about how eBay and its employees are pitching in to help the environment. Adding that human element and trying to demonstrate that eBay ‘walks the walk’ is an important part of the believability of the new eBay green brand message.

Perhaps in time, consumers really will make a conscious effort to purchase a used item to help the environment rather than doing so simply to save money. Now that would be a huge accomplishment for eBay which would transcend simply boosting the bottom-line (although I have to assume that stockholders would disagree, unfortunately).

What do you think of the new green eBay brand message?

"New" Fortune 100 Best Companies to Work For: Part 1

Cynthia — Mon, 08 Mar 2010 09:18:31 +0000

The February 28^th edition of CBS’s popular Sunday Morning show led with a profile of SAS, the top shop in this year’s Fortune 100 Best Companies to Work For. But the title of the story wasn’t “Workers in Paradise”—it was: “The Great American Paycheck Squeeze.”

Fortune explains the choice for first place:

SAS boasts a laundry list of benefits — high-quality [onsite] child care at $410 a month, 90% coverage of the health insurance premium, unlimited sick days, a medical center staffed by four physicians and 10 nurse practitioners (at no cost to employees), a free 66,000-square-foot fitness center and natatorium, a lending library, and a summer camp for children.

There’s more about the culture (based on “trust between our employees and the company”), the continuity of leadership, the profitability of the company, and so on. But the big deal is obviously the Edenic workplace, which also boasts 40 miles of running trails, a hair salon, three subsidized cafeterias, an onsite massage therapist (of course), and an artist-in-residence program.

So what could possibly be wrong with this picture?

As the Sunday Morning story observes: “The reality is, for more and more Americans in these recessionary times, SAS might as well be Disney World.”

There’s an inherent discontinuity in the list between what we might call the “campus” companies, where life is made easy for employees (Intel, Intuit, Genentech, Qualcomm, the list goes on) and the “shirt sleeve” companies, where employees are offered emotional reward in lieu of creature comforts. Stew Leonard’s, Build-a-Bear Workshop, Umpqua Bank and a few others compete mainly on charm—fun at work, family feeling, respect for and from management—plus health care benefits, with few other tangible perks.

There’s also a discontinuity between companies where many people might work and those where few need apply. SAS actually did grow jobs last year, by a modest 2%. But the people they hire are for the most part already selected out of the general population by high skill levels. And many of the more applicant-accessible companies on the list had negative job growth, ranging from -2% to more than -20%. Across the board, from FedEx to Zappos, CarMax to Men’s Wearhouse, the job news for non-geniuses was not good.

So who grew? Biggest increases were at the Scooter Store (up 51%) and Smucker’s (up 44%). The “why” at Scooter Store seems obvious, given the aging population and the general decline in fitness. As for Smucker’s . . . well, sales have increased 58% since their acquisition of Folger’s in 2008, so effectively they bought a bunch of new jobs. And coffee has turned out to be a great space for expansion, since decreases in disposable income have driven coffee drinkers to brew at home. On the flip side, job growth at Starbucks was -27%.

More analysis, and some lessons from the list, in Part 2.