The Selective Use of Graphical Information in Corporate Annual Reports

[We’re pleased to welcome authors Andrea Melis and Simone Aresu of the Università degli Studi di Cagliari. They recently published an article in the International Journal of Business Communication entitled “Analyst Following, Country’s Financial Development, and the Selective Use of Graphical Information in Corporate Annual Reports,” which is currently free to read for a limited time. Below, they briefly describes their research and its significance.

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What motivated you to pursue your research?

Data visualization is a buzzword in the corporate world today. The use of graphs is widespread in corporate reports because graphs are eye-catching and easy-to-read communication tools. They are used, for instance, in financial and sustainability reports, presentations of quarterly results, and corporate websites. Graphs are also one of the few formats in financial reporting where the preparer has an ample discretion both in the content and the design. Previous research has shown that graphs are used for impression management purposes, i.e. they systematically provide a favorable impression of the company’s results. However, no prior study has investigated whether and how the demand for information at the country-level and firm-level influences the likelihood of impression management via graphs. The demand for information might, on the one hand, exert a ‘monitoring’ effect reducing the opportunity for self-serving, non-neutral, presentations. On the other hand, it creates more pressure on the preparer to provide a favorable communication of the company’s results. The study has tried to fill this gap, by conducting a longitudinal analysis on the KPI graphs in the annual reports of 200 large European companies.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

The major economic and social event that influenced our research was the global financial crisis. This event drove our curiosity in investigating the role of the demand for information on impression management during this period of economic and financial instability. The single company’s financial results were not necessarily affected by the crisis. However, its reporting choices were likely to be affected as companies, and their senior managers, were exposed to intense public scrutiny and reputational threats.

In what ways is your research innovative, and how do you think it will impact the field?

We found evidence that a higher demand for information, at both country and firm-levels, serves as an incentive, rather than as a curb, for a selective use of KPI graphs in annual reports. Companies are more likely to use KPI graphs selectively in those contexts where the pressure to perform is higher, i.e. in highly financially developed countries and/or when companies have a higher analyst coverage. Even when unable to affect the most sophisticated users, self-presentations can help preparers and companies to control the impressions of themselves, with self-enhancing and self-confirming messages. The study contributes to the literatures on impression management and visual language in corporate communication by showing that preparers change their communication strategies when the financial community (at both country and firm-levels) exerts a stronger pressure to perform. The study also offers practical implications. We suggest annual report readers to be aware that companies can use graphs selectively without providing a comparable, neutral account of their performance in those contexts where the pressure to perform is higher. We also suggest policymakers a clear guidance on graphs’ usage within corporate reporting.

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Dealing with Learning–Credibility Tension

[We’re pleased to welcome authors Alaric Bourgoin and Jean-François Harvey of HEC Montréal, Canada, who recently published the article, “Professional image under threat: Dealing with learning–credibility tension,” in Human Relations. Below they discuss the results and implications of their research.]

huma_71_2.coverHow does one learn and build credibility simultaneously? Today’s professionals often find themselves entering new organisations where they are expected to bring their knowledge to bear on shifting situations. Entering new settings generates uncertainty because knowledge is socially embedded and context-dependent, such that it may not be possible to simply transfer knowledge developed in a previous context and apply it to a new one. Despite this difficulty, professionals must project an image of competence to be regarded as experts, and preclude sceptical clients from withdrawing completely. Faced with an uncertain new setting, they may encounter a conflict between their professional image and their ability to fulfil their role. This challenge is faced by an increasing number of professionals and managers alike, who are no longer seeking linear careers and instead move in and out of complex projects on a regular basis.

To address this puzzle, Professors Alaric Bourgoin and Jean-François Harvey draw on data from 21 months of participant observation during consulting assignments, and interviews with 79 management consultants. They adopted an original method – auto-ethnography with an insider-outsider research team – insofar that Bourgoin worked as a consultant to collect first-hand data for almost two years, which was regularly discussed and analysed with Harvey. They gained an unparalleled access to the minutiae of the work practices and inner feelings of consultants repeatedly adjusting to new settings under high-pressure conditions from their clients.

The main finding of this research is the construct that Bourgoin and Harvey call “learning–credibility tension” – a discrepancy between a newcomer position that requires professionals to learn, and a role-based image that requires professionals to maintain their credibility as experts. The authors discovered that this tension is a salient and costly issue for professionals during organisational entry. Specifically, they find that consultants experience three threats to their professional image during interactions with clients: competency, acceptance, and productive threats. Whereas most recruits are given time for socialisation, and granted some trial-and-error leeway in the process, the high costs of consulting services ratchets up clients’ expectations with respect to practitioners’ capacity to solve complex problems, fit in the sociopolitical context of their firm, and create value for money within a few days through the assignment.

While consultants emphasise the pressures of learning–credibility tension, they also use three tactics to mitigate it: (1) crafting relevance, (2) crafting resonance and (3) crafting substance. Such tactics include back- and front-stage behaviour and allow professionals to keep face as experts while seeking the information they require to adjust to new settings. If performed successfully, the tactics allow consultants to reduce the anxiety associated with learning–credibility tension, and support their relationship with clients.

The study builds new theory in socialisation by bridging information needs and image concerns, revealing original tactics that are highly relevant to a wide variety of people. It also contributes to substantive debates on management consulting by relating insights from the sociology of professions to contemporary knowledge workers and overturning the critique of consultants as professionals of persuasion.

You can read  Professional image under threat: Dealing with learning–credibility tension from Human Relations free until the end of March by clicking here.

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One Strategy Does Not Fit All: A Look at Impression Management

26912109275_9b53648408_zImpression management describes the act of trying to control the first impression someone might have of an individual. It refers to shaping the perceptions others form about an individual’s behavior, motivation, morality, and other characteristics, like intelligence and future potential. Research on impression management has found significant differences between the impression management strategies used by women as compared to men. In fact, it has been revealed that women in Western context use less impression management strategies than men.

Some of the constructs closely related to impression management are self-monitoring, self-presentation and influence tactics (or impression management behaviors). There are two types of impression management strategies— soft impression management and hard impression management strategies. Hard impression management strategies include direct and aggressive behavior such as assertiveness, sanctions, upward appeal, blocking, self-promotion and intimidation. Soft impression management strategies include indirect and subtle behavior, such as ingratiation, coalition, exemplification and supplication. Combining certain behaviors can change the outcome of an individual’s impression management.Current Issue Cover

In identifying soft and hard impression management, researchers have been able to identify how different individuals from different backgrounds employ impression management. Indians avoid hard impression management strategies, in contrast with Dutch and Americans. Assertive and task-oriented behaviors were perceived as more effective by American and Swiss managers, and less effective by Chinese managers. As a result, it appears that hard impression management strategies are perceived as more effective by low power distance cultures as compared to high power distance cultures.

In addition to having a cultural impact, this comparison of impression management strategies also impacts gender. Indian women displaying authoritarian behaviors face perceptions of lesser effectiveness than their male counterparts. They may use charm, appearance, ingratiation and compliments as impression management strategies, which are soft impression management strategies. Women are perceived as more effective when displaying behaviors which are considered appropriate based on gender stereotypes. This may explain why Indian women tend to choose soft impression management strategies over hard impression management strategies.

This article shows that specific impression management strategies cannot be used with similar results across different contexts. Therefore, individuals need to be aware of the best impression management strategies specific to his or her situation.

The abstract for the article:

This article attempts to understand the impression management strategies used by women in Indian organizations. The extant research on gender differences in impression management, primarily conducted in Western cultures, has been inconclusive. This may be a result of attempting to generalize across cultures and/or the lack of research on moderating variables in the choice of impression management strategies by women. India provides an interesting context with high power distance culture, low social status of women as well as an emerging women’s movement.

Click here to read A Conceptual Framework for Understanding the Impression Management Strategies Used by Women in Indian Organizations for free from the South Asian Journal of Human Resources Management.

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*Image attributed to ITU Pictures (CC)

Narrative, drama and charismatic leadership

Abz Sharma and David Grant published “Narrative, drama and charismatic leadership: The case of Apple’s Steve Jobs” in the February 2011 issue of Leadership. To read the other articles in this issue, please follow this link.

The Abstract:

This article argues that a leader’s narrative and storytelling skills play a critical role in constructing their charismatic identity. In line with Goffman’s (1959) observations, we argue that these skills are effected through ‘stage management’: a segregation between back and front ‘performing regions’ that serves to minimise potential incursions, leaks, disruptions and faux pas that may undermine the leader’s performance. Further, we suggest that Burke’s (1966) observations in relation to the importance of scene setting offer important insights into the impact of leader storytelling and narrative on followers. We revise and extend Gardner and Avolio’s (1998) dramaturgical model of the charismatic relationship in order to reflect these observations, and go on to apply this model to an analysis of three public performances by a case-study leader – Steve Jobs, co-founder and CEO of Apple Inc.We examine Jobs’ performances as discursive texts, exploring the ways in which he uses them, through stage management, to practice narrative and storytelling and explore how, through these discursive activities, he is able to define himself and his world for his followers. In doing so, we empirically demonstrate and extend the utility of the dramaturgical metaphor to the study of charismatic leadership.

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