Benefits of Integrated Reporting Management Information and Decision MakingIntegrated Reporting improves the quality ofinformation acquired by management and shareholders, resulting in moreefficient and productive decisions being made. This results in improvedcollaboration between the board of directors, management and shareholders. Thisimprovement in collaboration is largely by virtue of reporting that revolvesaround a greater scope of performance, and is more affiliated.Likewise, management information systems experiencechange. This encompasses extended board reporting, changes in pay systems andchanges in budget and planning systems. This also brings about more informeddecision making.Change, in general, usually must come from the topdown. Once internal silos are broken down this becomes much more achievable.
Changing the information that is utilized to measure execution helps toencourage change. This allows companies who introduce Integrated Reporting toconsolidate what is relevant to be reported by the business and find it easierto enable and adapt to change. Understanding of ValueA vital benefit of Integrated Reporting is thatorganizations have a better understanding of value creation. A more expansiveperspective on how organisations create value consequently leads to changes inallocation of capital, strategy and management systems. Comprehending theconnections and associations between various parts of value creation can bedifficult. The ability of the business model to acclimate to transitions canaffect the organisations long term growth.Companies understand how non-financial performanceimpacts greatly on financial performance.
Numerous companies noted improved efforts to comprehend and measure theeffect of consumer loyalty and interests. This persuades companies to transformits management systems and strategies, and to look at things to a greaterextent from the long term. StakeholderRelations and Corporate ReputationIntegratedReporting has a substantial impact on external relations. More integratedthinking contributes to improved cohesion and efficiency in every aspect of thebusiness, particularly the reporting process. This is evident from companieschange in understanding of value creation. Organisations create value throughinterrelationships and exchanges with stakeholders. Integrated Reportingencourages organisations to develop and maintain new and improved ways ofworking with its stakeholders.Thisapproach also greatly reforms corporate reputation.
The most widely used factorto measure corporate responsibility is from a financial perspective. IntegratedReporting encourages companies to measure value from a non-financial perspective.However, measuring the organisation from a financial perspective is still ofutmost importance. Information provided to investors betters when companiesinduce Integrated Reporting because of these strengthening of relationships. Decisionmaking by investors will vastly improve as a result. Internal RelationsAswell as impacting on external stakeholder’s affiliation with the organisation,Integrated Reporting affects internal relations within the organisation.
Themore integrated approach breaks down internal silos and curtails duplication. Relationshipsbetween managers, board members and employees can be easily strained. Employeesmay feel that they are constantly being pressured in work and managers may feelthat employees are not working to the best of their ability. These stakeholdershave a better understanding of each other’s wants and needs with a moreintegrated approach.
Challengesof Integrated Reporting RelevanceOrganizationsfind it difficult to harmonize the obligations of various stakeholders.Bettering the materiality assurance process could help drive enhancements infulfilment, conciseness and unwavering quality.Remedies· Recognise who the fundamental user of the integrated report is