compress file / images in Microsoft word and powerpoint

On the older version of word and power point, compressing images was very easy: right clik, compress images, and done. I don't have this option on my 2008 version. I am finding it very frustrating to work with very large image files. I write a lot of reports with photos using word (maybe not the best sofware for that, but I am old school, if you have a better suggestion for a better sofware, please feel free to suggest...), same with powerpoint, a lot of photos. With word, I am currently editing the photos on photoshop first before using them on a word document, a real pain. On powerpoint, it is more complicated and my presentions are enormous. Would you have a suggestion on how to produce lower resolution / smaller file on both word and powerpoint, quick and easy solution if poss? Is the solution to upgrade to office 2011 or is it more money wasted to Microsoft?

Many thanks for your help

Yannick