New Year: New Legal Purpose Requirements

From 2019, many of the world's largest companies will have to report on business purpose and impact alongside the usual financial statements due to the new UK Corporate Governance Code. These reports will no doubt then be evaluated by stakeholders looking at things like your compliance with the Social Value Act and your tenders, or picked up by your ultimate consumers – the public – so go both to your compliance and your competitive position in the market. The UK is not alone in this regard and with many lenders and financiers also taking Environmental, Social and Governance (ESG) factors into account in pricing debt, a clearly articulated purpose and related metrics directly impact your bottom line.

So, whether you think you're ahead of the pack and want to stay that way, or you want to catch up and overtake the leaders – the team at HL BiG have come up with a few suggestions for how to drive performance and ensure that you are doing good business, the right way in 2019.

1.  Start the New Year with Purpose

What is your purpose? Is it authentic? Here you aren't asking "what do I sell or do", but what the ultimate goal of your business is.

If you can't answer these two questions then you should consider why you aren't taking advantage of the substantial increase to your financial performance that an authentic purpose is shown to bring.

2.  Reset your baseline

With a New Year comes a fresh start. Why continue trying to incrementally optimise when you can start with a clean sheet of paper and make step changes in the efficiency of your business?

And don't restrict yourself to just financial budgets – apply the same principles of "zero based budgeting" to organisational and other structures and challenge your business to be more agile.

3.   Look to the future

If everything is measured against monthly, quarterly, or even annual financial targets, what incentive is there to deliver long term value for the business and its stakeholders?

Transform the way your business and your people are incentivised. In doing so, consider including long term metrics which take into account social impact as well as financial performance, and start driving sustainable returns and delivering against your Purpose.

For further examples of how and where your business can improve and drive your long-term profits, why not spend 5 minutes on the Hogan Lovells Total Business Integrity Healthcheck app. Ten questions that could fundamentally change your business for the better.

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