New research suggests that businesses lose out on billions of pounds for one reason: they lack purpose. Fragmented shareholders and compensation contracts based on maximising profits in the short term, prevent companies from making more capital.
Organisations have become ownerless and have lost sight of the purpose of finance – a trend borne out by a financial system that often fails. In Britain and elsewhere, excessive and hidden costs, poorly designed institutions and ill-conceived regulation, hit people’s savings. And it’s not always easy for consumers to understand and access the best financial products for them.
Rediscovering the purpose of finance is essential to addressing the issues affecting organisations and consumers. Our faculty believe shareholder activism where stakeholders help clarify and support the company’s vision can lead to success. Their research also highlights a need to reform financial systems, by making fees for consumers completely transparent, revamping governance and simplifying regulation.