Corporate purpose set up to fail in most businesses without structural reform, report warns

There's a growing gap between what organisations say about their purpose and what established business structures allow them to do, according to a major new report published today by leading business management consultancy Clarasys.

The report, Purpose by Design: Ownership, Governance and the Future of Business, produced in collaboration with independent charity A Blueprint for Better Business, warns that purpose statements are “structurally set up to fail” in many organisations because ownership, governance and legal frameworks still overwhelmingly prioritise short‑term financial returns.

The report finds that many listed companies remain highly vulnerable to short‑term market sentiment and anti‑ESG backlash, in part because of who owns them. Almost 60% of all UK equity is now foreign‑owned, much of it held by large passive investment houses, leaving boards acutely sensitive to short‑term performance signals.

Clarasys CEO, Matt Cheung, told That's Business: “Many leaders we spoke to are deeply committed to purpose, but they're operating in systems that keep pulling them back to a very narrow definition of success. 

"Our research shows this isn’t about better storytelling or smarter KPIs, it’s about redesigning the underlying machinery of business. 

"The good news is that the levers for change are already here; from alternative ownership models to practical governance interventions that any board can start using today. Purpose by Design is about giving leaders a realistic roadmap to move from good intentions to structures that can withstand leadership changes and market pressures.”

The report is based on a substantial body of research and in-depth interviews with over 50 business leaders from organisations including John Lewis Partnership, Anglian Water, Ingka Group, and Jupiter Asset Management. 

It examines the UK’s legal landscape, including Section 172 of the Companies Act 2006, and explores options for reform, such as the proposed Better Business Act and the introduction of UK‑specific purpose‑led legal forms, building on benefit corporations and similar models internationally.

Five ownership models are analysed in the report; public companies, investor‑owned private firms, family/founder‑owned businesses, member and collective owned organisations, and foundation‑owned enterprises. The report finds that each model has different implications for purpose potential, and outlines practical governance interventions they can take. These interventions include redesigned incentives, enhanced board representation, clearer purpose‑led decision‑making frameworks, and strengthened accountability mechanisms.

https://eu1.hubs.ly/H0rw6gR0

Struggling with crippling rents? Good news! You have a retail champion!

Britain’s struggling High Street shops have been thrown a lifeline with a new way of reducing crippling rents.

A retail champion is saving companies around 50% a year in charges so they can carry on trading and landlords don’t have to board up stores.

Financial experts believe the shopping landscape could be obliterated as rising rent reviews and poor sales force shop-owners to hand back the keys.

But an organisation is rescuing firms from the brink by negotiating new rent deals that give hope for landlords and the shops that are vital to national recovery.

“Everyone knew there was a lot of pain out there on the High Street but up until last year there wasn’t much blood. Now it is starting to flow,” said David Abramson, Managing Director of Rent Reform Ltd.

“Up to half of all shop rents are overpriced because they are held in long-term leases with upward-only reviews which make no allowance for the challenging economic climate. Firms are coming out of five-year terms and finding their rents going up just at the time they need the most help.

“Landlords don’t want properties empty so it is a question of finding a reasonable path so that our High Streets can keep going. We need retail to thrive to drive the economic recovery.”

Rent Reform has been deluged with retail giants and smaller shopkeepers keen to lower their costs and carry on trading as more High Street shops are boarded up.

“There needs to be a national review of the lease structure,” he added.

“Landlords are out of touch with the financial climate if they fail to grasp the simple fact that there is no longer as much money in the kitty for rents as there used to be. Without realistic reviews of rent rates we will see increasing numbers of High Streets die."

Rent Reform has negotiated rent savings for High Street chains, La Tasca, Subway and Walmsleys as well as a string of small businesses.

“We save businesses in the short term between 40-60%. It might just be for a few years and the landlord doesn’t have to suffer long term but it gives struggling firms room to breathe.”

Many retailers are simply unaware they can renegotiate rental agreements through third party experts and so are losing thousands of pounds in unnecessary costs as a result, claimed Rent Reform.

High Street fortunes have been devastated by the recession with lingerie retailer La Senza, the Peacocks chain and nostalgia gift retailer Past Times the latest firms to bite the dust and 30,000 retail jobs are estimated to be under threat in 2012.

Simon Wilkinson, chief executive of the Oxford-based La Tasca restaurant chain, said Rent Reform had protected the future of some of his outlets.

Aroma oriental restaurants saved £300,000 from its rent roll with 25 per cent reductions across three of its six sites.

“These are tough times and they allowed me to keep them going,” said owner Colin Aroma. “I employ 200 plus people and without Rent Reform we would have probably had to shut three restaurants putting 60 to 70 people out of a job.”


www.rentreform.co.uk