Christian Ulbrich: A defining purpose

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Christian-Ulbrich-2015-96Over recent years, a recurring question has been whether global corporates have truly learned from the Great Financial Crisis. The point behind the question is often that delivering shareholder value is not enough on its own and companies need to widen their focus to embrace all their stakeholders, especially their employees, but also communities and by helping to finance services and infrastructure through their taxes.

Some global companies have risen impressively to that challenge. They have defined their corporate purpose and they are even starting to see financial benefit as a result, clearly driven by much improved employee engagement. These companies take the longer-term view, they have become closely involved in local communities and their tax planning has become less aggressive.

Now that is only one side of the coin. Until very recently, many senior business leaders were increasingly reluctant to comment on political developments and stayed tightly focused on their immediate responsibilities. Stick to what you are paid for was a common theme. Maybe we now see that changing. If CEOs are asked to care about a wider range of stakeholders, they may also start requesting policy makers make a better job of doing the same. Rather than relocating their investments to a more business-friendly environment, CEOs may pressure governments to do their homework. Do we see any evidence of a seachange happening? Perhaps. Whereas in previous years senior managers often only quietly disagreed with some statements delivered by politicians, this year there seems to be a much higher willingness to openly express that discomfort.

Defining the purpose for business is extremely important. Defining the purpose of government is equally important. Complaints about high unemployment rates in many European countries will not create jobs, structural reforms will. Today the European Central Bank has taken the decision to buy Eurozone governments more time to clear up their backyards. Hopefully they will use it.

While the Eurozone seeks to rejuvenate its economies, there is also much talk here about the strong growth in the US. That, in combination with a solid 7% in China and a reinvigorated India should together help to fire up the global economy. General speaking, the benefits of lower oil prices will also outweigh the downsides. Companies around the world can help ensure this becomes sustainable long-term growth by broadening their horizons and redefining their purpose.

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