Section 172 Statement – How to get your organisation prepared
As of this year, companies are required to formally report on Section 172 Statement as a part of annual reporting.
Demonstrating that more than ever, there’s a clear demand for companies to align their overall strategies with interests of a diverse range of stakeholders.
It signifies a recognition of the various entities involved in creating a long lasting, successful business.
What you’ll learn:
- The requirements of the Section 172 Statement
- Who’s obligated to comply
- How organisations can go about pulling together the content
- Implementing changes to support the statement
Section 172 Statement
A director of a company must act in the way he considers would be most likely to promote the benefit of its members as a whole, and in doing so have regard to:
- The likely consequences of any decision in the long term
- The interests of the company’s employees
- The need to foster the company’s business relationships with suppliers, customers and others
- The impact of the company’s operations on the community and the environment,
- The desirability of the company maintaining a reputation for high standards of business conduct, and
- The need to act fairly as between members of the company
Companies will now need to report on how the directors have carried out these duties from the periods beginning on or after 1 January 2019.
Who is required to comply?
Any company that is defined as large under the 2006 Act that meet two of the following criteria is required to publicly report on the statement.
- £36 million or more turnover
- £18m or more balance sheet assets
- 250 UK employees
Small and medium sized companies that are not currently required to make their reports publicly available will be required to make their Section 172 Statement available as soon as reasonably practicable.
A simple framework to address matters from the top down
The statement commands a general focus on company culture and sustainability of business strategies and also a level of understanding that there are multiple stakeholders across the business.
Nailing your mission, vision and purpose
A great way to demonstrate director commitment across all the points is to nail down your company mission, vision and purpose and to use that as the guiding principle for your business strategy.
With your mission you want to highlight a specific goal you want to achieve.
This can be a simple target you might want to reach like, ‘1 million app downloads by 2025’.
For smaller organisations this should be a goal that’s achievable in 3-5 years.
Larger organisations should look to create goals for a 10 year+ time frame.
This should filter down to quarterly goals to demonstrate how you’re making decisions in the short term that impact your long term goals.
Your vision should be what you want the world to ultimately look as a result of your business efforts.
The Ikea vision is a really simple example; ‘Our vision is to create a better every-day life for many people’.
Deciding on your vision is a great way to demonstrate on point 4.
It relates your business to what you want to achieve for the wider community and environment.
A purpose is what you’re doing on a daily basis and helps directors to clearly demonstrate point 5.
The purpose is how you drive new products and business decisions.
For example, a purpose could be to develop all products and updates with the sole purpose of improving the financial lives of employees.
This may seem an obvious step but documenting it helps embed it in the company culture.
It can help to demonstrate how you’re maintaining a level high of standards throughout all that you do.
Developing the interests of your employees
With Brexit, potential changes visa requirements and the workforce cliff, the size of the modern workforce is shrinking.
Investing in your workforce is going to require a lot more focus, if not for the report but also for future success of businesses.
Give your staff more flexible working
Employees’ needs and wants are changing and to keep up with that employers need to offer more workplace flexibility. An area where you can have maximum impact is with employee pay.
The outdated system of monthly pay hasn’t changed for decades and causes millions a year to turn to payday lenders.
Employers are best placed to disrupt this cycle and have a real positive impact.
Wagestream provides employers with a way to do this that has no impact on payroll or internal systems.
Read more about the hidden costs of the monthly pay cycle here.
Make initiatives applicable and available to all
It’s simple maths really. The more people in your organisation that can utilise the initiatives you implement, the more you are going to get out of them.
A cycle to work scheme is worth having, however it’s only applicable to a small set of staff that are in cycling distance of the office.
To compliment these types of employee benefits it’s good to have something in place that is consistently available to the entire workforce.
For information on how to build an employee engagement strategy that works, click here.
Wagestream is available 100% of the time to 100% of your employees.
To find out how Wagestream can help you fulfil your Section 172 Statement, get in touch.