The Investment Association (IA), which represents institutional investors in the UK, and whose members own around a third of the UK’s blue-chip shares, has called for such large organisations to cease publishing quarterly reports. Well-known companies such as Legal and General, and Unilever have already done so – whether others follow suit remains to be seen, but the intervention deserves attention whether or not it has the desired effect.

The IA’s rationale is that quarterly reporting encourages a short-term mindset, decision-making that is hostage to short-term, unpredictable events, and a failure to invest for long-term success. Whether one subscribes to this or not, there is no question that the issue of reporting is a serious one, and one which deserves attention by the leaders of the UK’s biggest enterprises.

The figures for productivity and investment in UK companies are testament to the fact that corporate reporting, whether internal or external, is no longer doing its job – that of promoting and maintaining the performance of listed companies.

So, what could an alternative look like? Well, if business leaders were to be freed from the structures of the all-important 12-week target, then they may be able to work to a timescale more commensurate with the pace of operational change, which is seldom the matter of a few weeks. There would be benefits at other levels too, as the end of quarterly pressure could relieve the perceived need for dubious practices such as ‘sandbagging’, and the negative impact they can have on the management of the sales pipeline.

Businesses operate in an uncertain and rapidly changing world and in some industries, such as technology, 12 weeks can actually be long enough to see some very significant changes. Moreover, a globalised financial system means that multinationals must be more agile than ever before, as the impact of shocks can spread beyond their country of origin very quickly indeed.

To characterise ‘short-term’ or ‘long-term’ reporting as inherently the ‘right’ option is dangerously simplistic. In truth, large organisations today need a blend of short-term and long-term insight but, more important than that, they need the right insight.

The IA, of course are well aware of this, and it must be hoped that its call for the end of quarterly reporting does result in reappraisal of what reporting is for, and how companies can use it to respond to the challenges of the modern business world.

However, to make sure this happens, business leaders must make sure that not just they, but their whole management team, understands that management information must be focused on driving improved performance and decision-making, not just on keeping shareholders informed.

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