importance of business correspondence essay

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Business Correspondence: Meaning and Importance

Written communication is essential for conveying information to key stakeholders in your business. Business writing can involve the correspondence between the business and the client, different businesses, and within the business.

Every day, businesses use some form of written communication to pass messages to the appropriate stakeholders.

The challenge with business writing is that many business owners, executives, and even employees do not know how to write a clear business letter that effectively communicates their message.

Clear business writing is essential for eliminating misunderstandings. That said, business writing is no easy task, especially if you are a non-native English speaker.

This article teaches you the essentials of effective business correspondence, including helpful tips for clear, error-free, and professional business correspondence.

Let’s get started.

Meaning of Business Correspondence

Business correspondence is any form of communication in the business world that conveys a message between or within an organization.

A business person writes or receives letters during his day-to-day activities in his business place. It can be complaint letters, inquiry letters, job application letters, formal business letters, or other written communication letters.

Business correspondence covers all forms of written communication that emanate from business relationships between business partners or via internal communication within the organization.

Essentially, business correspondence is usually issued in the form of letters. It presents the individual in any business communication the unique opportunity to express themselves and seek clarity on issues bothering them about the organization.

In businesses, written communication serves as an effective communication medium. The strength of this medium is that information gets exchanged without affecting the professional relationships between and within organizations.

Importance of Business Correspondence

Business correspondence offers numerous benefits to your business communication, especially the ease of reaching and communicating within and outside your organization's structure.

Face-to-face communication is not always possible, and this is where your business correspondence comes in to aid effectual communication.

1. Helps in Maintaining a Proper Relationship

Sometimes it would seem difficult for your business or organization to get in touch with a particular person or another organization when needed. If this is often the case, it might cost your business or organization dearly.

In this case, a business correspondence would suffice as the best measure to salvage such situations as it helps to maintain a proper relationship among all relevant parties.

Business correspondence is an effective tool for strengthening your business. By improving the internal communication of your business, your business communication becomes more apparent and precise.

2. Serves as Evidence

Business correspondence is a way of helping your business keep records of all its activities. These written records can serve as evidence when needed, just like any other written form of communication.

3. Creates and Maintains Goodwill

A business correspondence assists in creating and maintaining goodwill and proper relationships between your business and its customers.

No matter how negative it may be, business correspondence in inquiry letters, complaint letters, suggestions, or feedback is used to help your organization grow and maintain goodwill.

The idea is to see above all the negatives and look for specific areas of complaints that your organization needs to work on to offer better products and services to your customers.

4. Cheap and Convenient

Business correspondence is usually very cheap and convenient to use as a mode of communication. It saves you valuable resources in terms of time and money that other modes of communication do not.

This mode of communication is very convenient for businesses to incorporate as it requires no new structure to be built before being used.

5. Formal Communication

A business correspondence serves as a formal communication between two parties, and its language is that of a formal and logical one.

With a business correspondence, doubts and issues on the minds of persons involved in your business are subdued as the language conveyed makes your business more acceptable to others.

6. Helps in the Expansion of Your Business

Business correspondence can help your organization achieve its organizational goals as it affords no room for wastage of resources, allowing your business to expand faster.

Types of Business Correspondence

There are many types of business correspondence available for you to choose from as they all have their essential unique functions depending on what works best for your organization.

Here are the popular types of business correspondence.

1. Internal Correspondence

Internal correspondence refers to the flow of information between individuals, departments, branches, and units within the same company.

This business correspondence type can either be formal as promotion letters or memorandum, printed on paper, or informal as an instruction from a top stakeholder to a lower ranking stakeholder, usually issued through emails.

2. External Correspondence

External correspondence is formal communication between two organizations or an organization and its clients. Any correspondence outside an organization falls under this business correspondence type.

This business correspondence type is usually issued to customers and suppliers, government departments, existing and prospective clients, and other organizations outside your own.

3. Routine Correspondence

Routine correspondence is made based on a predetermined routine and does not deviate from this set routine throughout its implementation.

Usually, business correspondence for inquiries, orders, replies, invitations, acknowledgments, and appointment letters are typical examples of routine correspondence.

This business correspondence type is identified by how its correspondence occurs routinely in a well-structured manner.

4. Sales Correspondence

Sales correspondence is a type of correspondence that pertains to the sales operations of your business. It is not just specific to just the sales of a product or service as it stretches out to encompass many other activities.

Delivery letters, marketing letters, invoices, discount letters, and statements of accounts are some famous examples of sales correspondence.

5. Personalized Correspondence

Among all the types of business correspondence, personalized correspondence is the only type based on physical and emotional factors that provide a sense of attachment and belonging to both parties at each end of the correspondence.

Letters of request, recommendation, gratitude and congratulation, letter of introduction, and granting and refusing terms are all notable examples of this type of business correspondence.

6. Circulars

When your business wants to convey an ordinary matter or main idea to a large audience, circulars are your go-to business correspondence, among other types of business correspondence.

Notice of tenders, change of contact information, change of address, the opening of a new branch, or launching of a new product or service all falls under scenarios where circulars are usually issued.

Writing in English: 5 Simple Tips for Clear, Professional Business Correspondence

When creating business correspondence, there are some things you need to be mindful of to give your business correspondence an authentic and professional look.

Here are five simple tips for precise and professional business correspondence.

1. Consider the Type of Business Correspondence You Intend to Write

You need to go back and consider the peculiarity of the situation at your organization and reach a conclusion on whether a note, an email, a memo, or a letter would best pass across the message you want to share to the receiver of your business correspondent.

A note is usually written in a hurry when the letter's receiver urgently needs the information in writing. Notes allow for abbreviations and informal punctuations as it is written in a relaxed and friendly manner.

Emails are a great medium for business communication as they are swift and can be easily sent or forwarded to multiple people at a time.

When you are confident that the reader will see the message in time, an email is better suited to convey information than a note, as there is no guarantee when the recipient will get the news.

Memos are written to instruct employees and make announcements on new policies that need to be adhered to by all employees.

Although memos are sent out on paper or as attachments in emails, they differ. In emails, messages are sent to a large audience depending on the closeness of employees in the company.

Business letters are conveyed across different organizations and tend to be formal communication in a positive tone as they are permanently written records.

If you want to respond to a note, email, or letter, you must regard the subject line in the same manner and tone of the message. A business letter can be a cover letter for business materials or important documents.

2. Be Polite

Being polite borders down on choosing the right tone and replying similarly . You need to have the reader in mind when writing your business correspondence.

Generally, the relationship you share with the recipient would determine the tone you would use in replying to their actual message. If you are unsure what tone to use, opt for a neutral tone, as being too formal is better than not being less formal.

Notes are addressed to just one person, and since they are short and detailed, you can start your message with just the name of the person, followed by a brief reason why you are writing the note.

Emails, business letters, and memos are more formal documents and require a subject, be it the recipient's e-mail address or a good subject line.

If you do not have a formal relationship with the recipient, you can either use ‘Dear Mr or Dear Sir’ to address the recipient if he is a man, and for memos, ‘Dear All’ would do the trick.

3. Plan and Stick to It

Writing does not afford you the luxury of time during oral communication, which is why you need a writing plan to save your reader's time.

In the main body of your business correspondence, separate your main ideas into distinct paragraphs.

The first paragraph of your business correspondence should detail why you are issuing the post. It is essential to ensure the recipient knows what awaits them in the mail.

In the closing paragraph, you round up your message and thank the recipient for their time. If there is a need for a response, ask the recipient to do so within the shortest possible time.

4. End on a Positive Note

Even if your message is a complaint, you must keep it formal and polite. Pissing your reader off is not the best way of getting a response from them, as you are likely to be ignored.

If your message is for someone you have a prior relationship with that you addressed at the start of your message by their name, kind regards, respectfully yours and best wishes are suitable end notations for your correspondence.

For formal business correspondence from the onset, yours sincerely or yours faithfully followed by your name and position, and your signature block is a positive way of ending your post.

After the closing paragraph, type your name, job title, company name, and signature.

5. Cross Check for Mistakes and Errors

After writing your business correspondence, you need to proofread and be on the lookout for spelling, vocabulary, grammar, and punctuation errors to ensure your post is free from all grammatical blunders.

Using a spell-checking tool to cross-check all your spellings is particularly helpful as spelling mistakes can discredit you in the eyes of the reader.

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How to Improve Your Business Writing

• Carolyn O’Hara

Cut the fat.

• Carolyn O’Hara is a writer and editor based in New York City. She’s worked at The Week, PBS NewsHour, and Foreign Policy. carolynohara1

Partner Center

Business Writing

What this handout is about.

This handout explains principles in business writing that apply to many different situations, from applying for a job to communicating professionally within business relationships. While the examples that are discussed specifically are the application letter and cover letter, this handout also highlights strategies for effective business writing in general.

What is business writing?

Business writing refers to professional communication including genres such as policy recommendations, advertisements, press releases, application letters, emails, and memos. Because business writing can take many forms, business writers often consider their purpose, audience, and relationship dynamics to help them make effective stylistic choices. While norms vary depending on the rhetorical situation of the writer, business writers and audiences tend to value writing that communicates effectively, efficiently, and succinctly.

If you have been assigned a genre of business writing for a class, it may help to think about the strategies business writers employ to both gather and produce knowledge. A business communicator or writer may use the following forms of evidence: statistics, exploration of past trends, examples, analogy, comparison, assessment of risk or consequences, or citation of authoritative figures or sources. Your knowledge of and relationship to your audience will help you choose the types of evidence most appropriate to your situation.

Who is your audience?

To communicate effectively, it is critical to consider your audience, their needs, and how you can address all members of your audience effectively. As you prepare to write, think about the following questions:

• What are your audience’s priorities and expectations?
• What does your audience need to learn from your document?
• How will you grasp the attention of readers when you are competing for their attention?
• How will you help your reader move through your document efficiently? When is it effective to use bulleted lists, visuals, boldface, and section headers to guide your reader’s attention?
• What does your audience most need to know?
• What is your audience expecting? Is your goal to satisfy their expectations, or do you want to surprise them with a new idea?
• How will you communicate about setbacks? When is it appropriate to spin bad information with a positive outlook? How will stakeholders, customers, or employees respond to bad news?
• In general, how can you tailor the organization and style of your writing to address your audience’s considerations and needs?

When answering the last question, don’t overlook the following considerations:

Title. Is it appropriate to address your audience by their first name, or is a salutation needed? Are you addressing someone who prefers to be addressed by a formal title such as Dr. or Professor? If you are writing about a third party, do you know what title and pronouns to use? When the name of the person you’re writing to is unknown, then it is customary to address your letter “To Whom It May Concern.” But this may be impolite if the person’s name is known or easily discovered. You can find more information on titles, names, and pronouns in our handout on Gender-Inclusive Language .

Language . If you’re writing in English, ask yourself: Is English the first language of all your audience members? Are you using idioms or other expressions that might not be clear to someone with a different background in English? For example, are you using expressions that require U.S.-specific cultural knowledge?

Culture . Does your audience have different customs and cultural norms? How might these customs and norms impact the way they receive your message?

Once you understand your purpose and your audience, you can begin to consider more specific elements, like organization and style.

What is your purpose?

To get a better sense of how the purpose of your writing will impact your style, it can be useful to look at existing messages and documents from the organization with the following questions in mind:

• What type of document is it (e.g. email, cover letter, social media post, memo, etc.)?
• What is the general length of the document?
• How is the document organized?
• How long are the paragraphs or sections?

How is business writing organized?

A common organizational pattern used across genres in business writing is OABC: Opening, Agenda, Body, and Closing. While the exact content of your opening, agenda, body, and closing may change depending on your context, here is the overall purpose of each component of the OABC pattern:

• Opening: This section introduces the reader to the purpose of your document or the subject matter you’ll be discussing. It lets them know why you are communicating with them and why the information is important to your reader.
• Agenda: This section lets the reader know, more or less, what to expect from the rest of the message. You can think of it like a roadmap for your document.
• Body: This section is where you make your main points and communicate your overall message to the reader. This section is often the longest part of a business document.
• Closing: Here, you reiterate the main points for the reader and include any follow-up actions or recommendations as necessary. In most cases, you may request a meeting to discuss your ideas further.

What style considerations are common in business writing?

Business writers tend to prioritize clear and concise communication. When writing in business, carefully considering the following style elements, along with your purpose and audience, can help you communicate more effectively:

Active voice. One skill in business writing is how to tactfully take ownership or distribute blame for certain actions. Active voice refers to a sentence structure that places the actor of the sentence as its grammatical subject. In general, active voice comes across as clearer, more direct, and more concise than passive voice, which are all elements of good business writing. However, the passive voice can be a useful tool in legally-sensitive writing, because the passive voice can convey what has occurred without naming names.

Jargon. Generally, your audience will prefer plain, straightforward language over jargon, because it allows them to read your writing quickly without misunderstandings. However, you may encounter what looks like jargon. Ask yourself if this language may be functioning as shorthand or whether it’s helping establish expectations or norms in business relationships. Understanding your audience and why they may choose to either use or avoid jargon will help you determine what is most appropriate for your own writing.

Tone. While business writing should be clear and concise, “concise” does not necessarily mean “blunt.” As you write, think about how your relationship to the reader and about how your audience may interpret your tone. Consider the following examples:

Nobody liked your project idea, so we are not going to give you any funding. After carefully reviewing this proposal, we have decided to prioritize other projects this quarter.

While the first example may be more direct, you will likely notice that the second sentence is more diplomatic and respectful than the first version, which is unnecessarily harsh and likely to provoke a negative reaction.

If you are wondering how your audience will respond to your writing, it may also be helpful to have a disinterested reader provide you with their impression of your message and tone after reading the document. What is the take-home message? Does any language stand out as surprising, confusing, or inappropriate? Where is the writing more or less persuasive? If you would like more ideas, see our handout on getting feedback .

There are many circumstances in which business writing is your opportunity to make a first impression, such as in a cover letter. In these scenarios, attention detail is especially important. A useful strategy for revising a piece of business writing is to use the acronym CLOUD: Coherence, Length, Organization, Unity, and Development. Contemplating each of these elements can help you to think about how each section communicates your ideas to your audience and how the sections work together to emphasize the most important parts of your message.

Going through the CLOUD acronym, you can ask yourself questions like:

• How coherent is each individual component of your document?
• Does each component follow length guidelines (if provided) or otherwise convey your message concisely? Our handout on conciseness gives 7 common writing patterns that make writing less concise that you may want to keep in mind when writing for business.
• Is the information clearly organized ?
• How unified is the message conveyed by all of the components taken together?
• Are your ideas fully- developed , or might your reader find themselves with any important questions?

As you answer these questions and start revising, revisiting your purpose, audience, style, and structure can help you address the concerns you’ve identified through CLOUD. Once you’ve considered these elements, soliciting feedback from another person can help you ensure your draft is clear and your ideas are fully-developed . Proofreading can help you identify errors and assess the tone of your document, while reading your draft aloud lets you hear your words and estimate your own tone.

Examples of business writing

Now that you’re ready to start writing, you may want to see some examples of business writing to guide your drafting process. Below, you can learn more about and see examples of two business writing contexts: cover letters for applications and cover letters for sending information. For more examples, explore the University Career Services’ Resumes and Letters portal .

Cover letters for applications

Maybe you have been asked to write an application cover letter for a job or a scholarship. This type of cover letter is used to introduce yourself and explain why you are qualified for a given opportunity, and your objective is to catch the reader’s attention and convince them that you are a qualified candidate for the job. Although this type of letter has some unique considerations and conventions, it still follows the OABC organization pattern and is generally 3-4 paragraphs in length.

• Opening: In the opening section of your letter, indicate your reason for writing. This generally includes mentioning the job title (if applicable) and how you heard about the position. Be specific about how you learned of the job.
• Agenda: In a cover letter, your agenda section sets the stage for a discussion of your qualifications by first summarizing your interest in the position, company, or organization. What sets you apart from your competitors? Why are you interested in working in this particular position or company? This section may be combined with the first paragraph.
• Body: This is where you highlight your qualifications for the job including your work experience, activities that show your leadership skills, and your educational background. If you are applying for a specific job, include any information pertinent to the position that is not included in your resume. You might also identify other ways you are a good fit for the company or position, such as specialized skills you have acquired. Illustrate how the experiences and skills from your resume qualify you for the job rather than merely repeating information as it is presented in your resume.
• Closing: Now that you have demonstrated your interest and fit to the reader, it is time to request an interview and, if necessary, refer them to your resume. State how you can be reached and include your contact information for follow-up. Be sure to close the letter by thanking the reader for their time and consideration before typing and printing your salutation and name.

Two sample letters of application are presented below. The first letter (Sample #1) is by a recent college graduate responding to a local newspaper article about the company’s plan to build a new computer center. The writer is not applying for a specific job opening but describes the position he seeks. The second letter (Sample #2) is from a college senior who does not specify where she learned of the opening because she is uncertain whether a position is available.

6123 Farrington Road Apt. B11 Chapel Hill, NC 27514

January 11, 2020

Taylor, Inc. 694 Rockstar Lane Durham, NC 27708

Dear Human Resources Director:

I just read an article in the News and Observer about Taylor’s new computer center just north of Durham. I would like to apply for a position as an entry-level programmer at the center.

I understand that Taylor produces both in-house and customer documentation. My technical writing skills, as described in the enclosed resume, are well suited to your company. I am a recent graduate of DeVry Institute of Technology in Atlanta with an Associate’s Degree in Computer Science. In addition to having taken a broad range of courses, I served as a computer consultant at the college’s computer center where I helped train users to work with new systems.

I will be happy to meet with you at your convenience and discuss how my education and experience match your needs. You can reach me at (919) 233-1552 or at [email protected] . Thank you for your time and consideration, and I look forward to hearing from you.

Raymond Krock

6123 Farrington Road Apt. G11 Chapel Hill, NC 27514

Dear Ms. LaMonica Jones:

I am seeking a position in your engineering department where I may use my training in computer sciences to solve Taylor’s engineering problems. I would like to be a part of the department that developed the Internet Selection System but am unsure whether you have a current opening.

I expect to receive a Bachelor of Science degree in Engineering from North Carolina State University in May and by that time will have completed the Computer Systems Engineering Program. Since September 2019 I have been participating, through the University, in the Professional Training Program at Computer Systems International in Raleigh. In the program I was assigned to several staff sections as an apprentice. Most recently, I have been a programmer trainee in the Engineering Department and have gained a great deal of experience in computer applications. Details of the academic courses I have taken are included in the enclosed resume.

If there is a position open at Taylor Inc., please let me know whom I should contact for further information. I look forward to hearing from you soon. I may be reached at my office (919-866-4000, ext. 232) or via email ( [email protected] ). Thank you for your time, and I look forward to hearing from you.

Rebecca Brock

Cover letters for sending information

Some cover letters simply provide a record of the transmittal of information—say, sending your resume to a recruiter or submitting your project for a class—and may even take the form of an email. Although they are short, to-the-point, and often only one or two brief paragraphs in length, these messages still follow the basic guidelines of business writing by using the OABC organization pattern in a more condensed format:

• Opening: Briefly explain what you are sending and why.
• Agenda: In an optional second paragraph, you might include a summary of the information you are sending as an agenda for your reader. A letter accompanying a proposal, for example, might point out sections in the proposal that might be of particular interest to the reader.
• Body: You could then go on to present a key point or two explaining why your firm is the best one for the job.
• Closing: You might end your letter with acknowledgements, offer additional assistance, or express the hope that the material will fulfill its purpose.

The following are examples of these kinds of cover letters. The first letter (Sample #1) is brief and to the point. The second letter (Sample #2) is slightly more detailed because it touches on the manner in which the information was gathered.

Your Company Logo and Contact Information

Brian Eno, Chief Engineer Carolina Chemical Products 3434 Pond View Lane Durham, NC 27708

Dear Mr. Eno:

Enclosed is the final report, which we send with Eastern’s Permission, on our installment of pollution control equipment at Eastern Chemical Company,. Please call me at (919) 962-7710 or email me at the address below if I can answer any questions.

Nora Cassidy Technical Services Manager [email protected]

Enclosure: Report

Brian Eno, Chief Engineer Ecology Systems, Inc. 8458 Obstructed View Lane Durham, NC 27708

Enclosed is the report estimating our power consumption for the year as requested by John Brenan, Vice President, on September 4.

The report is the result of several meetings with Jamie Anson, Manager of Plant Operations, and her staff and an extensive survey of all our employees. The survey was delayed by the transfer of key staff in Building A. We believe, however, that the report will provide the information you need to furnish us with a cost estimate for the installation of your Mark II Energy Saving System.

We would like to thank Billy Budd of ESI for his assistance in preparing the survey. If you need more information, please let me know.

Sincerely, Nora Cassidy New Projects Office [email protected]

Works consulted

We consulted these works while writing this handout. This is not a comprehensive list of resources on the handout’s topic, and we encourage you to do your own research to find additional publications. Please do not use this list as a model for the format of your own reference list, as it may not match the citation style you are using. For guidance on formatting citations, please see the UNC Libraries citation tutorial . We revise these tips periodically and welcome feedback.

Baker, William H., and Matthew J. Baker. 2015. Writing & Speaking for Business , 4th ed. Provo, UT: Brigham Young University Academic Publishing.

Covey, Stephen. 2002. Style Guide for Business and Technical Writing , 5th ed. Upper Saddle River, NJ: Franklin Covey.

Locker, Kitty, and Donna Kienzer. 2012. Business and Administrative Communication , 10th ed. Boston: McGraw-Hill.

O’Hara, Carolyn. 2014. “How to Improve Your Business Writing.” Harvard Business Review , 20 Nov. 2014. https://hbr.org/2014/11/how-to-improve-your-business-writing .

United States Government. 2011. “Federal Plain Language Guideline.” Plain Language, March 2011. https://www.plainlanguage.gov/guidelines/ .

University of North Carolina Writing Program. 2019. The Tar Heel Writing Guide , rev. ed. Chapel Hill, NC: UNC Writing Program.

You may reproduce it for non-commercial use if you use the entire handout and attribute the source: The Writing Center, University of North Carolina at Chapel Hill

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Business Writing

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What is Business Writing?

Business writing is a type of writing that is used in a professional setting. It is a purposeful piece of writing that conveys relevant information to the reader in a clear, concise, and effective manner. It includes client proposals, reports, memos, emails , and notices. Proficiency in business writing is a critical aspect of effective communication in the workplace.

• Business writing is a purposeful piece of writing that conveys relevant information to the reader in a clear, concise, and effective manner.
• It can be categorized into four types: instructional, informational, persuasive, and transactional.
• Clarity of thought, conciseness, correct grammar and sentence structure, and simple language characterize effective business writing.

Types of Business Writing

The broad field of business writing can be distilled into four categories based on their objective, such as:

1. Instructional

The instructional business writing type is directional and aims to guide the reader through the steps of completing a task. A user manual falls aptly under the instructional category, as well as a memo issued to all employees outlining the method of completing a certain task in the future.

2. Informational

Informational business writing pertains to recording business information accurately and consistently. It comprises documents essential to the core functions of the business for tracking growth, outlining plans, and complying with legal obligations. For example, the financial statements of a company, minutes of the meeting , and perhaps the most important, report writing.

3. Persuasive

The goal of persuasive writing is to impress the reader and influence their decision. It conveys relevant information to convince them that a specific product, service, company, or relationship offers the best value. Such a type of writing is generally associated with marketing and sales. It includes proposals, bulk sales emails, and press releases.

4. Transactional

Day-to-day communication at the workplace falls under the transactional business writing category. The bulk of such communication is by email, but also includes official letters, forms, and invoices .

Principles of Good Business Writing

1. clarity of purpose.

Before beginning a business document, memo, or email, one should ponder two primary questions:

• Who is the reader?
• What do I want to convey to the reader through my writing?

Clarity of purpose gives a direction to the writing and develops its tone, structure, and flow.

2. Clarity of thought

Thinking while, rather than before writing, makes the writing less structured, meandering, and repetitive. Business writing requires the skill to reduce long, rambling sentences into concise, clear ones. One needs to extract what is significant to write clearly.

3. Convey accurate and relevant information

The primary goal of business writing is to convey valuable information. Inaccurate or irrelevant content affects the purpose of the document. For effective business writing, information must be value-additive and complete.

4. Avoid jargon

A simple and uncluttered writing style goes a long way in communicating the message to the reader. Grandiose writing full of industry-specific buzzwords and acronyms should be avoided to the maximum possible extent. Otherwise, the reader may be unable to comprehend the document or lose interest in it.

5. Read and revise

Reading the passages out loud after completion can reveal flaws and gaps in the arguments. It is recommended to welcome constructive feedback from colleagues and revise the document for improvement.

6. Practice is the key

Proficiency in business writing can be attained through regular practice. Paying attention to the vocabulary, sentence structure, and style of writing while reading can help to develop the same instinct while penning one’s thoughts down.

7. Be direct

Presenting the crux of the passage in the first 150 words is a good idea when it comes to business writing. It saves the reader time and sharpens the argument.

8. Avoid verbosity

If the meaning can be conveyed in three words, it should not be stretched to five. Verbosity works against making the writing engaging to the reader. For example, instead of writing “the article uses more words than are needed,” write “the article is verbose.”

9. Correct grammar and sentence structure

While a grammatical error may come across as unprofessional, good grammar portrays both attention to detail and skill – traits that are highly valued in business.

Business writing evolves with time, so does grammar and conventions. For example, emoticons , when used judiciously, are gaining acceptance in business writing. A good writer needs to stay updated with the conventions to hone their skill.

10. Easy to scan

Business executives value a document that can convey its message in a cursory glance. Business documents can be enhanced through the use of numbered or bulleted lists, clear headings, concise paragraphs, and judicious use of bold formatting to highlight the keywords.

More Resources

CFI now offers the Business Essentials Bundle with courses on Microsoft Excel, Word, and PowerPoint, as well as business communication, data visualization, and an understanding of corporate strategy. To keep learning, we suggest these resources:

• Business Letter Format
• Internship Cover Letter
• Thank You After Interview Email
• Resignation Letter
• See all career resources
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Business Correspondence for Students: How to Make It on Your First Job

Transitioning from the academic world to the professional environment is a significant step for any student. Among the many new skills to master, effective business correspondence stands out as particularly crucial. This form of communication is the backbone of professional interaction, affecting everything from daily tasks to career progression. As a bridge between the casual tone of college life and the formal world of work, understanding the nuances of business correspondence can be daunting. This article aims to guide students and new professionals through the essentials of effective business communication, helping them to make a positive impact in their first job and setting the foundation for successful career development.

Business Correspondence 101

Business correspondence refers to any written or digital communication within a professional setting. This can range from emails and memos to reports and letters. In the workplace, these communications are not just about sharing information; they are a reflection of your professionalism, attention to detail, and understanding of business etiquette.

The significance of business correspondence lies in its ability to convey clear, concise, and relevant information in a professional manner. It serves various purposes, from coordinating efforts and sharing updates to making requests or providing feedback. Unlike the academic papers you might have worked with an essay writer service on, business documents require a more direct, structured, and formal approach. Understanding the different types of business correspondence and their appropriate uses is essential for effective communication in the workplace.

Email Etiquette

Email is the cornerstone of modern business communication. It’s crucial to master the art of professional email writing, as it often forms the first impression you make on colleagues, clients, and superiors. A well-crafted email should start with a clear and informative subject line, giving the recipient a precise idea of the email’s content. The greeting should be professional, using either a formal salutation or a respectful address based on your relationship with the recipient.

The body of the email should be concise and to the point, clearly stating its purpose without unnecessary details. Use professional language and tone, avoiding slang, emojis, or overly casual phrases. Just as an essay writer service focuses on clarity and coherence, your emails should be structured for easy reading and understanding.

Always proofread your emails before sending them to avoid typos and grammatical errors, which can detract from the professionalism of your message. Finally, close with a polite sign-off and a professional email signature that includes your contact information and job title.

Writing Memos and Reports

Memos and reports are formal methods of communication no matter what kind of organization you’re working for. A memo, short for memorandum, is typically used for internal communication and is less formal than a report. It is concise and to the point and used for informing staff of policies, procedures, or other internal matters. The structure of a memo includes a clear heading, an introduction, the main message, and a conclusion or call to action.

Report writing, on the other hand, is more detailed and often used for external communication. It involves collecting, analyzing, and presenting data in a structured format. Reports require a clear organization with an introduction, body, conclusion, and sometimes an executive summary. The language should be formal and objective, focusing on clarity and precision. Presenting data effectively, such as through charts or graphs, can enhance the report’s readability and impact. 

In both cases, understanding the audience is key. Tailoring the content, tone, and complexity to suit the audience’s needs and expectations ensures that your message is both effective and well-received.

Effective Communication in Meetings

Meetings are a staple in the professional world, and effective communication during these gatherings is essential. Preparation is key; know the meeting’s agenda and your role in it. If you’re presenting, organize your thoughts and materials in advance, ensuring clarity and conciseness in your delivery. 

During the meeting, practice active listening. This means fully focusing on the speaker, understanding their message, and responding thoughtfully. Clear and concise speaking is equally important. Be direct in your communication, and avoid jargon that might confuse listeners. After the meeting, follow up with a summary or action items if necessary, ensuring everyone is on the same page.

Navigating Difficult Conversations

Difficult conversations, such as delivering bad news or addressing issues, are inevitable in any workplace. Handling these situations requires empathy, clarity, and professionalism. Begin by setting a positive tone and expressing your intention to resolve the issue constructively.

Be clear and direct with your message, but maintain a respectful and empathetic tone. Avoid blame and focus on solutions. When receiving constructive feedback, listen openly without becoming defensive. This demonstrates professionalism and a willingness to grow.

Networking and Building Professional Relationships

Networking is a vital aspect of professional life. Effective business correspondence plays a significant role in building and maintaining these connections. When reaching out to new contacts, be courteous and clear about your intentions. After networking events, follow up with a brief and personalized message.

Maintain your professional relationships through regular, relevant communication. This can be through sharing articles, congratulating them on achievements, or simply checking in. Platforms like LinkedIn are invaluable for networking, allowing you to connect and interact with professionals in your field.

Continuous Improvement and Adaptation

Effective business correspondence is not a static skill but an evolving practice. Stay open to learning and adapting to new communication styles and technologies. Pay attention to the nuances of communication in your particular workplace and industry.

Seek feedback on your communication skills from colleagues and superiors. Self-assessment is also crucial. Reflect on your interactions and consider areas for improvement. Continuous learning, whether through formal training or self-study, is essential for honing your business correspondence skills.

Final Thoughts

In your first job, mastering business correspondence is as crucial as the skills you honed as a student, whether working with a top essay writer or tackling complex projects. Effective communication sets the tone for your professional image and relationships. It’s a combination of clarity, empathy, professionalism, and continuous adaptation. As you navigate your career, remember that each email, report, and conversation is an opportunity to reinforce your professional presence and contribute meaningfully to your workplace. Embrace these opportunities with confidence and a commitment to ongoing improvement, and you’ll find that effective communication is a key driver in your career success.

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Business Correspondence Overview, Types & Examples

Margaret has taught both college and high school English and has a master's degree in English from Mississippi State University. She holds a Mississippi AA Educator License.

Kevin has edited encyclopedias, taught history, and has an MA in Islamic law/finance.

What are the types of correspondence?

There are several types of business correspondence, including business letters, e-mails, instant messages, and memos. Writers should consider the purpose and audience of the communication to select the appropriate type of correspondence to use.

What are examples of correspondence?

Correspondence is any written communication. Most people are familiar with text messages, which are typically brief and informal, such as "Would you meet me in the lobby with the file?" The recipient could respond, "I am at lunch, but I'll text you when I return in fifteen minutes." More extended types of correspondence, such as letters, should be used for more formal communication. Other types of correspondence used in business include e-mails, instant messages, and memos.

Table of Contents

What is business correspondence, types of business correspondence, importance of business correspondence, examples of correspondence, lesson summary.

When a business produces written communication, the resulting document is called business correspondence . The message or body of the document is the most important component of business correspondence. Other components include the document's date and the sender and receiver's identifying information. Typically, this identifying information includes name, mailing address, telephone number, and email address. Certain types of correspondence may also use a salutation, such as "Dear Dr. Smith." When enclosures are included with the correspondence, writers note that enclosures are a part of the communication. If a person other than the sender has typed the correspondence, the typist's initials are also shown. However, some types of business correspondence do not include all of these components.

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• 0:01 Types of Correspondence
• 0:32 Letters
• 2:28 Instant Messages &…
• 3:27 Lesson Summary

Businesses use several types of written correspondence, including business letters, memos, emails, instant messages , and text messages.

Business Letters

Business letters are the most formal type of business correspondence. To determine the appropriate level of formality, writers should consider the type of organization that will receive the letter, as well as the writer's relationship to the organization.

For example, writers typically communicate with official boards in writing. The writer asking for assistance or direction from such a group is not likely to have a personal relationship with the recipients, which is one reason for the writer to use the business letter format. In addition, the writer may be representing a community group or a business. As such, the letter should represent both the correspondent and other interested parties in the best possible light. The business letter may sometimes create a favorable impression on the recipient due to the writer's efforts to communicate clearly and succinctly in a document that accurately represents the situation or concern.

Business letters have many purposes.

• Business letters can be used to build relationships with others. For example, a realtor might compose a letter to thank a homeowner for allowing the realtor to list the house on the homeowner's behalf. This type of business letter helps build goodwill, relationships, and future business opportunities with the recipient.
• Business letters can also serve to generate sales. In addition to highlighting the product or service the writer offers, a business letter can allow the writer to explain details of the proposal, such as costs and benefits.
• Because of the inherently formal nature of the business letter, this type of communication can be used to respond to customer complaints. Unsatisfied customers are sometimes angry or irritated, and the formal language and format of a business letter can often help customers move beyond emotion and toward a solution to the issue.
• Business letters can be used to retain current customers or reconnect with inactive customers. For example, businesses can use the business letter format to offer incentives to loyal customers or to those who have not recently bought anything from the company.

The memo , or memorandum, is most often used for communication within an office or organization. Memos can be used to inform specific teams or groups about policies, projects, schedules, and other purposes. Some memos request action, as well. For example, a memo can ask for assistance from others within the organization or group.

Memos can also clarify issues or respond to employee speculation about specific areas of concern. For example, if a business eliminates a particular project, employees may become concerned about the company's financial stability and perhaps even their job prospects. Before employees experience anxiety about the project's elimination, managers could write a memo to explain that the company's financial situation is positive and that personnel assigned to the eliminated project will be assigned to other divisions within the company.

Email , also known as electronic mail, is a type of digital communication that can be used for many of the same functions as business letters and memos. Business letters and memos may be delivered via email.

In some cases, an email may replace these other types of communication. A question for a colleague can be addressed just as easily in email as in a memorandum, for example. More formal communications, typically represented by business letters, can also be presented within the text as an e-mail. Email is a flexible type of communication that can be adapted to various situations.

Instant Messages

Instant messages offer the benefit of instant collaboration, which can be particularly useful for employees working in remote locations. Like some other types of communication, instant messages are best used to communicate with others within an organization or group.

For example, two English teachers are creating an American literature course in the school's learning management system. One of the teachers notices that they still need to select a novel from the 20th century to include in the course. The two teachers had previously discussed three titles but failed to select one. To quickly complete the required reading list, one teacher sends an instant message in the learning management system to ask the other teacher which of the three novels he prefers.

Instant messaging offers the benefit of fast communication, and its informal format and structure can simplify communication between coworkers or team members.

Text Messages

Text messages , which are often transmitted via mobile devices, are best used for brief, uncomplicated messages. If a message requires more than a few sentences in response, it may be advisable to use a different type of business communication.

However, a text message is a good option when a brief notification or response is needed. For example, if a dentist is going to be late arriving at work because of car trouble, she could send a text message to ask another staff member to reschedule her morning appointments. The sender can relay the information quickly in a text message, and the recipient can acknowledge the request using the same medium.

Business correspondence is important in both external and internal business communication. Business correspondence can build relationships and encourage collaboration within an organization. Effective communication within an organization can also ensure that team or company goals and responsibilities are clearly outlined. Perhaps most importantly, companies can provide transparency on issues that affect workers. This type of communication can ensure that rumors or misinformation can be replaced with statements of fact that assure workers of the organization's goodwill toward its employees.

When composed for an external audience or people who do not work for the business, correspondence can help build customer confidence and loyalty. Regardless of the purpose of the correspondence, clear and appropriate communication can help establish or reinforce the reader's positive impression of the organization.

By examining a few examples of correspondence common to businesses, writers can explore the formats and uses of different types of communication.

Business Letter Example

Business letters typically consist of single-spaced paragraphs. Paragraph breaks are indicated by double spacing. This type of communication uses one-inch, left-justified margins. The sender's contact information usually appears on the letterhead.

September 7, 2023

Mr. Grant Presley, President Seneasha County Board of Supervisors P.O. Box 1 Seneasha, Michigan 12345

Dear Mr. Presley:

I am writing on behalf of the Lincoln Subdivision residents who own property along Seneasha Creek. We would like to request that the board send a representative from the county Department of Public Works to our neighborhood to examine flooding along the creek bank and assist the homeowners in finding a solution to the problem of flooding on their property.

I am available at the phone number above and can meet your representative on short notice. We appreciate your assistance in advising and helping us with this issue in our neighborhood. Please let me know if I can provide additional information.

Respectfully submitted,

Memo Example

A memo uses more informal language and is typically much briefer than a business letter.

To: Domingo Sanchez

From: Elizabeth Powers

I found the map you were looking for yesterday. I will be out of the office for the rest of the day, but I have left the map at the front desk for you.

Email Example

Emails include the sender's and recipient's e-mail addresses and a subject line. Emails are typically brief messages used when instant communication is unnecessary.

Can we meet on Monday or Tuesday next week to discuss the luncheon for retirees? Please let me know when you are available.

Other Examples

Instant messages are appropriate for brief and informal conversations. For example, a supervisor might send an instant message to an employee that says, "Would you see me for five minutes before you leave for lunch?" The employee could then send a one-word response such as "Sure."

Text messages are also best for informal and succinct communication. Perry, for example, might send a text message to a coworker that says, "Did you find the Connor file?" The employee could then respond, "Yes. I left it on your desk."

Businesses and other organizations use business correspondence to produce written documents for internal and external contacts. Business letters , which are the most formal type of business communication, can be used to communicate with current or potential customers and also with other organizations. Business letters allow writers to include more details since the format allows for longer passages. Letters are typically used for external communication.

Other, less formal types of business correspondence are useful as well. E-mails are an official type of communication that can be appropriately used to ask questions or communicate information that does not require an immediate response. Memos are typically written to others within the entity, business, or team. Memos are best used to provide brief information within a group, such as a manager who wants to remind workers of a new company policy. Both instant messages and text messages are informal forms of communication between employees or associates. Instant messages are particularly useful for encouraging collaboration between associates, while text messages work well when information needs to be delivered quickly and succinctly. For example, an employee who will be late for work can quickly inform the company of the situation.

Video Transcript

Types of correspondence.

In any office, you'll encounter a variety of different types of correspondence. After all, unless you live on a deserted island with no desire to escape, everyone has to communicate. However, how you communicate makes a huge difference in the business world, just as it does in your social life. You wouldn't send a mounted courier to tell someone that you're running 15 minutes late to dinner, now would you? In this lesson, we'll look at the most common forms of communication in the business world, as well as when each is appropriate to use.

The most formal form of communication for most business purposes is a letter . Depending on the purpose, a letter can take a variety of different forms. Most often, these take the form of one entity communicating with another. For example, when working with clients, much of your communication will be in the form of letters. These messages can take the form of anything from a letter accompanying a bid to a contract to a letter thanking a client for choosing your company, but in any event, it will take the form of a letter.

Still, some letters are written internally. When you applied for your job, you likely wrote a brief cover letter to explain why you think you're an attractive candidate. Likewise, when you were offered the job, you likely got an offer letter including expectations and salary. Finally, when you leave a job, you'll likely write a letter of resignation stating your reasons for leaving.

Certainly, in some instances, letters are written for internal purposes. However, most formal writing that takes place within an organization is in the form of a memo . A memo is a formal document that describes a change or policy to the members of a team. That team can be a whole organization or just a department, while the change or policy could be anything from a new hire to a new policy about requesting leave. In any event, memos are written in a certain way to allow them to quickly be read and processed, but still be considered formal for the purposes of being official.

Still, you don't need a memo to ask your boss to get off early. Instead, you'd likely do that with an email . Depending on your organization, email can be anything from a substitute for all but the most formal letters and memos to something regarded as unofficial and informal. The biggest advantage of email is its speed - once sent, it is instantly there. However, this ease makes it ill-regarded by some organizations. In other words, it's always a good idea to check with your company for best practices regarding emails.

Instant Messages and Text Messages

Finally, there are instant messages and text messages. These are easily the least formal forms of communication within an office but are still vital. For a quick consult on a document, little beats an instant message sent to the person you're collaborating on it with. This allows you to communicate quickly and silently, not disrupting the work of those around you. However, instant messages are never used as a way to distribute official information because of that informal nature.

Likewise, text messages will never replace formal business letters, but they can still be a useful way to communicate information. This is especially true during meetings or when individuals are outside of the office. Certainly, there are times to text and times not to - texting your contacts when they are in a meeting with their boss about the future of their job is not a good time! However, texting a client to say that you're running ten minutes late to the meeting will show consideration that their time is valuable and that you acknowledge it.

In this lesson, we took a look at various forms of communication that are common in offices. We started by examining the role of letters , seeing that they are the most formal level of communication. This is especially true for matters that involve entities outside of the company. Memos play the role of a formal document within an office. Email policy differs between companies, but for most, it is considered less formal than a memo or letter. Finally, text messages and instant messages have a place as well. Both of these can facilitate time sensitive information about relatively minor details, but won't replace a letter or a memo.

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• Meaning And Importance Of Business Correspondence

What is Business Correspondence?

Whenever the topic of business correspondence surfaces, the most important question is what is business correspondence. The meaning of correspondence is a letter. Anyone associated with any business expresses themselves in terms of business correspondence. The importance of business correspondence is immense in any business. They can express their ideas, question or raise concerns about any aspect of the company through business correspondences. Business correspondences do not only refer to individual letters but also the letters exchanged between the companies or organizations. It can be a letter of complaint, an inquiry letter, a letter to any supplier, an application letter for jobs, etc.

Business Correspondence Letter

(Image will be Uploaded soon)

Whenever we need to contact any person, we send them letters or texts. A similar approach is followed in businesses as well. Such a kind of communication in business is called business correspondence. Business correspondence can be defined as the means of expressing in terms of business. 

The letters written during such business transactions are called business correspondence letters. Such written documentation is required since no one can remember all the details of the business for the entire length of the business. Therefore, they prefer to write down the details, which is known as business correspondence. 

Why do we need a Business Correspondence Letter?

For the smooth running of any business, business correspondence is necessary. The utmost importance of business correspondence is that it eases reaching out and communication between different parties. For any business deal, meeting delegates in person might be a hectic task. Therefore, it is better to exchange correspondences in this regard.  Business correspondence meaning lies in helping and achieving the goal of the company. Some of the company goals achieved through business correspondences are:

Maintaining a Cordial Relationship with all Parties

Running a business is a tedious task. There are so many aspects of any business that the business owners hardly find any extra time to interact with the clients and the associated parties on a personal basis. In general, as a business grows, it is impossible to reach out to all the parties in person. Under such circumstances, it is necessary to communicate through business correspondence.  Such a means of communication in terms of business correspondences helps to strengthen the business relationship. Modern business correspondences like PDF can also be shared amongst the parties. Such activities improve internal communication and make them precise and clear. Maintaining a good relationship with all associated parties is considered the prime importance of business correspondence. 

Proofs of Evidence

Documentation of all important communications is necessary for keeping track of the growth of relations between different parties. It is important to maintain all these documents as proof of such communication so that the business owners can revert to them whenever needed as references. Moreover, such documents can be used to file lawsuits against those parties who will not act as per the terms and conditions allowed in the correspondences.

Create and Maintain a Positive Image

For any business to thrive, it is imperative to generate goodwill amongst the parties. Having every conversation in the record creates a professional impression that is appreciated by all parties. The company must accept all letters related to inquiries, complaints, suggestions and feedback related to the services of the company.  Such approaches by the company help to generate and maintain the goodwill of the company.

Convenient and Inexpensive

Business correspondences are considered to be the most convenient and cheapest form of business communication. It only requires an exchange of letters amongst the parties.

Formal Communication

Any kind of business communication is considered between two parties. It can be between two business partners, the employer and the employee and the sellers and the buyers. The language used in these business correspondences, like the advanced business correspondence PDF, is logical, concise and formal. Such an approach helps to do away with any kind of ambiguity and is considered to be acceptable and followable by all parties. The precise nature of the letters outlines the importance of business correspondence.

Assists in Business Expansion

Having formal correspondences related to the business ensures that the business can reach all its targets. Therefore, it allows the business to expand and set newer goals for them. Through such business correspondences, novel information about the market for any specific product can be obtained. Business correspondences can also be used to spread the news of business expansion.

Different Types of Business Correspondence

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There are different types of business correspondence letters. The types and functions of business correspondence include:

Internal Correspondence- The exchange of information in the form of correspondence between different individuals, departments, sectors or branches of the same company.

External Correspondence- It exists between two individuals but not from the same company. It can be between the producer and the suppliers, collaborators, etc.

Routine Correspondence- Business correspondences made routinely are called routine correspondences. These include order, inquiries, replies, acknowledgements, etc.

Sales Correspondence- It is related to the sales of the company. These include sale reports, sale letters, confirmation of orders, invoices, etc.

Personalized Correspondence- Such letters contain emotional inputs. Letter of recommendation, request, or congratulatory letters are examples of personalized correspondence.

Circular Correspondence- business correspondences that are issued in common for a large number of people are called circulars. These include notices, tenders, news, announcements, etc.

The first three types of business correspondence are major. More information on the business correspondence can be obtained through business correspondence and report writing PDF free download.

FAQs on Meaning And Importance Of Business Correspondence

1. What is the effective means of writing a formal paragraph for a Business Correspondence Letter?

In any business correspondence PDF, special emphasis is provided in writing the paragraphs. It has four essential components- coherence, unity, topic sentence and development. The topic highlights the primary idea of the paragraph. It is supported by the details. Coherence and unity must be exhibited in the details mentioned in the paragraph. The details must be linked logically with all supporting examples. All this information will effectively develop the theme of the paragraph. The paragraph will set the tone of the entire business correspondence. Therefore, special importance must be provided to the construction of the paragraphs for an effective business letter.

2. What does business correspondence mean?

According to the general business correspondence meaning, it is a letter used for communication in a business. It can be a personalized talk between clients, or the employer or the employee, a routine conveyance of day to day reports or even a formal talk communicated internally or externally.  It is important to maintain a formal outlook on all business correspondence letters, be it a modern business correspondence PDF. Such approaches help to maintain a record, give a formal look, and be in the goodwill of all the clients who prefer to do business with such approaches. They can also be used as evidence against any unlawful acts by any collaborating parties in the future.

3. What is the importance of business correspondence?

There are numerous reasons why business correspondence is required. The first reason is to maintain stable relationships with clients and communication between all parties, to keep the documented evidence required so as to take reference whenever necessary, to have communication between all parties the method of business correspondence is the most effective and cheap one. It also helps to create a positive image and retain it. All these factors help a business to thrive and prosper in the most convenient and effective way. Thus, this is why a business needs business correspondence. 

4. From where can I get the notes for the meaning and importance of business correspondence?

The students can get the notes for the meaning and Importance of business correspondence via Vedantu.com, your one-stop for everything academic. These notes are simple and easy to read to make sure that you understand each and every point in detail without any problem. The notes are prepared in an easy manner for the convenience of each student by our expert teachers for your better performance. These notes help you to keep your progress to reach the peak. So for a better future join the Vedantu community today!

5. Explain how a business correspondence letter helps in maintaining cordial relationships with all parties?

The students must understand that the business correspondence letter helps in maintaining cordial relationships with all parties by making the intentions between client and business providers clear with no miscommunication from both sides. To maintain a business and engage with every individual client is a tedious task and thus, using business correspondence comes in handy. This ensures that the primary need for any business is being completed, which is to maintain a good rapport with all parties or clients and vice versa.

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Business Communication  - How to Write a Formal Business Letter

Business communication  -, how to write a formal business letter, business communication how to write a formal business letter.

Business Communication: How to Write a Formal Business Letter

Lesson 7: how to write a formal business letter.

/en/business-communication/business-writing-essentials/content/

How to write a formal business letter

Whenever you need to communicate with another company or share important news, business letters can present your message in a classic, polished style. Unlike internal memos, business letters are usually written from one company to another, which is why they’re so formal and structured . However, letters are also quite versatile, as they can be used for official requests, announcements, cover letters, and much more.

Despite the formality, letters can still have a friendly tone , especially because they include brief introductions before getting to the main point. Regardless of the tone you use in your letter, your writing should remain concise, clear, and easy to read.

Watch the video below to learn about formal business letters.

This lesson focuses on American business letters. Letters written in other parts of the world may have minor differences in formatting.

The structure of a business letter

The business letter’s precise structure is crucial to its look and readability. As you write your letter, you can follow the structure below to create an effective document.

• Opening : Include your mailing address, the full date (for example, July 30, 2017), and the recipient’s name, company, and address. Skip one line between your address, the date, and your recipient’s information. Don’t add your address if you’re using letterhead that already contains it.
• Salutation : Address the recipient using “Dear,” along with their title and last name, such as “Dear Mr. Collins” or “Dear Director Kinkade.” If you don’t know the recipient’s gender, use their full name, such as “Dear Taylor Dean.” Finally, be sure to add a colon to the end of the salutation.
• Body : In the first paragraph, introduce yourself and the main point of your letter. Following paragraphs should go into the details of your main point, while your final paragraph should restate the letter’s purpose and provide a call to action, if necessary.
• Closing : Recommended formal closings include “Sincerely” or “Yours truly.” For a more personal closing, consider using “Cordially” or “Best regards.” Regardless of what you choose, add a comma to the end of it.
• Signature : Skip four lines after the closing and type your name. Skip another line and type your job title and company name. If you’re submitting a hard copy, sign your name in the empty space using blue or black ink.
• Enclosures : If you’re including documents with this letter, list them here.

Another important part of the structure is the layout , which determines how the text is formatted. The most common layout for a business letter is known as block format , which keeps all text left-justified and single spaced, except for double spaces between the paragraphs. This layout keeps the letter looking clean and easy to read.

As stated in Business Writing Essentials , revision is a crucial part of writing. Review your letter to keep it concise, and proofread it for spelling and grammar errors. Once you’re finished writing, ask someone to read your letter and give you feedback , as they can spot errors you may have missed. Also make sure any enclosures are attached to your document and that any hard copies are signed.

After revising the content, consider the appearance of your letter. If you’re printing a hard copy, be sure to use quality paper. Also try using letterhead to give your document a more official look.

Example of a business letter

To see this lesson in action, let’s take a look at a polished business letter by reviewing the example below.

This letter looks great! The structure is perfect, and the text is left-justified and single spaced. The body is formal, friendly, and concise, while the salutation and closing look good. It also contains a handwritten signature, which means it’s ready to be submitted as a hard copy.

Knowing how to write a business letter will serve you well throughout your career. Keep practicing and studying it, and you’ll be able to communicate in a classic style.

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Home > General > 10 Reasons Why Business Writing Skills Are So Important

10 Reasons Why Business Writing Skills Are So Important

Written by Contributor, on 6th Dec 2017. Posted in General

The global workplace forces us to improve our communication skills. Irrespective of the field, job, and expertise, you need to be an effective communicator in order to move up the career ladder.

There are three main ways of communication in business: verbal, non-verbal and written. All of them are essential. Yet, the latter leads the list as the basic one for most jobs. No matter what level of hierarchy you are at in a company, writing skills are a valuable asset.

The list of written business communication is quite long. It includes emails, letters, reports, company brochures, presentation slides, case studies, sales materials, visual aids, social media updates, and other business documents. Whether you are connecting internally with colleagues and executives or externally to clients, the way you write can either give your career a boost or hamper your progression within the organization. Read on to see 10 benefits a good writer can get.

1. Writing skills ensure effective business communication

Business correspondence helps a company connect with partners and stakeholders. Everything you write must be tailored in a proficient, comprehensive, and informative way. Thus, the receivers will clearly understand your message.

If a text is poorly written and structured, the subordinates will have troubles with deciphering it. The message may be misinterpreted.

2. Writing skills make the difference between "good" and "bad" employees

If you are in college now, academic paper writing may seem a difficult task for you. Many students cannot fit into the deadlines and hire services like EssayPro . Wait until you need to craft a strong resume and cover letter. That is a real challenge. A document filled with grammatical errors will never make a favorable impression. Professionals are good at composing clear messages. Employers value such workers. That’s why hiring managers recruit these individuals.

If you already have a job, practice writing skills in order to stand out among your co-workers. Senior management is generally more favorably disposed towards an employee who can create excellent documentation.

3. You demonstrate your intelligence

Even if your job doesn’t require a lot of writing, how you come across is crucial. A few grammatical or punctual errors may seem minor. But people do notice. And they tend to think that those who don't write well are less intelligent than those who do.

Don't let anyone dismiss you because of your poor writing skills. A few minutes of proofreading can improve the way you are perceived. Flawless documents will present you a smarter person than a colleague whose work is full of typos.

4. Good writers are credible

People with advanced writing skills are perceived as more reliable and trustworthy. It is easy to prove. Imagine that you receive an email where you notice odd abbreviations and misspelled words. What will be the first impression of the sender?

Two options are possible. And none is satisfactory for the sender. Either the person is not competent and neglects proofreading or is simply unintelligent.

Aim to be perceived as credible in the workplace. It makes you dependable, assigned with more responsibility, and a right candidate for promotion.

5. You can be more influential

Good persuasion skills help you to influence others to achieve your goals. Professors assign their students to write persuasive essays in order to prepare them for the job market by developing these significant skills.

If you are creating taglines and calls-to-action for your organization, you need to know how to develop a copy that will encourage the reader to take action. If you are describing an innovative idea that can improve a process to your manager, you should sound convincing. Every paper must communicate your ideas effectively.

6. Business writing conveys courtesy

The content of formal business correspondence mirrors the same level of politeness and considerate attention to detail that is shown in face-to-face interaction. A courteous business letter expresses the writer’s personal respect for the receiver and the company they work for.

Professionals take into consideration formatting and etiquette. They also pay attention to their personal tone, clarity, and logic. They avoid poor word choice and grammar. These things can come across as lazy or even rude.

7. Writing skills help to keep good records

Information that is communicated orally isn’t kept for long. That’s why students take notes of lectures. As scholars use their notes to write essays, you can apply your records in your work.

Saving information on paper is the best way of preserving it for years. In fact, the most accurate knowledge that has reached us from many centuries back was from books.

8. You boost your professional confidence

Every business document has its purpose. You write a business proposal to attract investors or find partners. You send emails to reach potential customers. You craft a report to impress your boss.

When written communication leads a business to another successfully completed project, you become more confident and inspired. And writing itself gets easier.

9. You promote yourself and your career

If you are the best business communicator in your office, coworkers will ask you to for help in editing their writing pieces before they go to their supervisors. Word will get around. If the company needs someone to draft effective emails, they will ask someone who writes with clarity and accuracy. Guess who they will turn to?

The better your writing skills are, the more responsibility you will be given. That’s great for you and your future career success!

10. Business writing builds a solid web presence

Business is all about presentation. Owners aim to set up an effective online presence. It helps potential customers discover the company and its products. To attain this goal, they create websites, blogs and social media accounts.

Quality content is a decisive factor here. A person who can present business in the best light and convince people to buy products or services is an irreplaceable employee.

Now you know why writing skills are significant to your career success. It is time to improve your business communication skills and reap the benefits it may bring. Otherwise, your co-workers or competitors will leave you behind.

About the Author: Michelle Brooks manages blog editing of the educational resource. As the guest blogger, she specializes in e-learning, career and self-development.

Image source: https://www.pexels.com/

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The Crucial Role of Effective Written Communication in the Workplace

• December 19, 2023
• Niel Levonius

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Communication is the lifeblood of any organization, and in the modern corporate landscape, effective written communication has assumed paramount importance. While verbal communication, including face-to-face interactions and oral exchanges, plays a crucial role, the written word remains the primary means of conveying information in various forms. In this essay, we explore the myriad reasons why effective written communication is essential in the workplace, considering its impact on team dynamics, professional success, and the overall functioning of businesses.

The Multifaceted Nature of Communication in the Workplace Effective communication in the workplace encompasses both verbal and written forms. Verbal communication, including face-to-face meetings, phone calls, and oral presentations, provides immediate interaction and allows for the expression of nuances through tone of voice, facial expressions, and body language. On the other hand, written communication, comprising emails, business letters, reports, and other documents, offers a lasting record and a structured means of conveying information.

Different forms of communication are suited to various contexts within the workplace. While face-to-face interactions are invaluable for team building, fostering positive relationships, and addressing complex issues, written communication is essential for documenting decisions, sharing important information, and ensuring clarity in professional exchanges. In an era dominated by digital communication tools and social media, the ability to convey ideas effectively in writing is a skill of great significance.

The Impact of Effective Written Communication on Team Dynamics Within a team, effective communication is the linchpin that ensures cohesion, collaboration, and shared understanding among team members. Written communication plays a crucial role in facilitating this, especially in the context of remote work, where face-to-face interactions may be limited. In a distributed team, written communication becomes the primary channel for sharing updates, providing project details, and seeking input from team members.

The use of tools such as emails, instant messaging, and collaborative platforms allows team members to stay connected and informed, irrespective of geographical locations. Good writing skills enable team members to articulate ideas clearly, reducing the chances of misinterpretation or misunderstandings. In team collaboration, the ability to draft effective emails, create well-structured documents, and communicate ideas persuasively in writing contributes significantly to project success.

Importance of Written Communication in Business Situations In the corporate world, where information flows rapidly and decisions often hinge on the accuracy and clarity of communication, effective written communication is indispensable. Business communication takes various forms, including formal reports, business letters, emails, and digital messages. A well-crafted business communication can convey key messages, facilitate decision-making, and establish a professional tone that reflects positively on the organization.

Business letters, for instance, are often the first point of contact in professional correspondence, including cover letters for job applications. A well-written cover letter not only introduces a job seeker effectively but also demonstrates their communication skills. In job interviews, the ability to articulate ideas clearly, supported by strong writing skills, can set a candidate apart in a competitive field.

In everyday business situations, employees at all levels engage in written communication to convey important information, make requests, and share updates. Clear writing is an asset in producing reports, creating business plans, and drafting proposals. In the legal realm, effective written communication is essential for legal proceedings, contracts, and other critical documents. The importance of written communication becomes even more pronounced in the digital age, where information is transmitted rapidly across various platforms.

Effective Emails: A Cornerstone of Workplace Communication Among the diverse forms of written communication in the workplace, emails stand out as a ubiquitous and powerful tool. The ability to compose effective emails is a skill that directly impacts an individual’s professional success. Whether conveying good news, providing updates, or addressing challenges, the tone, structure, and clarity of emails play a crucial role in conveying the intended message.

Best practices for effective emails include using an active voice, maintaining a professional tone, and structuring the message logically. In a busy corporate environment, where individuals receive numerous emails daily, the ability to grab the audience’s attention and convey information concisely becomes a key element of effective communication. Additionally, the use of plain language ensures that the message is accessible to a diverse audience with varying levels of expertise.

Furthermore, the use of written communication in emails extends to interpersonal relationships within the organization. Open communication fosters positive relationships among team members, contributes to employee morale, and creates a conducive work environment. A staff member who can communicate effectively in writing is an asset to any organization, enhancing internal collaboration and external relationships with clients and partners.

The Role of Effective Writing in Leadership and Professional Success Leadership in the workplace demands strong communication skills, and effective writing is an integral aspect of this skill set. Leaders who can articulate a vision, communicate expectations clearly, and inspire their teams through written messages create a positive and motivated work environment. The ability to draft persuasive emails, craft compelling reports, and communicate decisions with clarity distinguishes effective leaders in the corporate world.

Moreover, strong writing skills are often associated with critical thinking and attention to detail. Leaders who can express complex ideas in a clear and coherent manner demonstrate a high level of intellectual rigor. In professional settings, the written word is a reflection of an individual’s competence, professionalism, and commitment to excellence.

In the context of job roles that involve public speaking or presenting to a large audience, effective written communication serves as the foundation for preparing speeches and presentations. A well-structured and engaging speech relies on the ability to translate ideas into written form effectively. Leaders who can harness the power of effective writing in public speaking create a lasting impact on their audience.

The Impact of Effective Writing on Employee Morale and Satisfaction Open communication and effective writing contribute significantly to employee morale and job satisfaction. A workplace where information is conveyed transparently, and team members feel heard and understood, fosters a positive and collaborative atmosphere. Clear communication of expectations, goals, and feedback through written channels ensures that employees are well-informed and aligned with organizational objectives.

In contrast, poor communication can lead to confusion, frustration, and a decline in morale. A staff member who struggles to understand messages due to unclear or ambiguous writing may experience job dissatisfaction. Conversely, a leader who communicates effectively in writing can inspire confidence, build trust, and create a supportive work culture.

The Use of Written Communication in Different Forms Effective written communication takes various forms, each tailored to suit different contexts and purposes within the workplace. Reports and business documents demand a formal writing style, where clarity, precision, and professionalism are paramount. In contrast, internal communications and team updates may allow for a more conversational tone, fostering a sense of camaraderie among team members.

Blogs and other forms of digital content are increasingly becoming a means of conveying information within organizations. Good writers who can create engaging and informative blog posts contribute to internal knowledge sharing, promoting a culture of continuous learning and collaboration. Digital content also serves as a tool for external communication, allowing organizations to share insights, updates, and success stories with a wider audience.

The Importance of Tone and Style in Written Communication Tone of voice and writing style play a crucial role in the effectiveness of written communication. A professional tone is essential in formal documents, business letters, and communication with external stakeholders. The ability to strike the right tone ensures that the message is received in the intended manner, fostering positive relationships and facilitating mutual understanding.

In internal communications and team interactions, a more relaxed and conversational tone may be appropriate. The tone adopted in written communication contributes to the overall workplace culture, influencing how employees perceive the organization and their colleagues. Leaders who can modulate their writing style based on the context and audience demonstrate a high level of emotional intelligence and adaptability.

Clear Writing for Better Understanding Clarity in written communication is paramount for better understanding, and this is particularly true in the workplace. A well-articulated piece of information ensures that the recipient grasps the key message without confusion or misinterpretation. Clarity is achieved through the use of simple words, straightforward sentences, and correct order of information.

In an era where information overload is common, the ability to convey critical information clearly becomes a valuable skill. Employees who can distill complex concepts into easily understandable written content contribute to efficient decision-making and problem-solving within the organization. Clear writing is a bridge that connects diverse individuals with different backgrounds, languages, and levels of expertise, ensuring that everyone can access and comprehend the information.

The Role of Written Communication in the Hiring Process Effective written communication is a key consideration in the hiring process, from the creation of job postings to the evaluation of applicants. Job seekers who can convey their skills, experiences, and enthusiasm clearly in written form have a distinct advantage. Resumes, cover letters, and other application materials serve as the first impression a potential employee makes on a prospective employer.

In the context of job interviews, communication skills extend beyond verbal exchanges. A candidate who can articulate their thoughts clearly in writing during the interview process stands out as a potential asset to the organization. Written communication skills are indicative of a candidate’s ability to communicate effectively within the team and with external stakeholders.

Training and Upskilling: Enhancing Written Communication Skills Recognizing the importance of effective written communication, many organizations invest in training and upskilling programs for their employees. These programs aim to enhance writing abilities, improve communication skills, and foster a culture of clear and effective communication within the workplace. Training may cover various aspects of written communication, including email etiquette, report writing, and persuasive essay construction.

The availability of resources, such as online courses and workshops, provides employees with opportunities to develop and refine their writing skills. Many organizations offer these courses as part of professional development, enabling employees to earn digital badges that recognize their proficiency in written communication. Upskilling in written communication not only benefits individual employees but also contributes to the overall effectiveness of the organization.

The Challenge of Non-Verbal Cues in Written Communication While effective written communication is crucial, it does present challenges, particularly in the absence of non-verbal cues. In face-to-face interactions, individuals rely on body language, facial expressions, and eye contact to convey additional layers of meaning. In written communication, the challenge lies in accurately conveying tone, intent, and emotions without the aid of these non-verbal cues.

Emoticons and emojis are one way individuals attempt to bridge this gap in digital communication, providing a visual representation of emotions. However, their use may not always align with professional communication standards. Writers must navigate this challenge by choosing words carefully, being mindful of the tone they convey, and considering the potential interpretations of their written messages.

Cross-Cultural and Multilingual Considerations In today’s globalized workplace, where teams may consist of individuals from different cultures and language backgrounds, effective written communication becomes even more complex. Different cultures may have varied communication styles and expectations, necessitating a nuanced approach to written communication. Understanding cultural nuances, respecting diverse communication styles, and being aware of potential language barriers are essential components of effective cross-cultural communication.

In multilingual environments, clear and precise writing becomes a tool for overcoming language barriers. Choosing simple words, providing background information, and structuring messages logically contribute to better understanding across linguistic diversity. Organizations that prioritize diversity and inclusion also recognize the importance of creating an inclusive communication environment that accommodates different languages and cultural perspectives.

Conclusion In conclusion, the importance of effective written communication in the workplace cannot be overstated. It is a cornerstone of professional success, team collaboration, and organizational effectiveness. Whether in the form of emails, business documents, reports, or other written materials, the ability to convey ideas clearly, concisely, and persuasively is a skill that enhances individual and collective performance.

Strong communication skills, encompassing both verbal and written forms, are increasingly recognized as essential soft skills in the modern workplace. Individuals with strong writing skills contribute to positive workplace dynamics, foster employee morale, and play a pivotal role in creating a culture of open communication. As organizations navigate the complexities of the digital age and the globalized business landscape, the ability to communicate effectively in writing remains a key determinant of success. By recognizing the multifaceted nature of written communication, embracing best practices, and investing in training and upskilling programs, organizations can cultivate a workforce equipped for the challenges and opportunities of the evolving workplace.

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Business Correspondence Training Courses: Features and Benefits

Table of Contents

The business correspondence provides a formal way of communicating between organizations. An organization must have the suitable channels for exchanging information. Communication in a business can either be internal or external. 

Internal correspondence happens between workers at various levels. External one mainly focuses on B2B communication. There is another B2C level of it done in personalized ways. Business correspondence has unique features and benefits. 

Importance of studying business correspondence at work

Studying business correspondence is important in an organization. It takes time to meet workers and clients in person, but correspondence makes the task easier. You should choose the right school. It must offer good courses and motivation to the learners. An organization should consider training their workers on business correspondence. The main reasons for it are:

• An organization can grow and expand fast: There is a difference between an organization that consistently communicates and one that doesn’t. The one that often sends information can turn sale leads into customers. It uses its communication channels to provide product information. 
• An organization maintains healthy relationships: Healthy business relationships are important to both internal and external clients. Correct communication answers all important questions. 
• Builds trust: Strong brands are those that keep a flawless communication strategy. It builds trust with both customers and workers. 
• Keeping records: Face-to-face communication has many shortcomings. You cannot agree to a contract verbally. Written communication acts as a record of evidence in the future. 

Learning business communication lessons at university requires commitment. Apart from learning theory, you also need to learn practical skills. You may seek guidance on how to study it better from the education center. A college education is sometimes challenging due to the amount of work involved. To manage the important tasks effectively, a student needs help with some of the tasks. I don’t struggle with writing papers because I hire an essay writer to  help me write my paper  that I need regularly. They write winning papers that earn high grades. 

Benefits of studying business communication

Fulfilling the importance of business writing.

Business writing demands the use of formal language to win customers. The message that is written must be concise, clear, and persuasive. The training covers wide areas. You will learn how to write reports, notices, memos, and proposals. Email communication and writing marketing content is part of the training. 

Improving worker productivity

Employees should be careful with their communication strategies. They should adopt a unique language for exchanging information. If it is done wrongly, the worker could lose a chance to win a customer. Knowing how to interact and share messages correctly improves productivity. 

Building a strong customer satisfaction strategy

Customers appreciate communication done through proper channels. They appreciate interactions that clearly answer their questions. The person sending correspondence should make sure they answer in detail the client’s concerns. It helps build a strong customer satisfaction rate.

Creates a strategy for internal communication

Effective internal communication builds stronger collaboration in an organization. The organization may have different departments, but they are all interrelated. What happens in one department directly affects the other. There is a need for a proper flow of information between departments. It helps  build stronger teams  that are better informed. 

Best techniques for studying corporate communication

A business communications manager connects an organization and the outside world. They focus on creating content and sharing it with clients. They help build a strong corporate image. Attending business correspondence lessons will help you become a good communicator. Different strategies will help you study the subjet effectively. 

Understand what a business communication manager does

A business communication manager has many responsibilities. They plan and manage external and internal communications. They create content and share it with the right people. They are public relations promoters in an organization. They answer media questions and develop press releases and company statements.

Enroll in business communication training

The best strategy for learning business communication is to register for an online course. The course takes between 2-4 months to complete. You will learn various skills that include writing, public speaking, and media intelligence. Other important skills to learn are branding, digital marketing, and data analysis.

Decide your learning style

Decide whether you want to join a  full-time college or part-time . Full-time learning may require you to live near or on-campus. Part-time learning may involve attending a few lessons per week. You could be working the rest of the week. You may also decide to study online and take a shorter time to complete learning. After graduation, find a place to work and gain experience. 

Where to learn business correspondence courses

One of the best places to learn business correspondence lessons is online. The advantage is that you can register with any good university in the world. Most online courses take two years to complete. You may decide not to register with a university but with a training app. 

These are apps that you can install online, pay for your course, and learn. Most major universities around the world offer business communication training. You only need to identify the university that offers courses that fit within your budget. You may consider the time it will take to complete the course. 

Business correspondence training course prepares learners to work in the business communication field. It provides benefits to organizations such as customer satisfaction and retention. Business communication managers are responsible for ensuring the smooth flow of information in an organization. Many institutions of learning offer business communication training. You may choose to learn online, full-time, or part-time. You will learn skills like public speaking, branding, and media intelligence. 

Join the thousands who have sharpened their business writing skills with our award winning courses.

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Business letter: meaning, importance and advantages.

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Read this article to learn about Business Letters. After reading this article you will learn about: 1. Meaning of Business Letter 2. Importance of Business Letter 3. Advantages.

Meaning of Business Letter:

Business people have to communicate with the customers, the suppliers, the debtors, the creditors, the public authorities and the public at large as well as among themselves for the purpose of exchanging their views and of sending and receiving information. This is required to initiate, carry out and to conclude transactions.

Communication can be in two ways:

Either face to face or with the help of various machines and

(2) Written:

By writing letters. This written communication is otherwise called correspondence. The word correspondence has a sense of ‘similarity’ and ‘association’ in it. To correspond means to be in conformity or agreement with something or somebody.

Correspondence or written communication may take place between any two persons or parties. Commercial correspondence means correspondence by the business people on matters of commerce.

The word correspondence has a sense of plurality. It means letters or a pair of letters consisting of an original letter followed by a reply. ‘A’ letter has little value. The communication is complete when a letter is replied or an action is taken in response to a letter.

Importance of Business Letter:

Businessmen must establish contact with the people and then only they can develop their organisations. Importance of communication is very great in business life (Ref. 3.44). There was a time when the size of business was normally small and varied means of communication were not available, direct meetings or face-to-face communication was practised by the businessmen. Later on, the policy of sending representatives for direct contacts was introduced. All these methods have their limitations.

The importance of business letters as the cheapest and most extensive form of communication was first realised in USA and UK and now this method has been accepted as the best method of communication all over the world. This has been possible with the introduction of ever growing postal services. In the meantime standardisation of the form and the style of business letters have made them more popular and acceptable by all.

The commercial correspondence has a language of its own which is markedly different from personal letters. Day by day improve­ments are being made in the form and the style of business letters making them more impressive, meaningful and compact.

A large number of books on the subject are available in the market in the aid of the business world. Invention of different machines for the purpose makes business letters fast in production and in distribution.

It does not mean, however, that other means of communication have been abandoned.

Advantages of Business Letter:

Communication through letters occupies the largest share in the total volume of communication because of the following advantages:

(1) Letters are less costly than other means of communication.

(2) Letters can be sent to long distant places by post within a short time. Of course, letters may be sent by messengers within neighbouring areas.

(3) Letters are drafted after proper thinking and planning and so the subject matter can be presented in a systematic and logical way.

(4) The ideas conveyed in letters are clear and free from ambiguity.

(5) The size of a letter may be big or small as required.

(6) Letters simultaneously provide evidence and exact copies can be retained.

(7) Same communication may-be made to a number of persons at a time, through duplicating or printing.

(8) Many unpleasant and delicate matters which cannot be spoken face to face or through mechanical devices can be written in letters in a discreet language.

(9) Letters are suitable for all types of communication.

(10) There is standardisation in form and style readily acceptable by the business world. Even internationally accepted code language is used.

(1) Components:

A business letter has the following components like any other form of communication.—A writer or corres­pondent—He is the communicator. He has the primarily responsibility to make a letter purposeful and effective.

(a) He must know the form and the style of writing letters. Different types of letters have different styles. The secretary of an organisation, who is in charge of the office including the correspondence department, is supposed to be well conversant with the art. There are experienced correspon­dence clerks whose services are utilised for the purpose.

(b) He must have a command over the language and English is the main language used in the commercial world. (The second internationally accepted language is French.)

(c) He must be conversant with the facts on which he is writing a letter otherwise he cannot faithfully express the facts and the viewpoints.

(d) He must also know the technical terms and phrases necessary to be used in particular types of letters. He can take the help of different types of dictionaries available in the market.

(e) He must make planning before he sets forth to write a letter.

(f) In case he is writing a reply he must read the initiating letter very carefully.

(g) The drafting will depend much upon the nature of the recipient.

(2) The Addressee or the Recipient or the Reader:

A letter is always directed to a recipient (or recipients). He is the communicate or the addressee or the reader. If the letter is unimpressive, the recipient may not read it and so not necessarily a recipient is the reader. The drafting of a letter largely depends on the nature of the recipient. Moreover, a letter must reach the recipient, in the shortest possible time. That depends much upon the external factor—the efficiency of the postal system unless a letter is sent by a messenger. The form of a letter depends much upon the nature of the recipient.

(3) The Message:

A letter carries a message or stimuli. It may be long or short, pleasant and unpleasant, general or particular, regular or urgent, meant for an individual or many, initial or responsive, etc. The style of writing depends much upon the nature of the message.

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Importance of Business Letter

Letter is as an indispensable tool of communication in business . Business letters are used to sell the products, make an inquiry about customers or prices of goods, seek information and advice, maintain good public relation, increase goodwill and perform a variety of other business functions. With the continuous growth of commerce and industry, usefulness and importance of business letter are also increasing gradually. Some points highlighting the benefits or importance of business letter are discussed below:

From the above discussion, it can be concluded that successful operation of business activities establishing, maintaining and developing business relationship and finally achieving business goal all require help of business letters. In a sense, conducting business is impossible without business letters.

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Nikita Prokhorov , co-founder of Reputation House, is a marketing, online reputation and communication expert, public speaker and author.

Today, following digital etiquette is more important than knowing how to hold a fork properly. In the modern world, it is almost impossible to work without communicating digitally. The 17 Business Email Statistics & Trends to Watch in 2024 article says that "62.86% of business professionals prefer to communicate by email," and the total number of emails sent per day amounts to 124.5 billion. Mastering this culture is simple yet essential. Following a few basic rules can help you improve your online reputation.

Why mastering digital etiquette is so important.

The lockdown and widespread shift to working remotely in 2020 forced millions of people around the world to conduct their work-related communication online. As it turned out, many people who used to understand each other perfectly in the office failed to find common ground on Zoom calls and meetings. According to the Harvard Business Review (HBR) Survey , 71% of respondents thought employees who did solely remote work were likely to feel more disconnected from their organization, and 52% claimed that employee engagement dramatically decreased. This caused redundancies and drops in productivity

The pandemic ended, employees are back in the office, but digital communication hasn’t gone anywhere. So, anyone who wants to make a good impression on colleagues, management and business partners should learn digital etiquette.

How to start a conversation and get your message across.

Problems with digital communication often start with the very first message. As you know, there is only one chance to make a good first impression , so don’t waste it. In order for your first message to be as correct and clear as possible, it should consist of several parts.

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• Greet the recipient (and introduce yourself if necessary). This is common courtesy, without which it is difficult to start communicating. If you are writing an email, make sure to state the subject.

• Explain the purpose of the message to the recipient.

• Describe the essence of your question or the information you want to convey. The text may be quite lengthy, so it would be more convenient for the reader if it were divided into several smaller paragraphs.

• Call for a response and its format. At the end of the message, you should specify the form in which you are expecting to receive a response. It can be a reply letter, a message or a phone call. Remember to include this point in your message, because it will gently encourage the recipient to respond.

You can use this structure on any communication platform. Feel free to write long messages on messengers and social networks. If they are divided into paragraphs or bullet points, they will be just as easy to understand as in an email.

How not to start messages.

• “Hello.” A greeting without any name can lead to confusion and unease.

• “Can I ask you a question?” Excessive hesitancy can be annoying. Just ask the question; there is no need to ask for permission.

• “I’m here for the gifts/prizes.” Here you are being too obtrusive. If you are taking part in a raffle or a promo, you should phrase your request more politely.

• “Do you see my message?” This is an absurd wording of a question, as it’s impossible to answer “no.” The recipient may think you are making fun of them.

• “More details in another account.” You should not end your message by referring to another account or another platform. If you are contacting a person on a particular platform, you should stick to that for this communication.

How to fix common mistakes in digital communication.

In offline communication, there are situations where people find themselves in an embarrassing position. With experience, people become more aware of how to avoid such situations. They behave more appropriately and avoid using words and phrases that may lead to misunderstanding. In business correspondence, there are also ways to put yourself in an awkward position. Here are some of the most common mistakes and how to fix them:

• “Sent from Touchsuper5Gphone2046.” Some email services automatically add the brand name of the device the email was sent from in the message. No matter how cool and expensive your smartphone may be, the recipient is hardly interested in this information and it could be mistaken for bragging. Delete this bit of text before you send the email.

• “With hope for your reply.” Such a phrase might be appropriate in a nineteenth-century romance novel, but not in business correspondence. There is no need for hopes in business communication.

• “Thx,” “mb” and “u.” Remember that your colleagues or clients are not necessarily your friends. What you can afford in a friendly exchange may be completely inappropriate in a business exchange. Even if you have a friendly relationship with your message recipient, avoid this kind of slang. Leave it for non-business-related discussions.

• “Run through it” and “have a quick look.” There is no need to set yourself or your message up as something to be taken lightly.

Conclusion Follow these simple guidelines, so your colleagues, clients and business partners find it easier and more pleasant to communicate with you. In addition, it can make negotiating favorable terms with them easier.

It is worth remembering that there are no fixed rules for online communication. New ways of communicating, technologies and features are emerging every day. So, keep up with digital etiquette trends, learn new things and don’t be shy about communicating a lot—all of these things will help you to develop your business and career.

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Essay Type Questions: What is a correspondence? What is the importance of business correspondence?

Correspondence refers to the exchange of important information, ideas and views in a written format between two people or institution for achieving some objective. the importance of business correspondence are: 1. serves as an evidence since it is in written format. 2. helps in maintaining proper and formal relationship between organisations. 3. enhance internal communication in the organisation. 4. it is inexpensive and convenient. 5. good correspondence helps in maintaining goodwill in the market..

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The Importance of Competitive Strategies in Achieving Sustainable Business Growth

1. introduction.

Every business has the ultimate objective of achieving long-term sustainable growth that results in increasing sales, profits, and market share. The purpose of this article is to explain the importance of competitive strategies under the umbrella of the marketing mix in achieving sustainable long-term business growth, and also how these strategies are implemented and achieved. It is believed that the competitiveness of any business in any sector is driven by product superiority, the quality of service, the price paid by customers for the benefits sought, and the convenience of and the ease with which the customer can access the products and services. When these strategic imperatives are articulated and aligned to the corporate strategy, this will provide the means by which funders, shareholders, and stakeholders can measure competitive pre-eminence and the delivery of the corporate strategy. The attributes required for one business sector will differ from other sectors, but clearly there has to be some commonality of strategic attributes, and these are the attributes of the competitive marketing mix and its components.

1.1. Background and Significance

How a firm achieves sustainable growth in current markets with increasingly more intense competition is still being debated by many researchers. What is clear is that firms need to be competitive and they must be able to differentiate themselves from their competitors in order to grow. In addition to many external competitive pressures, there are new forms of organization, such as virtual corporations or alliances between stakeholder firms, that are creating ever-more sophisticated virtual organizations that are highly capable of gaining sustainable competitive advantage. These organizations often have many common enemies, or better said, they share the profit interests that come from innovating the network, gained from high-profit growth. The new competition in today's business world, combined with comments about the importance of risk-sharing in new global business models by CEOs of many of the world's leading global companies, has created a set of critical success factors that include working together with selected external firms, defined as partnerships.

2. Understanding Competitive Strategies

Competitive strategies are broad in scope, entrepreneurial in character, and have a long-term orientation to determine future competitive position in the market. Competitive strategy identifies the firm's strategic commitment to competing in a market. While a wide variety of strategies can be formulated and implemented, there are only two basic types of competitive strategy. Competitive strategies are of two types: low-cost provider strategy and differentiation strategy. A low-cost provider strategy is based on a complete set of production, engineering, distribution, and other activities designed to perpetrate a company which tries to become the industry's low-cost provider and use the low-cost edge as a means of underpricing rivals and attracting price-sensitive buyers into their product market, driving weak competitors out of the market. The other competitive strategy, differentiation strategy, is based on a particular product attribute. Buyers' taste, special design, a dealer network, and strong demand enable the firm to demand a premium price for the product. Main competitive strategies can be low-cost provider strategy, differentiation strategy, low-cost focus, or focusing on differentiation as well as best cost provider. The low-cost strategy is based on production and performing activities with an aim of being a cost leader in an industry. The differentiation strategy is based on performing activities differently from other industries in an industry, which will charge a premium price for a superior product or outdistinguish the original product's standard price. The focus strategy aims at buyers in a narrow market segment which has distinctive or unique preferences, special needs, and others. The best cost provider is a hybrid strategy that mixes elements of the low-cost strategy and differentiation strategy into one. It is forced to be successful in implementing new technologies as a means of acquiring lower costs, operating facilities with efficient scale economies, designing products that offer buyers good value for the money, and being better able to satisfy customer needs. The differentiation strategy requires charging a premium price from customers, and in many cases, the firm is able to outperform others in the industry. Lowering costs and selling products through high volume with only the most basic customer service at an attractive price. The low-cost focus can charge a price lower than competitors because the product is uniquely valued by buyers and available only from the focused industry through special relationships. With these strategies, a firm can provide enough value to the buyer at a low enough cost that the buyer can attract value to themselves.

2.1. Definition and Types

Various market reports and academic papers pinpoint the need for competitive business strategies as the main driver for business growth. However, a classical misbelief is that growth and expansion plans fail because of market conditions, while the truth is that they are results of erroneous competitive business strategy choices and a company's inability to adapt to small and large market changes in a timely and appropriate manner. Business company growth is a complex process and should only be achieved via well thought out and implemented competitive business strategies, which are entirely based on accurate and meaningful business performance indicators. In the majority of cases, achieving sustainable business company growth requires time, effort, dedication, and additional strategic business planning, which includes analytical evidence-based decision-making. Business companies' export market entry and partnership with larger experienced export partners may facilitate the rapid implementation of suitable business competitive growth strategies. Small and medium enterprises must set realistic and meaningful export market entry growth strategies, taking note of internal capabilities, expectations, and export risk management strategies.

3. The Link Between Competitive Strategies and Sustainable Business Growth

It is a universal truth that today's businesses have to grow to survive and thrive. In fact, the profitability and even the survival of the enterprise are largely based on the accomplishment of sustainable growth. Yet, the traditional and most used avenues for growth may not be as effective today as they were in the past. They include the creation of new products, new delivery channels, the exploration of new markets, expansion through merger and acquisition, or even an aggressive sales effort. Many of these strategies have merit, and I am not suggesting that these or others will not be more important tomorrow than today. Nonetheless, a more important and strategic goal for corporate growth is to get the right structure in place to manage the process and obtain sustainable development. There is compelling evidence to suggest that the essential effect of an effective competitive strategy can be sustainable without an ongoing cycle of product innovation. Although new products can provide a fast and lucrative kickstart to a company's financial performance for those that try it, and a series of carefully placed product improvements can keep the engine running, new products and new technology are not a substitute for a sound defense system. No matter how successful a company is today, it will have new opposition in the marketplace tomorrow. Indeed, it often happens that success leads to greater, more systematic competition. Similarly, no matter how good the company is today, there will be new methods for delivering the product tomorrow. Customers will adjust their buying habits to take advantage of these new methods. Also, no matter how efficient the company is today, there is always a different way to do it that would be more efficient. Because of this, I stress that businesses must concentrate as much of their energy on maintaining a sustainable competitive advantage as on creating a new one. Any strategy whose competitive edge can be broken in a relatively short period of time is a short-lived strategy. This is true for every industry, every form of competition, every organizational framework, and every culture. It is also true for commercial, industrial, and governmental organizations, and not-for-profit businesses as well. Since competition is universal, and since winners are defined by its outcome, it is reasonable to expect that the rules for winning are also fairly universal. And they are, in part because there is an invisible limit on what all companies can do to build their own competitive advantage, and it is called the competitive edge.

3.1. Key Concepts and Principles

Business strategy involves a series of decisions about the organization's future and is the process by which an organization documents and communicates how it will spend resources in ways that align with its overall mission and desired outcomes. More formally, business strategy is often defined as "the aggregation of the ends (goals and objectives) which the organization is seeking to achieve" and refers specifically to the business unit's intent to compete effectively and to achieve organizational objectives in the marketplace. Real-world data about competitive success consistently demonstrate that maintaining a sustainable cost and one of the following forms of differentiation leads to long-term profitability from developing valuable unique capabilities. 3.1.1. What are Corporate Objectives? Faced with numerous opportunities in which the organization might invest its human, physical, or financial resources, at one or more levels, the organization examines needs and options and then proceeds to set priorities. Objectives are the desired results. They provide the definitive "reason for doing" to all organizational activities. Key attributes of objectives are that they are clear, concise, and relatively concrete; state desired results; direct organizational attention and resources; and specify target dates, quantities, and qualities of performance. Needs link to objectives when the organization identifies desirable changes and what needs to be different. Strategic objectives focus attention where it is most needed. They should be developed within the context of the organization's business and reflect critical business factors. Finally, objectives at all levels play a critical role whenever the organization enters into performance contracts.

4. Implementing Competitive Strategies for Sustainable Growth

Competitive strategies refer to managerial actions, decisions, and corporate resources that maintain and improve the health of the organization in anticipation of its long-run success in a competitive environment. Competitive strategy is a long-term plan and goal of the company to gain a competitive advantage. Competitive strategy should rationalize the objectives of the company, the market span in terms of the product, market structure, the generic competition strategy proposed for the achievement of the above-stated objective, and the specific areas of markets in which the company can exploit its strength against competitors for the strategy's implementation. Impersonal market forces and competitive dynamics weed out non-performing businesses at a very fast pace, establishing a Darwinian reality about business survival in the marketplace. Only companies that are able to help themselves survive while also being able to contribute to society. Large organizations such as Tata Steel, Microsoft, and IBM have faced challenges in their quest for perpetual growth. Although the actual competitive environment and rate of growth of a business can't be predicted, researchers have suggested that the optimal rate of growth is 7 to 9 percent. The 7-9 percent range is associated with relatively low product risk and high financial risk. To achieve this kind of sustainability, a business must continuously innovate and implement strategies that can help accomplish this. Of course, it's not just small businesses that are concerned with sustainability and growth; large conglomerates with billions of pounds in the bank are also seeking to maintain sustainable growth over the short and long term. It's critical for all businesses to analyze their competitive environment and develop growth strategies quickly. While these strategies will vary in complexity and scope, the overall results will give these organizations a large advantage over their competitors. The pace of long-term business growth is quickening, and competitive strategies have never been more important.

4.1. Strategic Planning and Execution

Strategic planning is the process of determining what an organization needs to achieve and how it will achieve those results. The key to strategic planning is to accomplish the desired outcomes within the desired time frames and at a minimum cost. It is the blueprint to set long-range goals, objectives, and performance targets, and to specify how the organization will address issues related to its customers, products, competencies, and competition. Although long-term strategic planning is done on a continuum, normally for a five-year period, tactics planning is a short-term planning that is normally done on an annual basis or more frequently for corrections. Strategic planning is a focused effort to identify and define how to achieve a set of long-range objectives. It is based on the fact that organizations must constantly fine-tune their strategies to adapt to a changing environment. The mission is a public declaration of the reason for the organization's existence and specifies the strategic guides. It should declare the specific functions or services provided plus the values, beliefs, and basic aspirations of the organization. The mission guides the overall process and keeps the organization on track. It states the main objective of the organization in terms of its constituent role in society. The mission provides an assessment of the firm's strengths and weaknesses and expresses how it entertains the achievement of a competitive advantage.

5. Challenges and Future Trends

This study reveals that there are several challenges to the majority of manufacturing small and medium enterprises (SMEs), especially in the achievement of sustainable business growth through competitive strategies. In short, key informants have mentioned several challenges, such as the availability of government funding for implementing strategies, the efficiency of the business process, the different meanings of sustainable growth at different stages of business development, small-scale operation characteristics, the lack of best practice application, techno-innovation, external environment changes, and the need for the presence of other quality resources. Then, in the future, many challenges have to be faced, such as the changing roles of big business and the traditional role of small-sized businesses, and the likely development of economic activity at a future time. This includes looking into skills development and training, the development and utilization of information technology (IT) in business, potential opportunities for the availability of new markets and new services, the possibility of alternative sources of investment and finance, the ability to provide essential infrastructures through information systems, the ability to carry the infrastructure for research and development (R&D) and marketing, and the application of policy measures to increase the value of Malaysian-made products. Therefore, policymakers should constantly provide the necessary support to encourage businesses to take as many profits as possible from that potential opportunity.

5.1. Emerging Technologies and Globalization

Emerging technologies and globalization, along with an overall growth in a variety of industries, are driving the business world toward a hypercompetitive market. This intensity of competition and the frequency with which competitive advantages are weakened or overturned will shrink the life cycle of the competitive advantages built by a company using the traditional business models. New strategic models must be developed and implemented in order to significantly differentiate a company in the hearts and minds of its customers, establish unique business processes, build new technologies, or other non-imitable factors. Companies that have earned a successful reputation in new product introduction should not primarily focus on business performance improvement and cost saving initiatives that were state-of-the-art and trend before the waves of e-commerce and competition in hypercompetitive markets. While consumer interest is stumbling, Starbucks focuses on accelerating its product leadership—a decision that may sound a bit crazy in the middle of an economic depression. Such an unusual decision is quite sensible: it fosters Starbucks’ creative urge and makes the company stand for quality continua. Definite up-market regular opportunities and markets place are the right ones for the company in the long term, and now that Starbucks’ less cowed competitors may see the current fiasco at Starbucks as a chance to catch up with this leading company, Starbucks simply improves its competitive distance to its competitors due to its cost inhibitors and capabilities utilized by the company.

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The state of AI in early 2024: Gen AI adoption spikes and starts to generate value

If 2023 was the year the world discovered generative AI (gen AI) , 2024 is the year organizations truly began using—and deriving business value from—this new technology. In the latest McKinsey Global Survey  on AI, 65 percent of respondents report that their organizations are regularly using gen AI, nearly double the percentage from our previous survey just ten months ago. Respondents’ expectations for gen AI’s impact remain as high as they were last year , with three-quarters predicting that gen AI will lead to significant or disruptive change in their industries in the years ahead.

About the authors

This article is a collaborative effort by Alex Singla , Alexander Sukharevsky , Lareina Yee , and Michael Chui , with Bryce Hall , representing views from QuantumBlack, AI by McKinsey, and McKinsey Digital.

Organizations are already seeing material benefits from gen AI use, reporting both cost decreases and revenue jumps in the business units deploying the technology. The survey also provides insights into the kinds of risks presented by gen AI—most notably, inaccuracy—as well as the emerging practices of top performers to mitigate those challenges and capture value.

AI adoption surges

Interest in generative AI has also brightened the spotlight on a broader set of AI capabilities. For the past six years, AI adoption by respondents’ organizations has hovered at about 50 percent. This year, the survey finds that adoption has jumped to 72 percent (Exhibit 1). And the interest is truly global in scope. Our 2023 survey found that AI adoption did not reach 66 percent in any region; however, this year more than two-thirds of respondents in nearly every region say their organizations are using AI. 1 Organizations based in Central and South America are the exception, with 58 percent of respondents working for organizations based in Central and South America reporting AI adoption. Looking by industry, the biggest increase in adoption can be found in professional services. 2 Includes respondents working for organizations focused on human resources, legal services, management consulting, market research, R&D, tax preparation, and training.

Also, responses suggest that companies are now using AI in more parts of the business. Half of respondents say their organizations have adopted AI in two or more business functions, up from less than a third of respondents in 2023 (Exhibit 2).

Gen AI adoption is most common in the functions where it can create the most value

Most respondents now report that their organizations—and they as individuals—are using gen AI. Sixty-five percent of respondents say their organizations are regularly using gen AI in at least one business function, up from one-third last year. The average organization using gen AI is doing so in two functions, most often in marketing and sales and in product and service development—two functions in which previous research  determined that gen AI adoption could generate the most value 3 “ The economic potential of generative AI: The next productivity frontier ,” McKinsey, June 14, 2023. —as well as in IT (Exhibit 3). The biggest increase from 2023 is found in marketing and sales, where reported adoption has more than doubled. Yet across functions, only two use cases, both within marketing and sales, are reported by 15 percent or more of respondents.

Gen AI also is weaving its way into respondents’ personal lives. Compared with 2023, respondents are much more likely to be using gen AI at work and even more likely to be using gen AI both at work and in their personal lives (Exhibit 4). The survey finds upticks in gen AI use across all regions, with the largest increases in Asia–Pacific and Greater China. Respondents at the highest seniority levels, meanwhile, show larger jumps in the use of gen Al tools for work and outside of work compared with their midlevel-management peers. Looking at specific industries, respondents working in energy and materials and in professional services report the largest increase in gen AI use.

Investments in gen AI and analytical AI are beginning to create value

The latest survey also shows how different industries are budgeting for gen AI. Responses suggest that, in many industries, organizations are about equally as likely to be investing more than 5 percent of their digital budgets in gen AI as they are in nongenerative, analytical-AI solutions (Exhibit 5). Yet in most industries, larger shares of respondents report that their organizations spend more than 20 percent on analytical AI than on gen AI. Looking ahead, most respondents—67 percent—expect their organizations to invest more in AI over the next three years.

Where are those investments paying off? For the first time, our latest survey explored the value created by gen AI use by business function. The function in which the largest share of respondents report seeing cost decreases is human resources. Respondents most commonly report meaningful revenue increases (of more than 5 percent) in supply chain and inventory management (Exhibit 6). For analytical AI, respondents most often report seeing cost benefits in service operations—in line with what we found last year —as well as meaningful revenue increases from AI use in marketing and sales.

Inaccuracy: The most recognized and experienced risk of gen AI use

As businesses begin to see the benefits of gen AI, they’re also recognizing the diverse risks associated with the technology. These can range from data management risks such as data privacy, bias, or intellectual property (IP) infringement to model management risks, which tend to focus on inaccurate output or lack of explainability. A third big risk category is security and incorrect use.

Respondents to the latest survey are more likely than they were last year to say their organizations consider inaccuracy and IP infringement to be relevant to their use of gen AI, and about half continue to view cybersecurity as a risk (Exhibit 7).

Conversely, respondents are less likely than they were last year to say their organizations consider workforce and labor displacement to be relevant risks and are not increasing efforts to mitigate them.

In fact, inaccuracy— which can affect use cases across the gen AI value chain , ranging from customer journeys and summarization to coding and creative content—is the only risk that respondents are significantly more likely than last year to say their organizations are actively working to mitigate.

Some organizations have already experienced negative consequences from the use of gen AI, with 44 percent of respondents saying their organizations have experienced at least one consequence (Exhibit 8). Respondents most often report inaccuracy as a risk that has affected their organizations, followed by cybersecurity and explainability.

Our previous research has found that there are several elements of governance that can help in scaling gen AI use responsibly, yet few respondents report having these risk-related practices in place. 4 “ Implementing generative AI with speed and safety ,” McKinsey Quarterly , March 13, 2024. For example, just 18 percent say their organizations have an enterprise-wide council or board with the authority to make decisions involving responsible AI governance, and only one-third say gen AI risk awareness and risk mitigation controls are required skill sets for technical talent.

Bringing gen AI capabilities to bear

The latest survey also sought to understand how, and how quickly, organizations are deploying these new gen AI tools. We have found three archetypes for implementing gen AI solutions : takers use off-the-shelf, publicly available solutions; shapers customize those tools with proprietary data and systems; and makers develop their own foundation models from scratch. 5 “ Technology’s generational moment with generative AI: A CIO and CTO guide ,” McKinsey, July 11, 2023. Across most industries, the survey results suggest that organizations are finding off-the-shelf offerings applicable to their business needs—though many are pursuing opportunities to customize models or even develop their own (Exhibit 9). About half of reported gen AI uses within respondents’ business functions are utilizing off-the-shelf, publicly available models or tools, with little or no customization. Respondents in energy and materials, technology, and media and telecommunications are more likely to report significant customization or tuning of publicly available models or developing their own proprietary models to address specific business needs.

Respondents most often report that their organizations required one to four months from the start of a project to put gen AI into production, though the time it takes varies by business function (Exhibit 10). It also depends upon the approach for acquiring those capabilities. Not surprisingly, reported uses of highly customized or proprietary models are 1.5 times more likely than off-the-shelf, publicly available models to take five months or more to implement.

Gen AI high performers are excelling despite facing challenges

Gen AI is a new technology, and organizations are still early in the journey of pursuing its opportunities and scaling it across functions. So it’s little surprise that only a small subset of respondents (46 out of 876) report that a meaningful share of their organizations’ EBIT can be attributed to their deployment of gen AI. Still, these gen AI leaders are worth examining closely. These, after all, are the early movers, who already attribute more than 10 percent of their organizations’ EBIT to their use of gen AI. Forty-two percent of these high performers say more than 20 percent of their EBIT is attributable to their use of nongenerative, analytical AI, and they span industries and regions—though most are at organizations with less than $1 billion in annual revenue. The AI-related practices at these organizations can offer guidance to those looking to create value from gen AI adoption at their own organizations.

To start, gen AI high performers are using gen AI in more business functions—an average of three functions, while others average two. They, like other organizations, are most likely to use gen AI in marketing and sales and product or service development, but they’re much more likely than others to use gen AI solutions in risk, legal, and compliance; in strategy and corporate finance; and in supply chain and inventory management. They’re more than three times as likely as others to be using gen AI in activities ranging from processing of accounting documents and risk assessment to R&D testing and pricing and promotions. While, overall, about half of reported gen AI applications within business functions are utilizing publicly available models or tools, gen AI high performers are less likely to use those off-the-shelf options than to either implement significantly customized versions of those tools or to develop their own proprietary foundation models.

What else are these high performers doing differently? For one thing, they are paying more attention to gen-AI-related risks. Perhaps because they are further along on their journeys, they are more likely than others to say their organizations have experienced every negative consequence from gen AI we asked about, from cybersecurity and personal privacy to explainability and IP infringement. Given that, they are more likely than others to report that their organizations consider those risks, as well as regulatory compliance, environmental impacts, and political stability, to be relevant to their gen AI use, and they say they take steps to mitigate more risks than others do.

Gen AI high performers are also much more likely to say their organizations follow a set of risk-related best practices (Exhibit 11). For example, they are nearly twice as likely as others to involve the legal function and embed risk reviews early on in the development of gen AI solutions—that is, to “ shift left .” They’re also much more likely than others to employ a wide range of other best practices, from strategy-related practices to those related to scaling.

In addition to experiencing the risks of gen AI adoption, high performers have encountered other challenges that can serve as warnings to others (Exhibit 12). Seventy percent say they have experienced difficulties with data, including defining processes for data governance, developing the ability to quickly integrate data into AI models, and an insufficient amount of training data, highlighting the essential role that data play in capturing value. High performers are also more likely than others to report experiencing challenges with their operating models, such as implementing agile ways of working and effective sprint performance management.

About the research

The online survey was in the field from February 22 to March 5, 2024, and garnered responses from 1,363 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. Of those respondents, 981 said their organizations had adopted AI in at least one business function, and 878 said their organizations were regularly using gen AI in at least one function. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP.

Alex Singla and Alexander Sukharevsky  are global coleaders of QuantumBlack, AI by McKinsey, and senior partners in McKinsey’s Chicago and London offices, respectively; Lareina Yee  is a senior partner in the Bay Area office, where Michael Chui , a McKinsey Global Institute partner, is a partner; and Bryce Hall  is an associate partner in the Washington, DC, office.

They wish to thank Kaitlin Noe, Larry Kanter, Mallika Jhamb, and Shinjini Srivastava for their contributions to this work.

This article was edited by Heather Hanselman, a senior editor in McKinsey’s Atlanta office.

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Title Transfers and Changes

To prove vehicle ownership, it’s important to have a valid, up-to-date, and accurate California Certificate of Title. Here’s how you can transfer and change a title. 

Transfer your Title online!

You can now transfer a title online. Learn more about the steps and get started.

How to Transfer a Title

Anytime there’s a change to a vehicle or vessel’s registered owner or lienholder, that change must be updated in DMV’s records within 10 days and the California Certificate of Title must be transferred to the new owner.

A change in ownership is usually due to:

• Sale, gift, or donation
• Adding or deleting the name of an owner
• Inheritance
• Satisfaction of lien (full payment of car loan)

To transfer a title, you will need:

• Either the California Certificate of Title or an Application for Replacement or Transfer of Title (REG 227) (if the title is missing). 
• The signature(s) of seller(s) and lienholder (if any).
• The signature(s) of buyer(s).
• A transfer fee .

Depending on the type of transfer, you might need to complete and submit additional forms. See below for other title transfers and title transfer forms.

Submit your title transfer paperwork and fee (if any) to a DMV office or by mail to: 

DMV PO Box 942869 Sacramento, CA 94269

Rush Title Processing

If you need us to expedite your title processing, you can request rush title processing for an additional fee.

Transfer Fees

Depending on the type of transfer, you may need to pay the following fees:

• Replacement title
• Use tax, based on the buyer’s county of residence
• Registration

See the full list of fees .

Renewal fees and parking/toll violation fees don’t need to be paid to issue a replacement California Certificate of Title.

Title Transfer Forms

These forms may be required when transferring ownership of a vehicle or vessel:  Application for Replacement or Transfer of Title (REG 227) Vehicle/Vessel Transfer and Reassignment (REG 262) form (call the DMV’s automated voice system at 1-800-777-0133 to have a form mailed to you) Statement of Facts (REG 256) Lien Satisfied/Title Holder Release (REG 166) Notice of Transfer and Release of Liability Smog certification Vehicle Emission System Statement (Smog) (REG 139) Declaration of Gross Vehicle Weight (GVW)/Combined Gross Vehicle Weight (CGW) (REG 4008) Affidavit for Transfer without Probate (REG 5) Bill of Sale (REG 135) Verification of Vehicle (REG 31)

Other Title Transfers

When you’re buying a new car or a used car from a dealership, the dealer will handle the paperwork and you’ll receive your title from DMV in the mail.

When vehicle ownership is transferred between two private parties, it’s up to them to transfer the title. If you have the California Certificate of Title for the vehicle , the seller signs the title to release ownership of the vehicle. The buyer should then bring the signed title to a DMV office to apply for transfer of ownership. 

If you don’t have the California Certificate of Title , you need to use an Application for Replacement or Transfer of Title (REG 227) to transfer ownership. The lienholder’s release, if any, must be notarized. The buyer should then bring the completed form to a DMV office and we will issue a new registration and title.

Make sure you have all signatures on the proper lines to avoid delays.

Other Steps for the Seller When Vehicle Ownership is Transferred

• 10 years old or older.
• Commercial with a GVW or CGW of more than 16,000 pounds.
• New and being transferred prior to its first retail sale by a dealer.
• Complete a Notice of Transfer and Release of Liability (NRL) within 5 days of releasing ownership and keep a copy for your records.

Once the seller gives the buyer all required documentation and DMV receives the completed NRL, the seller’s part of the transaction is complete.

*If the vehicle has been sold more than once with the same title, a REG 262 is required from each seller.

Other Steps for the Buyer When Vehicle Ownership is Transferred

• Current registered owner(s), how names are joined (“and/or”), and lienholder/legal owner (if any).
• License plate number, vehicle identification number (VIN), make, model, year, and registration expiration date.
• Title brands (if any).
• Words “Nontransferable/No California Title Issued,” indicating a California title was not issued and a REG 227 cannot be used (see FAQs).
• Get a smog inspection (if applicable).

Once the buyer has provided the DMV with all the proper documents and fees, the vehicle record is updated to reflect the change of ownership and a registration card is issued.

A new title is issued from DMV headquarters within 60 calendar days.

To transfer a vehicle between family members, submit the following:

• The California Certificate of Title properly signed or endorsed on line 1 by the registered owner(s) shown on the title. Complete the new owner information on the back of the title and sign it.
• A Statement of Facts (REG 256) for use tax and smog exemption (if applicable).
• Odometer disclosure for vehicles less than 10 years old.
• Transfer fee .

You may transfer a vehicle from an individual to the estate of that individual without signatures on the Certificate of Title.

Submit the following:

• The California Certificate of Title. On the back of the title, the new owner section must show “Estate of (name of individual)” and their address. Any legal owner/lienholder named on the front of the title must be re-entered on the back of the title.
• A Statement of Facts (REG 256) confirming the owner is deceased and Letters Testamentary have not been issued. The person completing the statement must indicate their relationship to the deceased.

Use tax and a smog certification are not required.

Vehicle ownership can be transferred to a deceased owner’s heir 40 days after the owner’s death, as long as the value of the deceased’s property in California does not exceed:

• $150,000 if the deceased died before 1/1/20.
• $166,250 if the deceased died on or after 1/1/20.

If the heir will be the new owner, submit the following to a DMV office:

• The California Certificate of Title. The heir must sign the deceased registered owner’s name and countersign on line 1. The heir should complete and sign the back of the title.
• Affidavit for Transfer without Probate (REG 5) , completed and signed by the heir.
• An original or certified copy of the death certificate of all deceased owners.

If the heir prefers to sell the vehicle, the buyer also needs (in addition to the items above):

• Bill of Sale (REG 135) from the heir to the buyer.
• Transfer fee (two transfer fees are due in this case).

To transfer vessel ownership, submit the following:

• The California Certificate of Ownership. The registered owner signs line 1. The legal owner/lienholder (if any) signs line 2. Complete the new owner information on the back of the certificate and sign it.
• Bill(s) of sale, if needed to establish a complete chain of ownership.
• A Vessel Registration Fee .
• Use tax based on the tax rate percentage for your county of residence.

After you sell a vessel, complete a Notice of Transfer and Release of Liability (NRL) within five days of releasing ownership and keep a copy for your records.

How to Update or Change a Title

Because a California Certificate of Title is a legal document, it is important to keep it accurate and up-to-date. Here’s how you can update or change a title. 

Order a Replacement California Certificate of Title

You must order a replacement California Certificate of Title when the original is lost, stolen, damaged, illegible, or not received. 

To order a replacement title, submit the following:

• Application for Replacement or Transfer of Title (REG 227) .
• The original title (if you have it).
• California photo driver license (if submitting form in person).
• Replacement title fee .
• If another replacement title was issued in the past 90 days, a Verification of Vehicle (REG 31) completed by the California Highway Patrol (CHP). This requirement only applies if the registered owner’s name or address doesn’t match DMV records*.

You can submit your application either in-person* at a DMV office or by mail:

Department of Motor Vehicles Registration Operations PO Box 942869 Sacramento, California 94269-0001

If you’re submitting your form to a DMV office, we recommend you make an appointment so you can avoid any lines. 

You’ll receive your title by mail 15-30 calendar days from the date you submit the replacement title application.

*If you’re applying for a replacement title and the registered owner’s name or address doesn’t match DMV records (except for obvious typographical errors), you must submit your application in person with proof of ownership (e.g. registration card) and an acceptable photo ID (e.g. driver’s license/ID card).

Online Replacement Title Request

Visit our Virtual Office to request a replacement title online.

Change or Correct a Name on a Title

Your true full name must appear on your vehicle or vessel California Certificate of Title and registration card. If your name is misspelled, changes (e.g as a result of marriage or divorce), or is legally changed, you need to correct your name on your title.

To change or correct your name, submit:

• California Certificate of Title with your correct name printed or typed in the “New Registered Owner” section
• A completed Name Statement in Section F of the Statement of Facts (REG 256) .

You may submit your application to any DMV office or by mail to:

Department of Motor Vehicles Vehicle Registration Operations PO Box 942869 Sacramento, CA 94269-0001

Removing Information that was Entered by Mistake

If a name or other information is entered on a title by mistake, complete a Statement to Record Ownership (REG 101) .

Frequently Asked Questions

If the vehicle has a legal owner/lienholder, then section 5 of the REG 227 needs to be notarized. If the registration does not show a legal owner/lienholder, notarization is not required.

Need help finding the lienholder on your vehicle title? We keep a listing of banks, credit unions, and financial/lending institutions that may have gone out of business, merged, changed their name, or been acquired by another financial institution.

No. You must obtain a title from the state where the vehicle was last titled.

If you’re unable to obtain a title from that state, provide documentation that they cannot issue a title. A motor vehicle bond may be required

Contact us for more information .

Need something else?

Fee calculator.

Use our fee calculator to estimate any applicable registration or title transfer fees.

Renew Your Vehicle Registration

You need to renew your vehicle registration every 1-5 years in California, depending on the vehicle. Make sure your registration is up-to-date.

Make an Appointment

Some applications can be submitted to a DMV office near you. Make an appointment so you don’t have to wait in line.

General Disclaimer

When interacting with the Department of Motor Vehicles (DMV) Virtual Assistant, please do not include any personal information.

When your chat is over, you can save the transcript. Use caution when using a public computer or device.

The DMV chatbot and live chat services use third-party vendors to provide machine translation. Machine translation is provided for purposes of information and convenience only. The DMV is unable to guarantee the accuracy of any translation provided by the third-party vendors and is therefore not liable for any inaccurate information or changes in the formatting of the content resulting from the use of the translation service.

The content currently in English is the official and accurate source for the program information and services DMV provides. Any discrepancies or differences created in the translation are not binding and have no legal effect for compliance or enforcement purposes. If any questions arise related to the information contained in the translated content, please refer to the English version.

Google™ Translate Disclaimer

The Department of Motor Vehicles (DMV) website uses Google™ Translate to provide automatic translation of its web pages. This translation application tool is provided for purposes of information and convenience only. Google™ Translate is a free third-party service, which is not controlled by the DMV. The DMV is unable to guarantee the accuracy of any translation provided by Google™ Translate and is therefore not liable for any inaccurate information or changes in the formatting of the pages resulting from the use of the translation application tool.

The web pages currently in English on the DMV website are the official and accurate source for the program information and services the DMV provides. Any discrepancies or differences created in the translation are not binding and have no legal effect for compliance or enforcement purposes. If any questions arise related to the information contained in the translated website, please refer to the English version.

The following pages provided on the DMV website cannot be translated using Google™ Translate:

• Publications
• Field Office Locations
• Online Applications

Please install the Google Toolbar

Google Translate is not support in your browser. To translate this page, please install the Google Toolbar (opens in new window) .

Dear Fellow Shareholders,

Across the globe, 2023 was yet another year of significant challenges, from the terrible ongoing wars and violence in the Middle East and Ukraine to mounting terrorist activity and growing geopolitical tensions, importantly with China. Almost all nations felt the effects last year of global economic uncertainty, including higher energy and food prices, inflation rates and volatile markets. While all these events and associated instability have serious ramifications on our company, colleagues, clients and countries where we do business, their consequences on the world at large — with the extreme suffering of the Ukrainian people, escalating tragedy in the Middle East and the potential restructuring of the global order — are far more important.

As these events unfold, America’s global leadership role is being challenged outside by other nations and inside by our polarized electorate. We need to find ways to put aside our differences and work in partnership with other Western nations in the name of democracy. During this time of great crises, uniting to protect our essential freedoms, including free enterprise, is paramount. We should remember that America, “conceived in liberty and dedicated to the proposition that all men are created equal,” still remains a shining beacon of hope to citizens around the world. JPMorgan Chase, a company that historically has worked across borders and boundaries, will do its part to ensure that the global economy is safe and secure.

In spite of the unsettling landscape, including last year’s regional bank turmoil, the U.S. economy continues to be resilient, with consumers still spending, and the markets currently expect a soft landing. It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus. There is also a growing need for increased spending as we continue transitioning to a greener economy, restructuring global supply chains, boosting military expenditure and battling rising healthcare costs. This may lead to stickier inflation and higher rates than markets expect. Furthermore, there are downside risks to watch. Quantitative tightening is draining more than $900 billion in liquidity from the system annually — and we have never truly experienced the full effect of quantitative tightening on this scale. Plus the ongoing wars in Ukraine and the Middle East continue to have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost. These significant and somewhat unprecedented forces cause us to remain cautious.

2023 was another strong year for JPMorgan Chase, with our firm generating record revenue for the sixth consecutive year, as well as setting numerous records in each of our lines of business. We earned revenue in 2023 of $162.4 billion 1 and net income of $49.6 billion, with return on tangible common equity (ROTCE) of 21%, reflecting strong underlying performance across our businesses. We also increased our quarterly common dividend of $1.00 per share to $1.05 per share in the third quarter of 2023 — and again to $1.15 per share in the first quarter of 2024 — while continuing to reinforce our fortress balance sheet. We grew market share in several of our businesses and continued to make significant investments in products, people and technology while exercising strict risk disciplines.

Throughout the year, we demonstrated the power of our investment philosophy and guiding principles, as well as the value of being there for clients — as we always are — in both good times and bad times. The result was continued growth broadly across the firm. We will highlight a few examples from 2023: Consumer & Community Banking (CCB) extended its #1 leadership positions and grew share year-over-year in retail deposits, credit card sales and credit card outstandings (adding close to 3.6 million net new customers to the franchise); the Corporate & Investment Bank (CIB) maintained its #1 rank in both Investment Banking and Markets and gained more than 100 basis points of Investment Banking market share; Commercial Banking (CB) added over 5,000 new relationships (excluding First Republic Bank), roughly doubling the prior year’s achievement; and Asset & Wealth Management (AWM) saw record client asset net inflows of $490 billion, over 20% higher than its prior record.

In 2023, we continued to play a forceful and essential role in advancing economic growth. In total, we extended credit and raised capital totaling $2.3 trillion for our consumer and institutional clients around the world. On a daily basis, we move nearly $10 trillion in over 120 currencies and more than 160 countries, as well as safeguard over $32 trillion in assets. By purchasing First Republic Bank, we brought much-needed stability to the U.S. banking system while allowing us to give a new, secure home to over half a million First Republic customers.

As always, we hold fast to our commitment to corporate responsibility, including helping to create a stronger, more inclusive economy — from supporting work skills training programs around the world to financing affordable housing and small businesses to making investments in cities like Detroit that show how business and government leaders can work together to solve problems.

We have achieved our decades-long consistency by adhering to our key principles and strategies (see sidebar on Steadfast Principles below), which allow us to drive good organic growth and promote proper management of our capital (including dividends and stock buybacks). The charts below show our performance results and illustrate how we have grown our franchises, how we compare with our competitors and how we look at our fortress balance sheet. Please peruse them and the CEO letters in this Annual Report, all of which provide specific details about our businesses and our plans for the future.

STEADFAST PRINCIPLES WORTH REPEATING (AND ONE NEW ONE)

Looking back on the past two+ decades — starting from my time as Chairman and CEO of Bank One in 2000 — there is one common theme: our unwavering dedication to help clients, communities and countries throughout the world. It is clear that our financial discipline, constant investment in innovation and ongoing development of our people have enabled us to achieve this consistency and commitment. In addition, across the firm, we uphold certain steadfast tenets that are worth repeating.

First, our work has very real human impact. While JPMorgan Chase stock is owned by large institutions, pension plans, mutual funds and directly by single investors, in almost all cases the ultimate beneficiaries are individuals in our communities. More than 100 million people in the United States own stocks; many, in one way or another, own JPMorgan Chase stock. Frequently, these shareholders are veterans, teachers, police officers, firefighters, healthcare workers, retirees, or those saving for a home, education or retirement. Often, our employees also bank these shareholders, as well as their families and their companies. Your management team goes to work every day recognizing the enormous responsibility that we have to all of our shareholders.

Second, shareholder value can be built only if you maintain a healthy and vibrant company, which means doing a good job of taking care of your customers, employees and communities. Conversely, how can you have a healthy company if you neglect any of these stakeholders? As we have learned over the past few years, there are myriad ways an institution can demonstrate its compassion for its employees and its communities while still strengthening shareholder value.

Third, while we don’t run the company worrying about the stock price in the short run, in the long run we consider our stock price a measure of our progress over time. This progress is a function of continual investments in our people, systems and products, in good and bad times, to build our capabilities. These important investments will also drive our company’s future prospects and position it to grow and prosper for decades. Measured by stock performance, our progress is exceptional. For example, whether looking back 10 years or even farther to 2004, when the JPMorgan Chase/Bank One merger took place, we have outperformed the Standard & Poor’s 500 Index and the Standard & Poor’s Financials Index.

Fourth, we are united behind basic principles and strategies (you can see the principles for How We Do Business on our website and our Purpose statement in my letter from last year) that have helped build this company and made it thrive. These allow us to maintain a fortress balance sheet, constantly invest and nurture talent, fully satisfy regulators, continually improve risk, governance and controls, and serve customers and clients while lifting up communities worldwide. This philosophy is embedded in our company culture and influences nearly every role in the firm.

Fifth, we strive to build enduring businesses, which rely on and benefit from one another, but we are not a conglomerate. This structure helps generate our superior returns. Nonetheless, despite our best efforts, the walls that protect this company are not particularly high — and we face extraordinary competition. I have written about this reality extensively in the past and cover it again in this letter. We recognize our strengths and vulnerabilities, and we play our hand as best we can.

Sixth, and this is the new one , we must be a source of strength, particularly in tough times, for our clients and the countries in which we operate. We must take seriously our role as one of the guardians of the world’s financial systems.

Seventh, we operate with a very important silent partner — the U.S. government — noting as my friend Warren Buffett points out that his company’s success is predicated upon the extraordinary conditions our country creates. He is right to say to his shareholders that when they see the American flag, they all should say thank you. We should, too. JPMorgan Chase is a healthy and thriving company, and we always want to give back and pay our fair share. We do pay our fair share — and we want it to be spent well and have the greatest impact. To give you an idea of where our taxes and fees go: In the last 10 years, we paid more than $46 billion in federal, state and local taxes in the United States and over $22 billion in taxes outside of the United States. Additionally, we paid the Federal Deposit Insurance Corporation over $10 billion so that it has the resources to cover failure in the American banking sector. Our partner — the federal government — also imposes significant regulations upon us, and it is imperative that we meet all legal and regulatory requirements imposed on our company.

Eighth and finally, we know the foundation of our success rests with our people. They are the front line, both individually and as teams, serving our customers and communities, building the technology, making the strategic decisions, managing the risks, determining our investments and driving innovation. However you view the world — its complexity, risks and opportunities — a company’s prosperity requires a great team of people with guts, brains, integrity, enormous capabilities and high standards of professional excellence to ensure its ongoing success.

I remain proud of our company’s resiliency and of what our hundreds of thousands of employees around the world have achieved, collectively and individually. Throughout these challenging past few years, we have never stopped doing all the things we should be doing to serve our clients and our communities. As you know, we are champions of banking’s essential role in a community — its potential for bringing people together, for enabling companies and individuals to attain their goals, and for being a source of strength in difficult times. I often remind our employees that the work we do matters and has impact. United by our principles and purpose, we help people and institutions finance and achieve their aspirations, lifting up individuals, homeowners, small businesses, larger corporations, schools, hospitals, cities and countries in all regions of the world. What we have accomplished in the 20 years since the Bank One and JPMorgan Chase merger is evidence of the importance of our values.

CELEBRATING THE 20TH ANNIVERSARY OF THE BANK ONE/JPMORGAN CHASE MERGER

J.P. Morgan Chase

By 2004, J.P. Morgan Chase already represented the consolidation of four of the 10 largest U.S. banks from 1990: The Chase Manhattan Corp., Manufacturers Hanover, Chemical Banking Corp. and, most recently, J.P. Morgan & Company. And some of their predecessor companies stretched back into the 1800s, one even into the late 1700s.

Bank One had been even busier on the acquisition front, especially across the United States. By 1998, then Banc One had more than 1,300 branches in 12 states when it announced a merger with First Chicago NBD, a Chicago-based bank created just three years earlier by the merger of First Chicago and Detroit-based NBD. Now headquartered in Chicago, the new Bank One became the largest bank in the Midwest, second largest among credit card companies and fourth largest in the United States. But the merger didn’t go as planned, with Bank One issuing three different earnings warnings. In March 2000, Bank One reached outside its executive ranks, and my tenure began as Chairman and CEO, working to overhaul the company and help bring it back to profitability and growth.

The story begins ... A merger 20 years ago helped transform two giant banks

Fast forward to 2003, and another wave of consolidation was well underway in U.S. banking. Most of the nation’s larger banks were trying to position themselves to be an “endgame winner.” In the biggest deal, Bank of America agreed to buy FleetBoston Financial Corp. for more than $40 billion. Those two banks — already amalgamations of several predecessor companies — touted the breadth of their combined retail branch network.

But they were hardly alone. In 2003, some 215 deals were announced among U.S. commercial banks and bank holding companies for a total value of $66 billion, according to Thomson Financial, which tracks merger data.

In July 2004, J.P. Morgan Chase and Bank One merged — as part of a 225-year journey — to form this exceptional company of ours: JPMorgan Chase. At its merger in 2004, the combined bank was the fourth largest bank in the world by market capitalization. But with patient groundwork over the years — fixing systems and upgrading technology, managing the notable acquisitions of Bear Stearns and Washington Mutual (WaMu) and continuing to reinvest, including in our talent — we have made our company an endgame winner.

In earlier years, banks worried about their survival. While the past two decades have brought some virtually unprecedented challenges, including the great financial crisis and a pandemic followed by a global shutdown, they did not stop us from accomplishing extraordinary things. Our bank has now emerged as the #1 bank by market capitalization.

Each of our businesses is among the best in the world, with increased market share, strong financial results and an unwavering focus on serving our clients, communities and shareholders with distinction and dedication. The strengths that are embedded in JPMorgan Chase — the knowledge and cohesiveness of our people, our long-standing client relationships, our technology and product capabilities, our presence in more than 100 countries and our unquestionable fortress balance sheet — would be hard to replicate. Crucially, the strength of our company has allowed us to always be there for clients, governments and communities — in good times and in bad times — and this strength has enabled us to continually invest in building our businesses for the future.

You can see from the following charts what gains and improvements we have achieved along the way.

Read footnoted information here

Within this letter, I discuss the following:

I. SUMMARY OF OUR 2023 RESULTS AND THE PRINCIPLES THAT GUIDE US

• Steadfast principles worth repeating (and a new one)
• A timeline of accomplishments
• Financial performance

II. UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY

• The critical impact of artificial intelligence
• Our journey to the cloud
• Acquiring First Republic Bank and its customers
• Navigating in a complex and potentially dangerous world
• What we learned: A five-point action plan to move forward on the climate challenge
• Powering economic growth in Florida
• Giving the bank regulatory and supervisory process a serious review
• Protecting the essential role of market making (trading)

III. STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS

• The pressure of quarterly earnings compounded by bad accounting and bad decisions
• The hijacking of annual shareholder meetings
• The evolving influence of proxy advisors
• The benefits and risks of private credit
• A bank’s strength: Providing flexible capital

IV. MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND WITH HEART

• Benefiting from the OODA loop
• Decision making and acting (have a process)
• The secret sauce of leadership (have a heart)

V. A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY MATTER

• Coalescing the Western world — A uniquely American task
• Strengthening our position with a comprehensive, global economic security strategy
• Manager’s Journal: "A Politician's Dream Is A Businessman's Nightmare"
• We should have more faith in the amazing power of our freedoms
• How we can help lift up our low-income citizens and mend America's torn social fabric

Update on Specific Issues Facing Our Company

Each year, I try to update you on some of the most important issues facing our company. First and foremost may well be the impact of artificial intelligence (AI).

While we do not know the full effect or the precise rate at which AI will change our business — or how it will affect society at large — we are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet, among others.

THE CRITICAL IMPACT OF ARTIFICIAL INTELLIGENCE

Since the firm first started using AI over a decade ago, and its first mention in my 2017 letter to shareholders, we have grown our AI organization materially. It now includes more than 2,000 AI/machine learning (ML) experts and data scientists. We continue to attract some of the best and brightest in this space and have an exceptional firmwide AI/ML and Research department with deep expertise.

We have been actively using predictive AI and ML for years — and now have over 400 use cases in production in areas such as marketing, fraud and risk — and they are increasingly driving real business value across our businesses and functions. We're also exploring the potential that generative AI (GenAI) can unlock across a range of domains, most notably in software engineering, customer service and operations, as well as in general employee productivity. In the future, we envision GenAI helping us reimagine entire business workflows. We will continue to experiment with these AI and ML capabilities and implement solutions in a safe, responsible way.

While we are investing more money in our AI capabilities, many of these projects pay for themselves. Over time, we anticipate that our use of AI has the potential to augment virtually every job, as well as impact our workforce composition. It may reduce certain job categories or roles, but it may create others as well. As we have in the past, we will aggressively retrain and redeploy our talent to make sure we are taking care of our employees if they are affected by this trend.

Finally, as a global leader across businesses and regions, we have large amounts of extraordinarily rich data that, together with AI, can fuel better insights and help us improve how we manage risk and serve our customers. In addition to making sure our data is high quality and easily accessible, we need to complete the migration of our analytical data estate to the public cloud. These new data platforms offer high-performance compute power, which will unlock our ability to use our data in ways that are hard to contemplate today.

Recognizing the importance of AI to our business, we created a new position called Chief Data & Analytics Officer that sits on our Operating Committee.

Elevating this new role to the Operating Committee level — reporting directly to Daniel Pinto and me — reflects how critical this function will be going forward and how seriously we expect AI to influence our business. This will embed data and analytics into our decision making at every level of the company. The primary focus is not just on the technical aspects of AI but also on how all management can — and should — use it. Each of our lines of business has corresponding data and analytics roles so we can share best practices, develop reusable solutions that solve multiple business problems, and continuously learn and improve as the future of AI unfolds.

Clearly, AI comes with many risks, which need to be rigorously managed.

We have a robust, well-established risk and control framework that helps us proactively stay in front of AI-related risks, particularly as the regulatory landscape evolves. And we will, of course, continue to work hard with our regulators, clients and subject matter experts to make sure we maintain the highest ethical standards and are transparent in how AI helps us make decisions; e.g., to counter bias among other things.

You may already be aware that there are bad actors using AI to try to infiltrate companies’ systems to steal money and intellectual property or simply to cause disruption and damage. For our part, we incorporate AI into our toolset to counter these threats and proactively detect and mitigate their efforts.

OUR JOURNEY TO THE CLOUD

Getting our technology to the cloud — whether the public cloud or the private cloud — is essential to fully maximize all of our capabilities, including the power of our data. The cloud offers many benefits: 1) it accelerates the speed of delivery of new services; 2) it simultaneously reduces the cost of compute power and enables, when needed, an extraordinary amount of compute capability — called burst computing; 3) it provides that compute capability across all of our data; and 4) it allows us to be able to constantly and quickly adopt new technologies because updated cloud services are continually being added — more so in the public cloud, where we benefit from the innovation that all cloud providers create, than in the private cloud, where innovation is only our own.

Of course, we are learning a lot along the way. For example, we know we should carefully pick which applications and which data go to the public cloud versus the private cloud because of the expense, security and capabilities required. In addition, it is critical that we eventually use multiple clouds to avoid lock-in. And we intend to maintain our own expertise so that we’re never reliant on the expertise of others even if that requires additional money.

We invested approximately $2 billion to build four new, modern, private cloud-based, highly reliable and efficient data centers in the United States (we have 32 data centers globally). To date, about 50% of our applications run a large part of their processing in the public or private cloud. Approximately 70% of our data is now running in the public or private cloud. By the end of 2024, we aim to have 70% of applications and 75% of data moved to the public or private cloud. The new data centers are around 30% more efficient than our existing legacy data centers. Going to the public cloud can provide 30% additional efficiency if done correctly (efficiency improves when your data and applications have been modified, or “refactored,” to enable new cloud services). We have been constantly updating most of our global data centers, and by the end of this year, we can start closing some that are larger, older and less efficient.

ACQUIRING FIRST REPUBLIC BANK AND ITS CUSTOMERS

The purchase of First Republic Bank was not something that we would have done just for ourselves. But the regulators relied on us to step forward (we worked hand in hand with the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the U.S. Treasury), and the purchase of First Republic helped stabilize and strengthen the U.S. financial system in a time of crisis.

The acquisition of a major company entails a lot of complexity. People tend to focus on the financial and economic outcomes, which is a reasonable thing to do. And in the case of First Republic, the numbers look rather good. We recorded an accounting gain of $3 billion on the purchase , and we told the world we expected to add more than $500 million to earnings annually, which we now believe will be closer to $2 billion. However, these results mask some of the true costs. First, approximately one-third of the incremental earning was simply deploying excess capital and liquidity, which doesn’t require purchasing a $300 billion bank — we simply could have bought $300 billion of assets. Second, as soon as the deal was announced, approximately 7,600 of our employees went from working on tasks that would benefit the future of JPMorgan Chase to working on the merger integration. Overall, the integration involves effectively combining more than 165 systems (e.g., statement, deposit, accounting and human resources) and consolidating policies, risk reporting, and other various rules and procedures. We hope to have most of the integration done by the middle of 2024.

Fortunately, we were very familiar and comfortable with all of the assets we were acquiring from First Republic. What we didn’t take on was First Republic’s excessive interest rate exposure — one of the reasons it failed — which we effectively hedged within days of the acquisition.

Our people did a great job of respectfully managing this transition, knowing that circumstances were particularly tough for our new colleagues, whom we tried to welcome with open arms. We did everything we could to redeploy individuals whose jobs were lost because of the merger (we directly hired over 5,000 people). Our approach has always been to go into an acquisition knowing we can learn things from other teams, and in this case, we did: First Republic had done an outstanding job serving high-net-worth clients and venture capitalists, and we are developing what is effectively a new business for us following First Republic’s servicing model. We will serve these high-net-worth clients through a single point of contact, supported by a concierge service model, across our distribution channels — including more than 20 new JPMorgan Chase branded branches.

NAVIGATING IN A COMPLEX AND POTENTIALLY DANGEROUS WORLD

In the policy section, we talk about how we may be entering one of the most treacherous geopolitical eras since World War II. And I have written in the past about high levels of debt, fiscal stimulus, ongoing deficit spending and the unknown effects of quantitative tightening (which I am more worried about than most) so I won’t repeat those views here. However, the impacts of these geopolitical and economic forces are large and somewhat unprecedented; they may not be fully understood until they have completely played out over multiple years. In any case, JPMorgan Chase must be prepared for the various potential impacts and outcomes on our company and our people.

We remain wary of economic prognosticating.

While all companies essentially budget on a base case forecast, we are very careful not to run our business that way. Instead, we look at a range of potential outcomes for which we need to be prepared. Geopolitical and economic forces have an unpredictable timetable — they may unfold over months, or years, and are nearly impossible to put into a one-year forecast. They also have an unpredictable interplay: For example, the geopolitical situation may end up having virtually no effect on the world’s economy or it could potentially be its determinative factor.

We have ongoing concerns about persistent inflationary pressures and consider a wide range of outcomes to manage interest rate exposure and other business risks.

Many key economic indicators today continue to be good and possibly improving, including inflation. But when looking ahead to tomorrow , conditions that will affect the future should be considered. For example, there seems to be a large number of persistent inflationary pressures, which may likely continue. All of the following factors appear to be inflationary: ongoing fiscal spending, remilitarization of the world, restructuring of global trade, capital needs of the new green economy, and possibly higher energy costs in the future (even though there currently is an oversupply of gas and plentiful spare capacity in oil) due to a lack of needed investment in the energy infrastructure. In the past, fiscal deficits did not seem to be closely related to inflation. In the 1970s and early 1980s, there was a general understanding that inflation was driven by “guns and butter”; i.e., fiscal deficits and the increase to the money supply, both partially driven by the Vietnam War, led to increased inflation, which went over 10%. The deficits today are even larger and occurring in boom times — not as the result of a recession — and they have been supported by quantitative easing, which was never done before the great financial crisis. Quantitative easing is a form of increasing the money supply (though it has many offsets). I remain more concerned about quantitative easing than most, and its reversal, which has never been done before at this scale.

Equity values, by most measures, are at the high end of the valuation range, and credit spreads are extremely tight. These markets seem to be pricing in at a 70% to 80% chance of a soft landing — modest growth along with declining inflation and interest rates. I believe the odds are a lot lower than that. In the meantime, there seems to be an enormous focus, too much so, on monthly inflation data and modest changes to interest rates. But the die may be cast — interest rates looking out a year or two may be predetermined by all of the factors I mentioned above. Small changes in interest rates today may have less impact on inflation in the future than many people believe.

Therefore, we are prepared for a very broad range of interest rates, from 2% to 8% or even more, with equally wide-ranging economic outcomes — from strong economic growth with moderate inflation (in this case, higher interest rates would result from higher demand for capital) to a recession with inflation; i.e., stagflation. Economically, the worst-case scenario would be stagflation, which would not only come with higher interest rates but also with higher credit losses, lower business volumes and more difficult markets. Under these many different scenarios, our company would continue to perform at least okay. Importantly, being prepared means we can continue to help our clients no matter what the future portends.

The mini banking crisis of 2023 is over, but beware of higher rates and recession — not just for banks but for the whole economy.

When we purchased First Republic in May 2023 following the failure of two other regional banks, Silicon Valley Bank (SVB) and Signature Bank, we thought that the current banking crisis was over. Only these three banks were offsides in having the toxic combination of extreme interest rate exposure, large unrealized losses in the held-to-maturity (HTM) portfolio and highly concentrated deposits. Most of the other regional banks did not have these problems. However, we stipulated that the crisis was over provided that interest rates didn’t go up dramatically and we didn’t experience a serious recession. If long-end rates go up over 6% and this increase is accompanied by a recession, there will be plenty of stress — not just in the banking system but with leveraged companies and others. Remember, a simple 2 percentage point increase in rates essentially reduced the value of most financial assets by 20%, and certain real estate assets, specifically office real estate, may be worth even less due to the effects of recession and higher vacancies. Also remember that credit spreads tend to widen, sometimes dramatically, in a recession.

We seek to be engaged globally and carefully manage complex countries and geopolitical issues.

JPMorgan Chase does business in more than 100 countries, and we have people on the ground in over 60 countries. In almost all those locations, we do research on their economy, their markets and their companies; we bank their government institutions and their companies; and we bank multinational corporations, including the U.S. multinational corporations within their borders. This is a critical role — not only in helping those countries grow and improve but also in expanding the global economy.

Many of these countries are quite complex with different laws, customs and regulations. We are occasionally asked why we bank certain companies and even certain countries, particularly when countries have some laws and customs that are counter to many of the values held in the United States. Here’s why:

• The U.S. government sets foreign policy. And when it does, we salute. Wherever we do business, we follow the law of the United States, as it applies in that country (in addition to the laws of the country itself), in all respects. Think of trade rules, sanctions, anti-money laundering and the Foreign Corrupt Practices Act, among others. By and large, these things help improve those countries. In most cases, the U.S. government does not want us to leave because it agrees, generally, that the engagement of American business enhances our relationships with other countries and helps those countries themselves.
• Engagement makes the world a better place. We all should want the world to continue to improve. Isolation and lack of engagement do not accomplish that goal. While we believe that it makes sense for the United States to push for constant improvement around the world — from advocating for human rights to fighting corruption — this is rarely accomplished through coercion, and, in fact, is enhanced by engagement.
• We need to be prepared for emerging challenges and position ourselves to understand them. We created a new role — Head of Asia Pacific Policy and Strategic Competitiveness — to focus specifically on key policy issues critical to the firm’s (and, in fact, the country’s) competitiveness, such as trade restrictions, supply chains and infrastructure. We also created a new strategic security forum to focus on emerging and evolving risks, including trade wars, pandemics, cybersecurity and actual wars, to name just a few.

OUR EXTENSIVE COMMUNITY OUTREACH EFFORTS, INCLUDING DIVERSITY, EQUITY AND INCLUSION

JPMorgan Chase makes an extraordinary effort as part of our “normal” day-to-day outreach to engage with individual clients, small and midsized businesses, large and multinational firms, government officials, regulators and the press in cities all around the world. This dialogue is part of the normal course of business but it is also part of building trust and putting down roots in a community.

We believe that companies, and banks in particular, must earn the trust of the communities and countries in which they operate. We believe — and we are unashamed about this — that it is our obligation to help lift up the communities and countries in which we do business. We believe that doing so enhances business and the general economic well-being of those communities and countries and also enhances long-term shareholder value. JPMorgan Chase thrives when communities thrive.

This approach is integral to what we do, in great scale, around the world — and it works. We are quite clear that whether our efforts are inspired by the goodness of our hearts (as philanthropy or venture-type investing) or good business, we try to measure the actual outcomes.

It’s also interesting to point out that many of our efforts were spawned from our work around Advancing Black Pathways, Military and Veterans Affairs, and our work in Detroit. While we’ve banked Detroit for more than 90 years, our $200 million investment in its economic recovery over the last decade demonstrated that investing in communities is a smart business strategy. We are one of the largest banks in Detroit, from consumer banking to investment banking, and it’s quite clear that not only did our efforts help Detroit, but they also helped us gain market share. The extent of Detroit’s remarkable recovery was recently highlighted when Moody’s upgraded the city’s credit rating to investment grade — an extraordinary achievement just over 10 years after the city filed the largest municipal bankruptcy in U.S. history.

For JPMorgan Chase, Detroit was an incubator for developing models that help us hone how we deploy our business resources, philanthropic capital, skilled volunteerism, and low-cost loans and equity investments, as well as how we identify top talent to drive successful business and societal improvements. I hope that, as shareholders, you are proud of our focus on promoting opportunity for all, both within and outside our organization, which includes economic opportunity. Some of our initiatives are listed below.

• Business Resource Groups. To deepen our culture of inclusion in the workplace, we have 10 Business Resource Groups (BRG) across the company to connect more than 160,000 participating employees around common interests, as well as to foster networking and camaraderie. Groups welcome anyone — allies and those with shared affinities alike. For example, some of our largest BRGs are Access Ability (employees with disabilities and caregivers), Adelante (Hispanic and Latino employees), BOLD (Black employees), NextGen (early career professionals), PRIDE (LGBTQ+ employees) and Women on the Move.
• Women on the Move. At JPMorgan Chase, they sure are! Women represent 28% of our firm’s senior leadership globally. In fact, our major lines of business — CCB, AWM and CIB, which would be among Fortune 1000 companies on their own — are all run by women (one with a co-head who is male). More than 10 years ago, a handful of senior women at the company, on their own, started this global, firmwide, internally focused organization called Women on the Move. It was so successful that we expanded the initiative beyond the company; it now empowers clients and consumers, as well as women employees and their allies, to build their careers, grow their businesses and improve their financial health. The Women on the Move BRG has more than 70,000 employees globally.
• Advancing Black Pathways. This comprehensive program, which just reached the five-year mark, focuses on strengthening the economic foundation of Black communities because we know that opportunity is not always created equally. The program does so by, among other accomplishments, helping to diversify our talent pipeline, providing opportunities for Black individuals to enter the workforce and gain valuable experience, and investing in the financial success of Black Americans through a focus on financial health, homeownership and entrepreneurship. An important part of the program’s work is achieved through our investment in Historically Black Colleges and Universities (HBCU). We now partner with 18 schools across the United States to boost recruitment connections, expand career pathways for Black students and other students, and support their long-term development and financial health. As a measure of the program’s success, in four years we have made nearly 400 hires into summer and full-time analyst and associate roles at the firm.
• Military and Veterans Affairs. This firmwide effort sponsors recruitment, mentorship and development programs to support the military members and veterans working at JPMorgan Chase. Back in 2011, we joined with 10 other companies to launch the Veteran Jobs Mission (VJM), whose membership has since grown to more than 300 companies representing various industries across the United States and has hired over 900,000 veterans and military spouses. In 2023, VJM announced the creation of its Advisory Board, which is composed of 14 corporate leaders, to provide strategic direction and oversight of VJM as it continues to expand its commitment to support economic opportunities for veterans and military spouses, including its goal to hire 2 million veterans and 200,000 military spouses by 2030. JPMorgan Chase alone has hired in excess of 18,000 veterans since 2011 and currently employs more than 3,100 military spouses.
• Creating opportunity for people with disabilities. The firm’s Office of Disability Inclusion continues to lead strategy and initiatives aimed at advancing economic opportunity for people with disabilities. In 2023, we joined lawmakers and business leaders in Washington, D.C., to show support for passage of the Supplemental Security Income (SSI) Savings Penalty Elimination Act. Modernizing the SSI program, by updating asset limits for the first time in nearly 40 years, would allow millions of people with disabilities who receive SSI benefits the opportunity to build their savings without putting their essential benefits at risk. We also provided business coaching to more than 370 entrepreneurs with disabilities.
• Virtual call centers. When we sought to expand our customer service specialists program across the United States, we turned to Detroit, launching our first virtual call center in 2022. Investments in Detroit’s workforce development infrastructure helped us hire 90 virtual customer service specialists for a program that has outperformed many of our traditional call centers around the world. Following this success, we expanded our hiring efforts and this virtual program to Baltimore to create new jobs that jump-start careers. And now we’re evaluating the possibility of expanding even further.
• Entrepreneurs of Color Fund. A critical challenge we have seen in so many communities is that traditional lending standards render too many entrepreneurs — particularly entrepreneurs of color and those serving these communities — ineligible for credit. In response, we helped launch the Entrepreneurs of Color Fund (EOCF) in Detroit, a lending program designed to help aspiring small business owners gain access to critical resources needed for growth that are often not equitably available — capital, technical assistance and mentorship, among others. These challenges aren’t unique to Detroit so we worked with community development financial institutions to replicate the EOCF program in 10 markets across the United States in 2023, deploying more than 2,900 loans and $176 million in capital to underserved entrepreneurs across the country.
• Senior business consultants. To help entrepreneurs and small businesses make the transition from community lending to accessing capital from traditional financial institutions, we created a new job — senior business consultant — to provide support. Senior business consultants in branches that focus on underserved communities offer coaching and help business owners with everything from navigating access to credit to managing cash flow to generating effective marketing. Since 2020, these consultants have mentored more than 5,500 business owners, helping them improve their operations, grow revenue and network with others in the local business community.
• Advancing Cities The organizing principles that define the business and community investments we make and how we best achieve an overall impact in local economies were heavily influenced by our experience in Detroit. Seeing Detroit’s comeback begin to take shape several years ago, we created Advancing Cities to replicate this model for large-scale investments to other cities around the world. From San Francisco to Paris to Greater Washington, D.C., we’ve applied what we learned in Detroit to communities where conditions are opportune for success and require deeper investments — where community, civic and business leaders have come together to solve problems and get results.
• JPMorgan Chase Service Corps. Ten years ago, we launched the JPMorgan Chase Service Corps to strengthen the capacity-building of nonprofit partners. We brought employees from around the world to Detroit to assist with its recovery — from creating a scoring model for a nonprofit to helping prioritize neighborhoods for development funding to devising an implementation plan for an integrated talent management system. Since that time, the Service Corps has expanded, with more than 1,500 JPMorgan Chase employees contributing 100,000 hours to support over 300 nonprofits globally.
• Community Centers/Branches and Community Managers. A local bank branch, especially in a low-income neighborhood, can be successful only when it fits the community’s needs. That is why over the last several years we have shifted our approach to how we offer access to financial health education, as well as low-cost products and services to help build wealth. Since 2019, we have opened 16 Community Center branches, often in areas with larger Black, Hispanic or Latino populations, and have plans to open three more by the end of 2024. These branches have more space to host grassroots community events, small business mentoring sessions and financial health seminars, which have been well-attended — to date, over 400,000 people have taken advantage of the financial education seminars. In each of these Community Center branches, we hired a Community Manager (who acts as a local ambassador) to build relationships with community leaders, nonprofits and small businesses. The Community Manager concept and practice have become so successful that we have also placed these managers in many of our traditional branches in underserved communities. We now have 149 Community Managers throughout our branch network.
• Work skills development. Detroit showed us how talent in communities is often overlooked. We saw this in the early days of our investment when we visited our partners at Focus: HOPE, a training program designed to help Detroiters develop skills for high-demand jobs. Quickly, it became clear that the training and education system in Detroit was disconnected from employers and their talent needs. By investing in programs like Focus: HOPE, we have been able to help bridge local skills gaps by training people for in-demand jobs in communities like Dallas, Miami and Washington, D.C. Between 2019 and 2023, we supported more than 2 million people through our extensive learning and career programming around the world.
• Increasing our rural investment. We are proud to be the only bank with branches in all 48 contiguous states, which include many rural communities. Nearly 17 million consumers living in rural areas hold over $100 billion in deposits with us and $175 billion in loans. We are also a leading wholesale lender in these communities, helping to fuel local economies through relationships with local companies, governments, hospitals and universities. Since 2019, we have made material progress in extending our footprint to reach more rural Americans, including expanding our branch network into 13 new states with large rural populations. Now we are raising the bar. With our new strategy, we have a goal to have a branch available to serve 50% of a state’s population within an acceptable driving distance, including in heavily rural states such as Alabama and Iowa. This focus is part of our recently announced plan to build an additional 500 branches and hire 3,500 employees over the next three years. Through this expansion, we will partner across lines of business and our Corporate Responsibility organization to help advance inclusive economic growth and bring the full force of the firm to America’s heartland.

We’ve nearly completed our five-year, $30 billion Racial Equity Commitment — it will now become a permanent part of our business.

What began in 2020 as a five-year, $30 billion commitment is now transforming into a consistent business practice for our lines of business in support of Black, Hispanic, Latino and other underserved communities. By the end of 2023, we reported over $30 billion in progress toward our original goal. However, our focus is not on how much money is deployed — but on long-term impact and outcomes. And going forward, these programs will be embedded in our business-as-usual operating system.

• Affordable rental housing. Through our Affordable Housing Preservation program, we approved program funding to date of approximately $21 billion in loans to incentivize the preservation of over 190,000 affordable housing rental units across the United States. Additionally, we financed approximately $5 billion for the construction and rehabilitation of affordable rental housing.
• Homeownership. In 2023, we expanded our $5,000 Chase Homebuyer Grant program to include over 15,000 majority Black, Hispanic and Latino communities — and in January 2024, we increased our grant amount to $7,500 in select markets. Since our grant program began in 2021, we have provided about 8,600 grants totaling $43 million. We also have provided home purchase and refinance loans in 2023 worth over $4.6 billion for more than 14,000 Black, Hispanic and Latino households across the economic spectrum.
• Small business. The Business Card Special Purpose Credit Program, launched in January 2023, has provided over 10,900 cards, totaling over $43 million in available credit lines to underserved entrepreneurs and communities across the United States.
• Supplier diversity. In 2023, our firm spent approximately $2.3 billion directly with diverse suppliers — an increase of 10% over 2022. As a part of our racial equity commitment, over $450 million was spent in 2023 with more than 190 Black-, Hispanic- and Latino-owned businesses.
• Minority depository institutions and community development financial institutions. To date, we have invested more than $110 million in equity in diverse financial institutions and provided over $260 million in incremental financing to community development financial institutions to support communities that lack access to traditional financing. JPMorgan Chase also helped these institutions build their capacity so they can provide a greater number of critical services like mortgages and small business loans.

We’re thoughtfully continuing our diversity, equity and inclusion efforts.

Of course, JPMorgan Chase will conform as the laws evolve. We will scour our programs, our words and our actions to make sure they comply.

That said, we think all the efforts mentioned above will remain largely unchanged. And, in fact, around the world, cities and communities where we do business applaud these efforts. We also believe our initiatives make us a more inclusive company and lead to more innovation, smarter decisions and better financial results for us and for the economy overall.

We are often asked in particular about “equity” and what that word means. To us, it means equal treatment, equal opportunity and equal access … not equal outcomes. There is nothing wrong with acknowledging and trying to bridge social and economic gaps, whether they be around wealth or health. We would like to provide a fair chance for everyone to succeed — regardless of their background. And we want to make sure everyone who works at our company feels welcome.

We want to articulate how we weigh in on social issues and what it means for our customers.

Before I comment about culture issues, I have a confession to make: I am a full-throated, red-blooded, patriotic, free-enterprise (properly regulated, of course) and free-market capitalist. Our company is frequently asked to take a position on an issue, rule or legislation that might be considered “cultural.” When that happens, we take a deep breath and study the matter. Many of the laws in question have many specific requirements, some of which you would agree with but not others. But we are being asked to support the entire law. In cases like these, we simply make our own statement that reflects our educated view and values; however, we do not give our voice to others.

We believe in the values of democracy, including freedom of speech and expression, and are staunchly against discrimination and hate. We have not turned away — and will not turn away — customers because of their political or religious affiliations nor would we tell customers how they should spend their money.

Our commitment to these ideals is also reflected in our employees. The talent at our firm is a vibrant mix of cultures, beliefs and backgrounds. We are, of course, fully committed to freedom of speech. There are things that you can say that would be permitted under freedom of speech but would not be allowed under our Code of Conduct. For example, we do not allow intimidation, threats or highly prejudicial behavior or speech. Our Code of Conduct clearly stipulates that certain statements and behavior, while allowed under freedom of speech, can lead to disciplinary action at our company — from being reprimanded to being fired.

WHAT WE LEARNED: A FIVE-POINT ACTION PLAN TO MOVE FORWARD ON THE CLIMATE CHALLENGE

In May 2023, we gathered with knowledgeable and influential people from the energy industry writ large to the government and financial services arena in Scottsdale, Arizona, for an action forum. The goal was to explore various aspects of the climate challenge and try to devise effective solutions that could help lead to meaningful progress. The climate challenge is immense and complex. Addressing it requires more than making simplistic statements and rules; rather, energy systems and global supply chains need to be transformed across virtually all industries. And there is also a deep need for new research and development. Energy systems and supply chains provide the foundation of the global economy and must be treated with care.

At the same time, the opportunity here is immense. The investment required to meet climate goals — estimated at over $5 trillion annually — could generate economywide growth and opportunity at a scale the world has not seen since the Industrial Revolution.

The task for industry, policymakers and finance is to help formulate solutions that support the transition to a low-carbon economy, balancing affordable, reliable access to energy with generating economic growth.

To find a way forward, we sought input from diverse stakeholders in pursuit of a North Star. In Scottsdale and in discussions with clients across industries about what’s needed to achieve a low-carbon economy, these five action steps and reforms were top of mind:

• Supportive government policy and leadership to advance the transition. Policy that promotes favorable economic conditions to make the transition viable is a critical first step for clients. This includes government leadership via mandates, incentives or subsidies to support jobs and investment in the transition; actions on permitting and interconnection reform; and regulatory clarity and certainty, especially around long-term investments. As one vital example, current grid infrastructure is insufficient to accommodate the growth in renewables.
• Public/private partnerships in scaling bankable projects. Scaling investments needs to happen both for commercially proven technologies (e.g., wind and solar) and for emerging technologies (e.g., green hydrogen, sustainable aviation fuel and carbon capture). Developing “bankable” clean energy projects will require the application of smart financial tools, as well as further policy support. It will take public/private partnerships and innovation to create catalytic forms of capital that can step into these gaps, absorb first-mover risks and provide the necessary funding. The cost of capital is too high for some companies — and public funds ought to be deployed in a smart way that effectively attracts private capital.
• Public education and engagement. Without question, clients told us that public commitment to and investment in energy-related infrastructure is one of the most important parts of combating the climate crisis and running their businesses. Supporting the buildout of energy-related infrastructure with speed and scale is critical. Public acceptance of building and advancing the infrastructure needed to meet climate goals is at the heart of progress. While the energy transition is poised to deliver benefits to communities across the world, securing acceptance and support to build clean energy infrastructure at scale is challenging. Access to job-creating renewable energy projects can help rural communities thrive by advancing local economies. Ensuring public support and social license to operate requires better engagement strategies, including widespread stakeholder education about the benefits of these technologies for local communities.
• Communication about concrete successes. Across industries, market participants need to do a better job of celebrating and championing concrete successes and tangible milestones. This includes highlighting success stories around emerging technologies and the complex nature of the carbon transition. Stakeholders also should better convey the benefits of clean energy — across all technologies — to help combat misinformation and foster a more informed dialogue.
• Work skills training. Businesses depend on healthy, thriving communities so the carbon transition needs to work for everyone. This includes helping to ensure that workers are trained in the skills for the future, such as through improved engineering schools and job training programs. Work across the entire supply chain is essential to moving at pace. As one example, the U.S. Bureau of Labor Statistics estimates we will need more than 70,000 additional electricians per year through 2031; it is currently unclear how the market will meet that demand. If the deployment of heat pumps and electric vehicle chargers accelerates, demand for electricians will be even higher. A concerted focus to train electricians can help the United States meet some of its climate goals while providing well-paying jobs that do not require a four-year college degree. Also, broadly speaking, businesses are in a better position to make investments with confidence when labor requirements across the value chain — from design and manufacturing to installation — are satisfied.

We recently reconsidered certain memberships.

JPMorgan Chase recently exited Climate Action 100+ and the Equator Principles. “Why?” we are asked. While we don’t necessarily disagree with some of the principles many organizations have, we make our own business decisions. We think we have some of the best-in-class environmental, social and risk standards because we have invested in our own in-house experts and matured our own risk management processes over the years. As a result, we are going to go our own way and make our own independent decisions, gathering the best learnings of experts in the field, and, of course, we will follow all legal requirements.

We are engaged but recognize our role: three more important points.

First, everyone should understand that conquering the climate problem needs proper government action, particularly around taxes, permitting, grids, infrastructure building and proper coordination of policies — we are not there yet. Second, there is no known technology that can fill the gap between our “aspirations” and the current trajectory of the world. We hope and believe that this will be found (for example, through carbon capture, improved batteries, hydrogen or other measures). This new technology will also require proper government research and development funding, as the effort cannot be accomplished by private enterprise alone. And third, we are going to use the word “commitment” much more reservedly in the future, clearly differentiating between aspirations we are actively striving toward and binding commitments.

For JPMorgan Chase to play the right role in tackling the climate challenge, we have organized a special group around the green economy and related infrastructure investment. This group will coordinate and inform our work across all established industry groups (from auto to real estate, energy, agriculture and others) and includes hundreds of employees devoted to these efforts.

POWERING ECONOMIC GROWTH IN FLORIDA

From Tallahassee to Miami and from Tampa to Palm Bay, JPMorgan Chase has been committed to Florida for more than 130 years and has enjoyed being the bank for all communities. Each year, we contribute billions of dollars to the economy, hire and train local residents, help to revitalize neighborhoods and remove barriers to opportunity for Floridians across the state. Our partnerships with businesses, nonprofits, government entities and community organizations have enabled us to drive sustainable impact and help them achieve their goals. We couldn’t be more proud to help make opportunity happen in Florida.

This year, we forged a relationship with Inter Miami CF, one of the most recognizable sports teams in the world. Through this partnership and the newly named Chase Stadium, we’re continuing to contribute to South Florida and its local communities. In Tampa, home to nearly 6,000 of our employees, we’re triggering an additional $210 million in economic activity and creating over 660 local construction jobs through the renovation of our Highland Oaks campus and downtown Tampa office. We’re proud that one-third of all Floridians do business with us through deposits, credit cards or a mortgage. Through each of our investments across the state, we’re ensuring that residents have the resources and tools they need to thrive.

Our support to government, higher education, healthcare and nonprofit organizations:

• We serve over 150 government, higher education, healthcare and nonprofit clients throughout the state, and over the last five years, we have provided more than $20.2 billion in credit and capital to them.
• Our clients range from the city of Jacksonville to the Orlando Utilities Commission, the University of South Florida, Broward Health and the District School Board of Pasco County — a decades-long client.
• We are the lead treasury bank for the Wounded Warrior Project, one of the largest veteran service organizations in the United States. Headquartered in Jacksonville, the organization caters to wounded veterans and service members who served in the military on or after 9/11.

Our support to investment and middle-market banking clients:

• Over the last five years, we have provided in excess of $318 billion in credit and capital to local clients, such as utility, technology and tourism companies.
• We have more than 12,500 large and midsized clients across the state.

Our support to local financial firms:

• Over the last five years, we have provided more than $24 billion in credit and capital for financial institutions, such as local banks, insurance companies, asset managers and securities firms.
• We bank over 50 of Florida’s regional, midsized and community banks, helping them play an essential role in maintaining the state’s economy and serve local communities.

Our support to small business:

• At the end of 2023, balances for loans extended to Florida’s small businesses totaled more than $1.2 billion — funds being used to help those businesses scale and grow, contribute to the economy and create local jobs.
• Across the state, we have over 654,000 small business customers.
• In 2023, our bankers and senior business consultants spent more than 375,000 hours advising and supporting Florida business owners.

Our support to consumer banking needs:

• We operate 1,445 ATMs and 410 branches across the state.
• In 2023, we supported more than 6.1 million customers with mortgages, auto loans and savings, checking and credit card accounts, giving JPMorgan Chase one of the largest consumer banking market shares in the state.
• We managed more than $70 billion in investment and annuity assets for local clients.

Our business and community investments:

• $3 million to The Miami Foundation’s Resilient 305: Building Prosperity Collaborative to increase access to quality jobs and develop small businesses through training, investments and capacity-building.
• $1.6 million to the Community Justice Project, which empowers community-based legal advocates to help delay displacement and improve conditions for housing stability for renters across nine Florida counties.
• A $1 million investment to Florida Memorial University, South Florida’s only HBCU, to help traditionally underresourced students pursue a career in technology.

Our support as a local employer:

• We employ more than 14,000 residents throughout the state, including nearly 1,900 veterans and over 660 people with a criminal background who deserve a second chance.
• In Florida, the average salary of our employees is more than $87,000 (plus a starting comprehensive annual benefits package worth nearly $17,600) compared with the statewide per capita income of nearly $40,300.

GIVING THE BANK REGULATORY AND SUPERVISORY PROCESS A SERIOUS REVIEW

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was finished 14 years ago, and we believe it accomplished a lot of good things. But it’s been quite a while since then, and we’re still debating some very basic issues. It’s time to take a serious, hard, honest look at what has been done and what can be improved.

It’s good to remember that the United States has the best financial system in the world, with diversified, deep and experienced institutions, from banks, pension plans, hedge funds and private equity to individual investors. It has healthy public and private markets, transparency, rule of law and deep research. The best banking system in the world is a critical part of this, and, integrated with the overall financial system, is foundational to the proper allocation of capital, innovation and the fueling of America’s growth engine.

This is not about JPMorgan Chase — we believe we can manage through whatever is thrown our way. This is about the impact on all parts of the system — from smaller banks to larger regional banks that may not have the resources to handle all of these regulatory requirements. It’s also about the effect on the financial markets and the economy from the rapidly growing shadow banking system, as well as the ultimate impact on the customers, clients and communities we serve. This is about what’s right for the system.

The banking and financial system is innovative, dynamic and constantly changing.

The banking system is not static: There are startup banks, mergers, successful upstarts and fintech banks, and even Apple, which effectively acts as a bank — it holds money, moves money, lends money and so on. Nonbanks are competing with traditional banks, and, in general, this dynamism and churn are good for innovation and invention — with success and failure simply part of the robust process. Innovation runs across payments systems, budgeting, digital access, product extensions, risk and fraud prevention, and other services. Different institutions play different roles, and, importantly, small banks and big banks serve completely different strategic functions. Large banks bank multinational corporations around the world, make healthy markets, and wield technology and a product set that are the best in the world. A small bank simply cannot bank these same multinational governments and safely move the amount of money and securities that large banks do. Regional and community banks have exceptional local knowledge and presence and are critical in serving thousands of towns and certain geographies.

It is also important to recognize that the banking system as we know it is shrinking relative to private markets and fintech, which are growing and becoming increasingly competitive. And remember that many of these new players do not have the same transparency or need to abide by the extensive rules and regulations as traditional banks, even if they offer similar products — this often gives them significant advantage.

To deal with this fluid environment, banks of all sizes develop their own strategies, whether to specialize, expand geographically or embark on mergers and acquisitions. There are certain banking services where economies of scale are a competitive advantage, but not all banks need to become bigger to gain this benefit (there are many highly successful banks that are smaller). What is clear is that banks should be allowed to pursue their individual strategies, including mergers and acquisitions, as they see fit. Overall, this process should be allowed to happen — it’s part of the natural and healthy course of capitalism — and it can be done without harming the American taxpayer or economy.

While we all want a strong banking and financial system, we should step back and assess how all the regulatory steps we have taken measure up against the goals we all share. Since Dodd-Frank was signed into law in 2010, thousands of rules and reporting requirements written by 10+ different regulatory bodies in the United States alone have been added. And it would probably be an understatement to say that some are duplicative, inconsistent, procyclical, contradictory, extremely costly, and unnecessarily painful for both banks and regulators. Many of the rules have unintended consequences that are not desirable and have negative impacts, such as increasing the cost of credit for consumers (hurting lower-income Americans the most).

The whole process, including the Basel III endgame, could be much more productive, streamlined, economical, efficient and safe.

Both regulators and banks should want the same thing — a healthy banking system, serving its clients and striving for continuous improvement. We all should also want the enormous benefits that would come from good collaboration between regulators and bank management teams and boards.

Over time, these relationships have deteriorated, and, again, are increasingly less constructive. There is little real collaboration between practitioners — the banks — and regulators, who generally have not been practitioners in business. While we acknowledge the dedication of regulators who work with banks on a daily basis, management teams across the industry are putting in a disproportionate amount of time addressing requests for extra details, documentation and processes that extend far beyond the actual rules — and distract both regulators and management from more critical work. We should be more focused on the truly important risks for the safety of the system. And unfortunately, without collaboration and sufficient analysis, it is hard to be confident that regulation will accomplish desired outcomes without undesirable consequences. Instead of constantly improving the system, we may be making it worse. A few additional points:

• The Basel III endgame disadvantages American banks. The Basel III endgame has been 10 years in the making, and it still has not been completed. In my view, many of the rules are flawed and poorly calibrated. If the Basel III endgame were implemented in its current form, it would hamper American banks: As proposed, it would increase our firm’s required capital by 25%, making our requirement 30% higher than it would be under the equivalent European Union proposal. That means for every loan and asset financed in the United States by a major American bank, that bank would have to hold 30% more capital than any international competitor. The proposed regulations would also damage market making (see the following section). There are many other flaws but suffice it to say that much of the work being done today to analyze the effects should have been done before the proposed rulemaking. One of the single most important lessons from the great financial crisis is that there is enormous value to having a bank that is well-managed and has diverse revenue sources. Yet regulation since then both punishes consolidation and diversification — and punishes performance — through many features of the GSIB surcharge.
• Built over many years, the framework is now full of duplication. The following is only a partial list: American gold-plating and conceptual inconsistencies among Comprehensive Capital Analysis and Review (CCAR), recovery and resolution plans, liquidity requirements, global systemically important bank (GSIB) requirements, and safety and soundness principles. The many overlapping rules contribute to the bureaucracy that generates an extraordinary amount of make-work (an 80,000-page CCAR and shockingly another, coincidentally, 80,000-page recovery and resolution plan).
• The new rules do virtually nothing to fix what caused the failure of SVB and First Republic. For example, they don’t improve certain liquidity requirements, limit HTM accounting or reduce allowable interest rate exposure.
• The current regulatory approach to liquidity might simply run counter to the stated intent. Regulations should recognize the value and importance of lending and borrowing against good collateral and using central bank resources, such as the discount window. Adhering to current liquidity requirements permanently ties up good liquidity in a way that makes the system more fragile and more risky.
• It is not clear what the full intent of the Basel III endgame was – it will have unintended consequences. Without real analysis of expected outcomes, additional regulation will likely reduce the number of banks offering certain services and increase costs for all market participants and activity, including loans, market making and hedging (by farmers, airlines and countries, among others). And new rules might even increase consolidation as companies race to achieve economies of scale in certain products and services.

Unfortunately, some recent regulations are ending up in court. You can imagine that no one wants to sue their regulators. Banks would not sue if they did not think they were right — or if they thought they had any other recourse — which they effectively do not. This is definitely not what anyone should want. A more constructive relationship with regulators would reduce confusion and uncertainty and would lead to better outcomes for banks, their shareholders, and their clients, customers and communities.

Collaboration between banks and regulators could improve the use of resources and create better outcomes.

True collaboration could dramatically improve the banking system. For example:

• Redirect enormous resources from things that don’t matter to things that do. As mentioned, it takes 80,000 pages to describe a CCAR test and 80,000 pages to detail recovery and resolution. The talent and resources at the banks and regulators could be better used elsewhere. Such overload is distracting and takes your eye off the ball on real, emerging risks, including China, trade, payment systems and cybersecurity, among others.
• Reduce bureaucratic processes that provoke a tendency to herd mentality. For example, CCAR is just a point-in-time stress test, and it can lull you into a false sense of security — for reference, we do more than 100 stress tests each week. On interest rate exposure, focusing on the documentation of details may stop you from thinking about big interest rate exposure. Sometimes analyzing “what ifs” and fat tail risks is better than excessive and rigid models and documentations.
• Examine risks outside the regulatory system that are rarely analyzed and largely unaddressed. These risks include data and privacy, as well as consumer banking and payment systems, which are growing fast in the unregulated market. In addition, there are potential risks from private credit markets (which I talk about later in this section).
• Let’s imagine what’s possible with real collaboration. Working together, we can improve how the FDIC manages failing institutions, how to limit contagion and restore confidence to depositors, how liquidity requirements can create more flexible funding for banks under stress, how the banking and Federal Reserve’s payment system can become more interoperable, how clearinghouse risk can be reduced, how stress tests can protect the system from a wider variety of outcomes, how costs and therefore consumer costs can be reduced (not increased), how anti-money laundering requirements can be simplified and improved at the same time, and how financial products can be brought to the unbanked. We can fix the housing and mortgage markets. For example, mortgage regulations around origination, servicing and securitization could be simplified, without increasing risk, in a way that would reduce the average mortgage by 70 or 80 basis points. The Urban Institute estimates that a reduction like this would increase mortgage originations by 1 million per year and help lower-income households, in particular, buy their first home, thereby starting them on the best way to build household net worth. There are many more things that can be improved — and we really should start working on them.

We need a detailed review and probably a complete revamp.

I know this might be wishful thinking, but now would be a good time to step back and have a thorough and candid review of the thousands of new rules passed since Dodd-Frank. After this review, we should ask what is it that we really want: Do we want to try to eliminate the possibility of bank runs? Do we want to change and create liquidity rules that would essentially back most uninsured deposits? Do we want the mortgage business and leveraged lending business to be inside or outside the banking system? Do we want products that are inside and outside the banking system to be regulated the same way? Do we want to reasonably give smaller banks a leg up in purchasing a failing bank? And while Dodd-Frank did some good things, shouldn’t we take a look at the huge overlapping jurisdictions of various regulators? This overlap creates difficulties, not only for banks, but for the regulators, too. Any and all of this is achievable, and, I believe, could be accomplished with simpler rules and guidelines and without stifling our critical banking system.

PROTECTING THE ESSENTIAL ROLE OF MARKET MAKING (TRADING)

Before we discuss market making and financial markets, readers should understand that market making occurs in almost all businesses. There are healthy markets in farm animals, foreign products, commodities, energy, logistics, healthcare and so on. Healthy markets increase customer choice and reduce cost. They almost always involve holding inventory and taking some risk, which is simply a part of the process. America’s financial markets are the biggest in the world — U.S. public debt and equity markets total $137 trillion, constituting the biggest “market” in the world, and are larger than America’s gross domestic product (GDP) of $27 trillion.

Market participants are not “Wall Street.” They are large and small, mainly sophisticated, global investors (pension plans, mutual funds, governments and individuals) representing retirees, veterans, individuals, unions, federal workers and others. They all benefit from our efficient, low-cost and transparent markets.

Some regulators seem to think that market making is a speculative, hedge fund-like activity — and this thinking is what might be leading them to constantly increase capital requirements. The proposed capital rules could fundamentally alter market-making activities that are critical to a thriving economy, particularly in difficult markets when market making is even more important . The new rules would raise capital requirements by 50% for major banks — which could undermine market stability, make banking services costlier and less accessible, and push even more activity to a less regulated banking system.

Our financial system and markets are the best in the world and benefit ALL participants; exceptionally good market making in the secondary market makes our primary markets the best in the world.

We should recognize that the United States has the biggest, deepest and most liquid capital markets in the world. For these markets to function, it is critical for transparency and liquidity to be in the secondary market . Market making provides this, promoting the flow of capital to real economy investments and supporting all sectors of the economy, including companies, state and local governments, universities, hospitals, pension plans and overall job creation. Without market making in the secondary market, it would be extremely difficult for companies to raise capital through the primary market — equity and debt offerings — which have totaled approximately $3.6 trillion on average over the past few years. The incredible strength of these markets enables companies of all sizes to grow and expand especially during times of volatility and stress. It also enables consumers to access cheaper credit and governments (local, state and federal) to reduce their borrowing costs.

JPMorgan Chase spends $700 million per year in extensive research coverage of nearly 5,200 companies across 83 countries. This massive effort continuously educates investors and decision makers around the world and often leads to improved governance and management. It also critically complements the firm’s market-making activities and further promotes transparency, enabling investors to make thoughtful choices around investing in capital markets.

I would also like our shareholders to know that our market making is backed by approximately $7 billion in support expenses, including over $2 billion in technology spend alone each year. This investment allows us to maintain global trading systems and constantly improve upon risk management and efficiency.

JPMorgan Chase deploys approximately $70 billion in capital to maintain our Markets franchise. This capital supports $500 billion in securities inventory (largely hedged) — and this inventory allows us to buy and sell $2 trillion (notional) in securities daily for our clients.

Market making entails risk but is not particularly speculative.

The main objective of market makers is to continuously quote prices and diligently manage an inventory to transact at those prices, which includes assuming certain risks to support heavy volumes and orderly trading. Market makers have a moral obligation to try to make markets in good times and in bad. Part of our brand promise is to stand ready as the willing buyer and seller. In this, we have never failed. In addition, in most cases regarding government debt, where we serve as a government securities dealer, we are legally obligated to make markets. This constant visibility into prices provided by market makers fosters investor confidence, keeps fees low and promotes economic growth by attracting more investors.

Many large market participants — for example, hedge funds and high-frequency traders, among others — have no obligation to make markets. In fact, many of these market participants often “step out” of the markets and dramatically reduce liquidity specifically when market conditions are difficult.

Market making is not particularly speculative since market makers generally hedge their positions, as you will see from some real life examples of the economics and risks. We earn revenue of approximately $100 million on a typical day. In the average year, the total is nearly $30 billion. On our $2 trillion in notional daily trading, this amounts to only one hundredth of a cent charged to the investor for these services — an extraordinarily low cost compared with any other market in the world.

Now let’s take a look at the actual risk and results versus the hypothetical risk and results. The hypothetical global market shock of the CCAR stress test has us losing $18 billion in a single day and never recovering any of it. Let’s compare that to actual losses under real, actual market stress.

Now consider these historical data points: First, over the last 10 years, the firm’s market-making business has never had a quarterly loss and has lost money on only 30 trading days. These loss days represent only 1% of total trading days, and the average loss on those days was $90 million. Second, when markets completely collapsed during the COVID-19 pandemic (from March 2 through March 31, 2020, the stock market fell 16%, and bond spreads gapped out dramatically), J.P. Morgan’s market-making activities made money every day prior to the Federal Reserve’s major interventions, which stabilized the markets. During that entire month, we lost money on only two days but made $2.5 billion in Markets revenue for the month. And third, in the worst quarter ever in the markets following the 2008 failure of Lehman Brothers, we lost $1.7 billion, but we made $5.6 billion in Markets revenue for the full year. The firm as a whole did not lose money in any quarter that year. In 2009, there was a complete recovery in Markets, and we made $22 billion in Markets revenue.

You can see that our actual performance under extreme stress isn’t even close to the hypothetical losses of the stress test.

Another major fallacy is that derivatives are objects of financial destruction. In reality, derivatives are an essential part of managing financial risk and are used by investors, corporations, farmers, businesses, countries, governments and others to manage their risks. And more than 85% of derivatives are fairly basic forms of foreign exchange or interest rate swaps.

One last fallacy is that the repo markets are all about speculation. While it’s true that repo is used by certain investors to leverage up their positions, about 75% of repo is essential to normal money market functioning, i.e., is done by broker-dealers financing their actual inventory positions, money market funds investing their cash backed by highly rated collateral and clients hedging their positions.

Market makers add confidence, liquidity and transparency to U.S. capital markets — market making helps stabilize markets and can reduce volatility.

In addition, more liquidity, not less liquidity, will be needed to maintain market stability. Large banks keep an inventory of securities they can deploy in times of stress to help soothe markets; however, with the implementation of new regulations, banks now hold 70% as much inventory in securities as they did before the 2008 financial crisis, while the total size of the market has almost tripled. Higher capital requirements will accelerate this trend even further, impacting banks’ ability to deliver support to clients and markets in times when it is needed the most.

Washington’s Basel III endgame proposal damages market making, hurts Americans and drives activity to less transparent, less regulated markets.

If this proposal is enacted as drafted:

• Everyday consumer goods could be impacted. Households contending with inflation could also feel the effects of higher capital requirements on market-making activities when they shop. From beverage companies that need to manage aluminum costs to farms that need to protect against environmental risks, if the cost of hedging those risks increases, it could be reflected in what consumers pay for everything from a can of soda to meat products.
• Mortgages and small business loans will be more expensive. Consumers seeking a mortgage — including first-time homebuyers and historically underserved, low- to moderate-income borrowers with smaller down payments — will face higher interest rates or will have a tougher time accessing one. This will occur not only because the cost of originating and holding these loans is higher but also because the cost of securitizing them will rise for banks, nonbanks and government agencies. Not only that, but the proposal will likely lead to reductions in the size of unfunded credit card lines, which will put pressure on FICO scores and thereby make it more difficult for some people to access other forms of retail credit such as mortgages. Again, this will have the greatest impact on low- to moderate-income borrowers who rely most heavily on credit cards for day-to-day spending and to build their credit history. It could even be argued that existing regulations go too far and that there is an opportunity to help underserved communities by dialing down regulations that lead to higher borrowing costs. This should be studied and the pros and cons analyzed. The same can be said for small business loans, which will become more expensive and less accessible.
• Saving for retirement or college will be harder. The cost of products that families count on to save for retirement or college will go up as a result of this proposal. Asset managers, money market funds and pension funds all buy, sell and safekeep securities and other financial instruments for American investors. Under the proposed rules, the cost of banking products used on behalf of clients each day — including brokerage, advisory, clearing and custody services — will go up and feed through to customers. That will lead to lower returns on retirement accounts, college funds and other long-term savings.
• Government infrastructure projects and corporate development will become more expensive. Federal, state and local governments, as well as corporations and other institutions, rely on large banks for access to U.S. capital markets to fund development. If accessing capital markets becomes more expensive, it will have a ripple effect on the hiring of American workers, investment in research and development, and funding to build hospitals, roads and bridges, including the planned infrastructure projects from the Inflation Reduction Act (IRA).

More market activity will move to unregulated institutions, out of sight from regulators and without the same level of consumer protections that Americans expect from their banks. Other market participants that don’t have holistic client relationships are less likely to provide liquidity to help stabilize markets.

In volatile times, banks have been able to intermediate to help their clients and to work with the regulators. With new regulations, they may be less able to do so. There have been several times in the past few years where banks had ample liquidity and capital but were unable to rapidly increase their intermediation in the markets due to very rigid liquidity and capital requirements. Finally, the proposed rules increase the chance that the Federal Reserve will have to step in again — and this is not something they should want to do on a regular basis but only in an extreme emergency.

Staying Competitive in the Shrinking Public Markets

In previous letters, I have described the diminishing role of public companies in the American financial system. From their peak in 1996 at 7,300, U.S. public companies now total 4,300 — the total should have grown dramatically, not shrunk. Meanwhile, the number of private U.S. companies backed by private equity firms — which does not include the rising number of companies owned by sovereign wealth funds and family offices — has grown from 1,900 to 11,200 over the last two decades. This trend is serious and may very well increase with more regulation and litigation coming. Along with a frank assessment of the regulation landscape, we really need to consider: Is this the outcome we want?

There are good reasons for private markets, and some good outcomes result from them. For example, companies can stay private longer if they wish and raise more and different types of capital without going to the public markets. However, taking a wider view, I fear we may be driving companies from the public markets. The reasons are complex and may include factors such as intensified reporting requirements (including investors’ growing needs for environmental, social and governance information), higher litigation expenses, costly regulations, cookie-cutter board governance, shareholder activism, less compensation flexibility, less capital flexibility, heightened public scrutiny and the relentless pressure of quarterly earnings.

Along with the universal proxy — which makes it easier to put poorly qualified directors on a board — the pressures to retreat from the public market are mounting. In addition, corporate governance principles are becoming more and more templated and formulaic, a negative trend. For example, proxy advisors may automatically judge directors unfavorably if they have a long tenure on the board, without a fair assessment of their actual contributions or experience. Another example is the constant battle by some proxy advisors who try to split the chairman and CEO role when there is no evidence this makes a company better off — in fact, today, lead directors generally hold most of the authorities previously assigned to the chairman. The governance of major corporations is evolving away from guidance by governance principles that focus on a company’s relationship to long-term economic value toward a bureaucratic compliance exercise. Good corporate governance is critical, and a little common sense would go a long way.

THE PRESSURE OF QUARTERLY EARNINGS COMPOUNDED BY BAD ACCOUNTING AND BAD DECISIONS

There is something very positive about detailed and disciplined quarterly financial and operating reporting. But company CEOs and boards of directors should resist the undue pressure of quarterly earnings, and it is clearly somewhat their fault when they don’t. However, it is naïve to think that the pressure doesn’t exist because companies that “disappoint” can face extensive criticism, particularly those with a new or young CEO. It’s possible for companies to take short-term actions to increase earnings, such as selling more product cheaply at the end of a quarter, cutting certain investments that may be terrific but can show accounting losses in the first year or two, or just deploying more aggressive accounting methods at times. Once shortcuts like this begin, people all over the company understand that it is okay to “stretch” to meet your numbers. This could put you on a treadmill to ruin. Obviously, a company should not resort to these tactics, but it does happen in the public markets — and it’s probably less likely in the private markets.

THE HIJACKING OF ANNUAL SHAREHOLDER MEETINGS

One of the reasons it is less desirable to be a public company is because of the spiraling frivolousness of the annual shareholder meeting, which has devolved into mostly a showcase of grandstanding and competing special interest groups. We should treat shareholders with tremendous respect — and we do. At JPMorgan Chase, we are constantly talking with our investors — our directors, our lead director and our corporate governance experts visit most of our major investors whether they be direct owners or asset managers who manage the money for others. Meeting with your shareholders and investors is critical, but the annual shareholder meeting itself has become ineffective. We should try to come up with a far more constructive alternative.

THE UNDUE INFLUENCE OF PROXY ADVISORS

There are essentially two main proxy advisors in the United States. One is called Institutional Shareholder Services (ISS), and the second is called Glass Lewis. These proxy advisors started out providing reams of data from companies to help their institutional investor clients vote on proxy matters (information on executive compensation, stock returns, detail on directors, policies and so on). However, they soon also began to provide advice on how shareholders should vote on proxy matters. And, in fact, institutional investors generally execute their voting on an ISS or Glass Lewis platform, which often includes a clear statement of the advisory service’s position.

I should also point out, because it may be relevant, that ISS is owned by Deutsche Boerse, a German company, and Glass Lewis is owned by Peloton Capital, a Canadian private equity firm. I question whether American corporate governance should be determined by for-profit international institutions that may have their own strong feelings about what constitutes good corporate governance.

While asset managers and institutional investors have a fiduciary responsibility to make their own decisions, it is increasingly clear that proxy advisors have undue influence.

Asset managers (who manage money on behalf of others) and institutional investors (e.g., pension plans and endowments) may rely on a variety of information sources to support their valuation decision-making process. While data and recommendations may form pieces of the information mosaic, their votes should ultimately be based on an independent application of their own voting guidelines and policies. To the extent they use recommendations from proxy advisors in their decision-making processes, they should disclose that they do so and should be satisfied that the information upon which they are relying is accurate and relevant. However, many companies would argue that this information is frequently not balanced, not representative of the full view and not accurate. In addition, companies complain that they often cannot get the data corrected, and, therefore, a vote may go uncorrected.

Almost all asset managers receive proxy advisor data and recommendations; while some asset managers vote completely independently of this information, the majority do not. Most asset managers have formed corporate governance or stewardship committees that are responsible for their voting, and these committee positions are often held not by portfolio managers and research analysts (i.e., the people buying and analyzing the individual securities) but by stewardship experts. While it is good to have stewardship experts, the reality is that many of these committees default large portions of what they do to proxy advisors and, more troubling, make it harder for actual portfolio managers to override this decision making.

Some have argued that it’s too hard and too expensive to review the large number of proxies and proxy proposals — this is both lazy and wrong. If issues are important to a company, they should be important to the shareholder — for the most part, only a handful of proposals are important to companies.

We are making enhancements to J.P. Morgan Asset Management’s proxy voting processes to amplify the role of portfolio managers and to address the perception of asset managers’ reliance on third-party advisor voting recommendations.

Enhancements to the firm’s internal proxy voting process will include:

• More portfolio manager participation in proxy committee decision making. The firm has significantly expanded the representation of portfolio managers on its North American Proxy Committee in an effort to increase the diversity of viewpoints represented on the committee. As part of this change, and in recognition that portfolio managers, as fiduciaries, may differ in their views on how to vote on particular proposals depending on a mandate’s investment strategy and guidelines, we are broadening our capabilities to support voting results that may vary across our platform.
• Diminished role of proxy advisor recommendations. J.P. Morgan Asset Management makes its own independent proxy voting decisions (based on deep fundamental research) and stands behind the depth and rigor of its processes and historical information advantage. In most cases, the firm will only use proxy advisory firms for research, data and technical mechanics of vote transmission and not for outsourced recommendations. By the end of 2024, J.P. Morgan Asset Management generally will have eliminated third-party proxy advisor voting recommendations from its internally developed voting systems. Additionally, the firm will work with third-party proxy voting advisors to remove their voting recommendations from research reports they provide to J.P. Morgan Asset Management by the 2025 proxy season.
• Other enhancements. We are working to give a company and its management even greater access to the ultimate decision makers; to raise critical issues to a company as early as possible in a constructive and proactive way; and to be willing to tell companies how we have voted once our decision is made rather than waiting until votes are finally counted.

Taken together, these steps are designed to respond to a growing perception (and, I believe, reality) that the asset management industry generally places undue reliance on proxy advisors in how proxies are voted. We believe these actions will strengthen our relationships with our clients and with companies while helping to build trust between shareholders, investors and companies.

THE BENEFITS AND RISKS OF PRIVATE CREDIT

I have already mentioned some of the benefits of private credit, and I’ll now mention some more. Many people in the private credit arena are very smart and creative and want to help the companies they invest in navigate through market shoals. They can move quickly, discreetly and flexibly. Most generally understand that bad accounting drives bad decisions, and their goal is to make the right decisions for the future of the company.

On the other hand, not all players are that good. And problems in the private credit market caused by the bad players can leak onto the good ones, even though private credit money is locked up for years. If investors feel mistreated, they will cry foul, and the government will respond by putting a laser focus on the business. It’s a reasonable assumption that at some point regulations will focus on the private markets as they do on the public markets.

This scrutiny will include a look at how private credit values its assets, which isn’t as transparent as public market valuations. In addition, private market loans commonly lack liquidity in the secondary market and are not generally supported by in-depth market research.

New financial products that grow extremely rapidly often become an area of unexpected risk in the markets. Frequently, the weaknesses of new products, in this case private credit loans, may only be seen and exposed in bad markets, which private credit loans have not yet faced. When credit spreads gap out, when interest rates go up and when some leveraged companies suffer in the recession, we will find out how those loans survive stress testing. In addition, they can create a little bit of a “credit crunch” for borrowers since it might be hard for private creditors to roll over loans under those conditions. Under stress conditions, private creditors would have to charge exorbitant prices that companies simply cannot afford in order to book the new loan at par. Banks are in a slightly different position.

A BANK’S STRENGTH: PROVIDING FLEXIBLE CAPITAL

Banks generally try to be there for their borrowers in difficult times — striving to roll over loans, renegotiate terms and raise additional capital. Banks do this for multiple reasons: They normally feel an obligation to help their clients, they have long-term relationships and they can commonly earn other sources of revenue from client-driven transactions. Banks can also flex their capital and lending base as needed by their clients. This is because a bank can and should make decisions to help companies through good times and bad, seeking to retain them as long-term clients across many areas of the bank. They can and do take “losses” that help the client maintain the franchise. But an asset manager must act as a “fiduciary” of other people’s money and cannot lend based on a moral obligation or potential future relationship.

Recently, we have been witnessing a convergence between the public and private markets. But it’s too soon to say how this ultimately will play out, particularly if we go through a recessionary cycle.

Management Lessons: Thinking, Deciding and Taking Action – Deliberately and with Heart

I always enjoy sharing what I’ve learned from watching others, reading and experiencing through my own journey.

BENEFITING FROM THE OODA LOOP

The military, which often operates in extreme intensity of life and death and in the fog and uncertainty of war, uses the term “OODA loop” (Observe, Orient, Decide, Act — repeat), a strategic process of constant review, analysis, decision making and action. One cannot overemphasize the importance of observation and a full assessment — the failure to do so leads to some of the greatest mistakes, not only in war but also in business and government.

A full assessment is critical.

To properly manage any business situation, you need to perform a full and complete assessment of it. In business, you have to understand your competitors, their distribution, their economics, their innovations, and their strengths and weaknesses. You also need to understand customers and their changing preferences, along with your own costs, your people and their skills. Then there’s knowing how other factors fit in, like technology, risk, motivations … hope you get the point. For countries, you need a thorough grasp of their economies, strengths and weaknesses, population and education, access to raw materials, laws and regulations, history and culture. Research, data and analytics should be at a very detailed level and constantly reassessed. Only after you complete this diligent study can you start to make plans with a high degree of success.

Get on the road – it builds knowledge and culture.

I have frequently wondered about all the nonstop road trips, client meetings, briefings, greetings, bus trips, and visits to call centers, operating centers and branches, regulators and government officials, among others: Did they make a difference? The answer is absolutely yes because they enabled a process of constant learning, assessment and modification of best practices — gaining insights from employees to clients to competitors. Employees will tell you what you are doing well or poorly if you simply ask them, and they know you want to hear the real answer. Curiosity is a form of humility — acknowledging that you don’t know everything. Responding to curiosity allows other people to speak freely. Facts and details matter and inform a deeper and deeper analysis that allows you to continually revise and update your plans. This, of course, also means that you are constantly admitting prior mistakes.

You need to shed sacred cows, seek out blind spots and challenge the status quo.

Very often companies or individuals develop narratives based upon beliefs that are very hard to dislodge but are often wrong — and they can lead to terrible mistakes. A few examples will suffice. Stripe, Inc. built a payments business by working with developers — something we never would have imagined but might have figured out if we had tried to seek out what others were doing in this area. Branches were being closed, both at Bank One and Chase, because the assumption was that they would not be needed in the future. We underinvested for years in the wealth management business because we were always focused on the value of deposits versus investments. Question everything.

Use your brains to figure out the truth — not to justify what you already think.

It’s often hard to change your own attitudes and beliefs, especially those you may have held on to for some time. But you must be open to it. When you learn something that is different from what you thought, it may affect many conclusions you have, not just one. Try not to allow yourself to become rigid or “weaponized,” where other employees or interest groups jazz you up so much that you become a weapon on their behalf. This makes it much harder to see things clearly for yourself. When people disagree with you, seek out where they may be partially right. This opens the door for a deeper understanding and avoids binary thinking.

It's hard to see certain long-term trends, but you must try.

There is too much emphasis on short-term, monthly data and too little on long-term trends and on what might happen in the future that would influence long-term outcomes. For example, today there is tremendous interest in monthly inflation data, although it seems to me that every long-term trend I see increases inflation relative to the last 20 years. Huge fiscal spending, the trillions needed each year for the green economy, the remilitarization of the world and the restructuring of global trade — all are inflationary. I’m not sure models could pick this up. And you must use judgment if you want to evaluate impacts like these.

Also, a block of time as short as one year is an artificial framework for judging the impact of long-term trends that could easily play out over years. A helpful exercise is to think “future back,” in which you imagine different future outcomes, including the ones you want, and then work backward to events that are happening today (or that might happen or that you cause to happen), closely examining the connections between those events and your projected or desired outcomes. Those connections inform your risk and R&D planning. Similarly, when companies compare the attributes of their products and services with their competitors, they usually only consider where they are versus their competitors. But nothing is static — they should consider where their competitors will be in the future. Conditions are always changing, crises are always emerging. When analyzing the playing field, it is better to assume that your competitors are strong and are already in the process of improving and innovating. This minimizes the chance of arrogance leading to complacency.

DECISION MAKING AND ACTING (HAVE A PROCESS)

There is a time for an individual to decide and act.

Sometimes you should take the time to measure twice and cut once. And then sometimes making a quick decision is better than delaying. You should try to distinguish between the two. For example, with decisions that are hard to reverse, it’s usually better to go slow. With other decisions where you can test, learn, probe and change direction, it’s often better to go fast. It’s been my experience that it’s hard for some people to actually decide and act. This could be from analysis paralysis, lack of “perfect” information, fear of failure or the feeling that full consensus is needed before a decision can be reached. But whatever it is, it can slow down and possibly seriously damage a company.

To get people to think like decision makers and take a strong point of view, we like to ask, “What would you do if you were king or queen for a day?” It helps shift the direction to individual decision making. We also ask questions like, “What would you wish for if you knew X was going to happen?” (for example, higher interest rates). Decision making takes a mix of courage, grit and guts.

One exercise that I find useful (and sometimes painful) is to draw up a list of important decisions that need to be made — the ones I often avoid confronting. So I take time every Sunday to think about these tough issues and almost always make progress. Progress doesn’t always mean that you come to the final conclusion — sometimes it’s just a very rational next step that can put you on a path to the final decision.

Try to have a good decision-making process.

Try to give yourself the time to decide. Make sure you speak with the right people and make sure the right people are in the room. Information should be fully shared. People should be made very comfortable with open debate. Quite often, the “right” answer is simply waiting to be found — you don’t have to guess.

Crowdsourcing, compromise, consensus and committees have benefits and risks.

There are huge benefits to crowdsourcing intelligence. It is a form of full assessment, a strategy for getting the best ideas and challenging the status quo. We should do this for almost every major decision. It is perfectly fine on some occasions to compromise and gain consensus, particularly on decisions that are not critical and can easily be reversed. Often people spend too much time debating issues that are simply not that important; it’s better to decide and move on. Also, before you compromise, you should know exactly what you want to achieve and the consequences of any tradeoffs. However, sometimes compromise and consensus cannot work and only lead to a feel-good decision that is probably wrong — this could be the road to ruin.

The use of committees can be good when done properly. For example, if our risk committees could do a full assessment and crowdsource all potential risks, that would lead to better decision making. I will give one very personal and painful example, which is when we had a major trading scandal, called The London Whale. The scandal was not caused by the complexity of the trade but rather the failure to go to the proper Risk committee for a thorough review, which should have happened but didn’t. I have no doubt that had the trade been raised there, the flaws would have been exposed immediately, thereby dramatically reducing or eliminating the problem. On the other hand, the opposite can happen when a committee, with everyone staring at each other, devolves into herd-like behavior with people looking for confirmation and ending up with a compromise that is a poor choice.

Good leadership involves great observation and the ability to act, but there is more …

THE SECRET SAUCE OF LEADERSHIP (HAVE A HEART)

You need to earn trust and respect with your employees.

You can be great at assessment, you can be brilliant and you may often be willing to act. But all of that is not good enough for “complete” leadership. To become a true leader, you need to be trusted and you must earn your respect, every day. People have to know that you do not have ulterior motives and that you’re trying to do the right thing — not trying to burnish your personal reputation. Good people want to work for people they respect, and they will not respect people who take all the credit and share all the blame. People need to know that even when you make mistakes, you’re willing to admit them and take corrective action. And there is more …

The importance of vision, communication and inspiration.

The reason I’ve always hesitated to talk about “vision” is because often it is the basic BS of corporate speak — that somehow if you impart your vision to people, they will take the mountain. What it really is all about is this: After you’ve done your full assessment and decision making, you can then continuously educate, explain, train, simplify, propel and fight. But this only works if people know you are in the trenches with them, if they understand the mission and if they are there side by side with your effort.

We know that bureaucracy can lead to politics, corporate stasis and terrible decisions. So you can communicate your vision about how to fight bureaucracy by telling stories about the silly things we do — but with a smile — and then by showing people that you will actually fix the problems.

Finally, your vision needs to be clear, coherent and consistent. Within an organization, people very quickly pick up the pattern of management saying one thing but doing another. Because if words and actions are inconsistent (for example, and I could give many, when we say we want employees to be treated with respect, but we allow a jerk to be their boss), confidence in leadership will be eroded.

Heart cannot be overstated.

Heart matters. And it makes a difference when people know and see that you actually care. One example: Many years ago when I was new to JPMorgan Chase, I learned that the company’s security guards had been outsourced — to save money. Since after outsourcing, when the same guards continued coming to work every day at the same salary, I wondered, “How could this be?” (FYI, this was brought to my attention by the head of the Service Employees International Union, who came to see me over the objection of my management team.) The reason we were saving money is because the healthcare benefits were cut in half for the guards and their family members (currently worth approximately $15,000 a year), and the savings were split with us. This was a heartless thing to do — and the second I found out, I reversed the decision. JPMorgan Chase’s success will not be built off the backs of our guards — it will be the result of fair treatment of all of our employees — and we’re thankful that many of those guards are still with our company today.

You know heart and soul when you see it in effect on sports teams or with “the boys in the boat” — it’s a beautiful thing to watch. It’s not as obvious, but it happens in business, too.

It’s essential to build trust with your customers, constituencies and, yes, even competitors.

Of course, I’m not bringing this up as a matter of corporate governance or a corporation’s purpose: A business should, over the long run, try to maximize shareholder value. It is completely obvious that running a decent business —treating everyone ethically and earning trust and respect in all your communities — is not only fundamental to shareholder value but also to a healthy society.

A Pivotal Moment for America and the Free Western World: Strategy and Policy Matter

In past years, I have written extensively about public policy issues. It is important to engage in these conversations, particularly around domestic economic policy because policy matters . While JPMorgan Chase can execute specific plans to improve outcomes for customers and communities, there is no replacement for effective government policies that add to the general well-being of the country. A stronger and more prosperous country will make us a stronger company.

As CEO of this company, every year I visit numerous countries around the globe. I meet with foreign government leaders, presidents and prime ministers, business leaders, and civic and academic experts, which allows me to learn a significant amount about how public policy is executed around the world. It also reinforces some of the critical values and virtues that are essential to a healthy country.

Every time I see the American flag, it reminds me of the values and virtues of this country and its founding principles conceived in liberty and dedicated to the notion that all men and women are created equal. Talk with someone who has recently become a naturalized citizen or watch a ceremony where groups of people take the oath to America, and you will see extraordinary joy and newfound pride. They now live free, with individual rights protected by the Constitution and with their life and the well-being of their family and community protected by the U.S. military. As Americans, we have much to be grateful for and much to defend.

If you read the newspaper from virtually any day of any year since World War II, there is abundant coverage on wars — hot and cold — inflation, recession, polarized politics, terrorist attacks, migration and starvation. As appalling as these events have been, the world was generally on a path to becoming stronger and safer. When terrible events happen, we tend to overestimate the effect they will have on the global economy. Recent events, however, may very well be creating risks that could eclipse anything since World War II — we should not take them lightly.

February 24, 2022 is another day in history that will live in infamy. On that day, 190,000 Russian soldiers invaded a free and democratic European country — importantly, somewhat protected by the threat of nuclear blackmail. Russia’s invasion of Ukraine and the subsequent abhorrent attack on Israel and ongoing violence in the Middle East should have punctured many assumptions about the direction of future safety and security, bringing us to this pivotal time in history. America and the free Western world can no longer maintain a false sense of security based on the illusion that dictatorships and oppressive nations won’t use their economic and military powers to advance their aims — particularly against what they perceive as weak, incompetent and disorganized Western democracies. In a troubled world, we are reminded that national security is and always will be paramount, even if its importance seems to recede in tranquil times.

The fallout from these events should also lay to rest the idea that America can stand alone. Of course, U.S. leaders must always put America first, but global peace and order are vital to American interests. Only America has the full capability to lead and coalesce the Western world, though we must do so respectfully and in partnership with our allies. Without cohesiveness and unity with our allies, autocratic forces will divide and conquer the bickering democracies. America needs to lead with its strengths — not only its military but also its economic, diplomatic and moral forces. And now we must do so as America’s leadership is being challenged around the world. There is nothing more important.

Policy and strategy matter, and it’s important to be engaged.

In our increasingly complex world, there is a vital interrelationship between domestic and foreign economic policy, particularly around trade, investment, national security and other issues. And, of course, while American voters and leadership set U.S. foreign policy, being a constructive part of the global conversation has become more important than ever.

If you doubt how important public policy is for the health of a country, you need to look no further than the recent history of Greece, Ireland or Singapore. Each of these countries, starting from deeply challenging places, implemented effective government and policies that have done a great job of lifting up their people when many thought it wasn’t possible. Sweden is another great example of a country with good broad-based policies that have succeeded at precisely what we all may want — a dynamic, innovative, free-market economy (Sweden actually has fewer government-owned enterprises than America) and safety nets that work. Conversely, you need to look no further than North Korea or Venezuela to see the complete destruction and havoc that terrible public policies (often in the name of the people) can cultivate.

Strategy by its nature must be comprehensive. In the rest of this section, I try to answer the question: What must we do to ensure that the world stays safe, not only for America but for freedom and democracy? A comprehensive strategy entails four important pillars, and we must succeed at each:

• Maintain American leadership (including military).
• Achieve long-term economic success with our allies.
• Strengthen our nation domestically.
• Deepen focus and resolve on addressing our most pressing challenges.

COALESCING THE WESTERN WORLD — A UNIQUELY AMERICAN TASK

Only America has the full capabilities of military might, economic power and the principles that most people around the world yearn for — based on “liberty and justice for all” and the proposition that all people are created equal. America remains the bastion of freedom and the arsenal of democracy.

There is no alternative to American leadership.

In the free and democratic Western world, and, in fact, for many other countries, there is no real or good alternative to America. The only other potential superpower is China. Other nations know they can rely on the founding principles of America. If we reach out our hand, most nations will happily take that hand. America is still the most prosperous nation on the planet, which not only can guarantee our military strength but also positions us to help our allies develop and grow their nations (though we should minimize the “our way or the highway” type of behavior). This leadership is needed today to help Ukraine stay free in its battle with Russia.

Most of the world wants American leadership.

America continues to be the envy of much of the world, and as we’ve seen with the challenges at our borders, there is a reason people want to come here and not to autocratic nations. If you opened America’s borders to the rest of the world, I have little doubt that hundreds of millions of people would want to move here. By contrast, not many would want to emigrate to autocratic nations. Also, I have little doubt that if most investors across the globe could only invest in one country, they would choose the United States. Beyond our country’s borders, people and nations around the world understand the role that America has played in promoting world peace — known as Pax Americana. For the most part, Pax Americana has kept the world relatively peaceful since World War II and helped lead to enormous global economic prosperity, which has helped lift 1.3 billion people out of poverty.

Modern America does not engage in economic coercion or foreign wars to steal land or treasure. The fact that some of our foreign excursions might have been misguided does not negate this. We helped rebuild Europe and Japan after the devastation of World War II, and we, with our allies, have helped create global institutions to maintain peace. We are still trusted.

First and foremost, the Western world needs unquestioned military might — peace through strength.

“We know only too well that war comes not when the forces of freedom are strong, but when they are weak,” said Ronald Reagan in 1980.

So far, the Western world has done a good job in strengthening military alliances in response to the war in Ukraine. Ukraine is essentially the front line that needs immediate support. Providing that support is the best way to counter autocratic forces that would seek to weaken the Western world, particularly America. But the ongoing wars in Ukraine and the Middle East could become far worse and spread in unpredictable ways. Most important, the specter of nuclear weapons — probably still the greatest threat to mankind — hovers as the ultimate decider, which should strike deep fear in all our hearts. The best protection starts with an unyielding resolve to do whatever we need to do to maintain the strongest military on the planet — a commitment that is well within our economic capability.

American leadership requires not only the military but also the full “symphony of power.”

Former Secretary of Defense Robert Gates, in his book Exercise of Power, writes extensively in the first chapter about “the symphony of power.” He makes the critical point that America has often overused and misused military power and has massively underused other muscles — diplomacy, intelligence, communication (explaining to the world the benefits of democracy and free enterprise) and comprehensive economic policy.

America has the most extensive group of partners, friends and allies — both military and economic — that the world has probably ever seen. We should put this to better use.

The American public ought to hear more about why this is so important.

International isolationism has run through American foreign policy throughout our history, frequently with good reason. The chant, “Don’t get involved in foreign wars” was often right. That said, the American public should remember that even after the Revolutionary War, we did, in fact, have British and French armies on our soil. The sinking of American merchant and passenger ships during World War I and the surprise attack on Pearl Harbor in World War II brought isolationism to a close for a time. America is never far from being dragged into terrible conflicts. Global wars come to our shores whether we like it or not — we need to stay engaged.

In perilous periods of history when our allies and other democracies were under serious assault, great American leaders have inspired the American people — through words and actions — to stand up to help and defend them. Staying on the sidelines during battles of autocracy and democracy, between dictatorship and freedom, is simply not an option for America today. Ukraine is the front line of democracy. If the war goes badly for Ukraine, you may see the splintering of Pax Americana, which would be a disaster for the whole free world . Ukraine’s struggle is our struggle, and ensuring their victory is ensuring America first . It is imperative that our national leaders explain to the American people what is at stake and make a powerful case – with energy, consistency and clarity – for our strong enduring commitment to Ukraine’s survival for as long as it takes (and it could take years).

One last point: Ukraine needs our help immediately, but it’s important to understand that much of the money that America is directing to Ukraine is for purchasing weapons and equipment, most of which will be built in America. Not only is our aid helping Ukraine, but it is going directly to American manufacturers, and it is helping the country rebuild our military industrial capacity for the next generation.

STRENGTHENING OUR POSITION WITH A COMPREHENSIVE, GLOBAL ECONOMIC SECURITY STRATEGY

Sustaining America’s economic strength is a bedrock for our long-term military strength. There are many things we need to do to strengthen the U.S. economy, and I talk about that later in this section. This discussion is about foreign economic policies – the economic battlefield.

The whole Western world is rethinking and reimagining its military strategies and alliances. We need to do the same for our economic strategies and alliances, but we should be guided by a comprehensive global strategy that deals with critical issues. Done properly, such a strategy would help strengthen, coalesce and possibly be the glue that holds together Western democratic alliances over decades.

Foreign economic policy involves trade and investment, export controls, secure and resilient supply chains, and the execution of sanctions and any related industrial policies. It must also include development finance — think of the “Belt and Road” efforts in China — which are critical to most developing nations. This framework should tell us not only how to deal with our allies but also how to work with nonaligned nations around the world. These strategies should not be aimed against any one country (such as China) but rather be focused on keeping the world safe for democracy and free enterprise.

Economic national security is paramount — both for the United States and for our allies.

It is a valid point that the Western world — both government and business — essentially underestimated the growing strength and potential threat of China. It’s also true that China has been comprehensively and strategically focused on these economic issues, all while we slept. But let’s not cry over spilled milk — let’s just fix it.

We missed the potential threat from three vantage points. The first is companies’ overreliance on China as the sole link in their supply chain, which can create vulnerabilities and reduces resiliency. But to the extent this involves everyday items, like clothes, sneakers, vaccine compounds and consumer goods, this dependency is not as critical or complex and will eventually be sorted out.

The second is the most critical. The United States cannot rely on any potential adversaries for materials essential to our national security — think rare earths, 5G and semiconductors, penicillin and materials critical to essential pharmaceuticals, among others. We also cannot be sharing vital technologies that can enhance an adversary’s military capabilities. The United States should properly and narrowly define these issues and then act unilaterally, if necessary, to fix them.

The third is also complex, which is countering unfair competition or “mercantilist” behavior in critical industries; think electric vehicles, renewable energy and AI, among others. Examples of this would be where a state, any state, uses government powers, capital, subsidies or other means to dominate critical industries and deeply damage the economic position of other nations. Weakening a country economically can render it a virtual “vassal state,” reliant on potential adversaries for essential goods and services, which also weakens it militarily. We cannot cede our important resources and capabilities to potential adversaries.

All these issues can be resolved, though they will take time and need devoted effort.

Every nation will have different national security issues. For example, Europe in general and countries like India, Japan and Korea need reliable, affordable and secure energy; many nations would put food security as their top concern. This means that we must work with our allies to accomplish our own goals and to help them accomplish theirs. We have extraordinary common interests in our joint security: We must hang together — because if we don’t, we will assuredly hang separately.

We already engage in trade — improving it is good economics and great geopolitics.

We must have a better understanding of trade. As a nation, we refuse to get into genuine trade discussions, but this ignores the complete and obvious truth — we already have trade relationships with all these countries. Approximately 92% of the world’s consumers live outside the United States. Increased trade allows our workers and farmers to access those markets. We should negotiate trade agreements that can achieve more, economically, for ourselves and our allies, as well as meet all of our national security needs. While it is appropriate to use trade to continue to nudge allies in the right direction around human rights and climate, this objective should be subordinated to our national interests of long-term security.

Negotiating must be done in concert with our allied nations so as not to cause a fissure in economic relations. This is critical — strong economic bonds will help ensure strong military alliances. The Inflation Reduction Act has much good in it (more on this later), but it angered many of our allies. To them, the bill was by America and for America, and, subsequently, they felt a need to match it so their businesses would not be disadvantaged. The terms of the legislation could have been better negotiated with our allies in mind, strengthening our economic ties with the free world.

We should also immediately re-enter, if possible, the prior negotiated Trans-Pacific Partnership agreement. Not only is it good for the economy, but it also could be a brilliant, strategic, economic security move — an economic alliance that binds us with 11 other important countries (including Australia, Chile, Japan, Malaysia, Mexico, Singapore and Vietnam). Geopolitically and strategically, this might be one of the most important moves to counter China. While this is a challenging step, our political leaders need to explain and lead — and not be afraid of dealing with the tough issues. We also need to acknowledge that there have been real negative job impacts as a result of trade, which are usually concentrated around certain areas and businesses. So any new trade policy should be combined with a greatly enhanced Trade Adjustment Assistance program, which provides retraining, income assistance and relocation for those workers directly impacted by trade.

Trade is realpolitik , and the recent cancellation of future liquified natural gas (LNG) projects is a good example of this fact. The projects were delayed mainly for political reasons — to pacify those who believe that gas is bad and that oil and gas projects should simply be stopped. This is not only wrong but also enormously naïve. One of the best ways to reduce CO2 for the next few decades is to use gas to replace coal. When oil and gas prices skyrocketed last winter, nations around the world — wealthy and very climate-conscious nations like France, Germany and the Netherlands, as well as lower-income nations like Indonesia, the Philippines and Vietnam that could not afford the higher cost — started to turn back to their coal plants. This highlights the importance of safe, secure and affordable energy. Second, the export of LNG is a great economic boon for the United States. But most important is the realpolitik goal: Our allied nations that need secure and affordable energy resources, including critical nations like Japan, Korea and most of our European allies, would like to be able to depend on the United States for energy. This now puts them in a difficult position — they may have to look elsewhere for such supplies, turning to Iran, Qatar, the United Arab Emirates or maybe even Russia. We need to minimize anything that can tear at our economic bonds with our allies.

The strength of our domestic production of energy gives us a “power advantage” — cheaper and more reliable energy, which creates economic and geopolitical advantages.

Industrial policy is now necessary, but it should be carefully constructed and limited.

In some cases, industrial policy (using government resources to subsidize investments to help make businesses more competitive) may be the only solution for quickly building up the industries we need (rare earths and semiconductors, among others) to guarantee resilient national security. The IRA and CHIPS Act are good examples of this and government has to get it right.

Such policy can also be used to help combat unfair competitive policies of nations that are using state capitalism and state control to dominate critical industries. However, when crafting industrial policy, the function of government needs to be narrowly defined and kept simple; i.e., governmental jurisdiction should be limited to very specific products and probably to what we know works, such as tax credits and, to a lesser extent, loan guarantees. And industrial policy should include twin provisions: 1) strict limitations on political interference, like social policies, and 2) specific permitting requirements, which, if not drastically improved, will badly inhibit our ability to make investments and allow infrastructure to be built. Adding social policy, politics and matters other than simple tax credits dramatically reduces the economic efficiency of industrial policy and creates conditions for corporate America to feed at the trough of government largess. We should quickly address how we can improve on already executed legislation. We do not want to look back and have great regrets about how so much of this policy work failed.

There are those who argue that the U.S. government needs much more far-reaching industrial policy to be able to micromanage and accomplish its many ambitious objectives. To those I say, read further in this section about how ineffective so many government policies have been.

We should be tough, but we should engage with China.

Over the last 20 years, China has been executing a more comprehensive economic strategy than we have. The country’s leaders have successfully grown their nation and, depending on how you measure it, have the first or second largest economy in the world. That said, many question the current economic focus of China’s leadership as they don’t have everything figured out. While China has become the largest trading partner to many countries around the world, its own GDP per person is $13,000. And the country continues to be beset by many economic and domestic issues.

China has its own national security concerns. The country is located in a very politically complex part of the world, and many of China’s actions have caused its neighbors (e.g., Japan, Korea, Philippines, among others) to start to re-arm and, in fact, draw closer to the United States. It also surprises many Americans to hear that while our country is 100% energy sufficient, China needs to import 10 million barrels of oil a day. It is clear that China’s new leadership has set a different course, with a much more intense focus on national security, military capability and internal development. That is their right, and we simply need to adjust to it.

America still has an enormously strong hand — plenty of food, water and energy; peaceful neighbors; and what remains the most prosperous and dynamic economy the world has ever seen, with a per person GDP of over $80,000 a year. Most important, our nation is blessed with the benefit of true freedom and liberty. See the sidebar on the amazing power of freedom later in this section.

While we may always have a complex relationship with China (made all the more complicated and serious by ongoing wars), the country’s vast size and importance to so many other nations requires us to stay engaged — thoughtfully and without fear. At the same time, we need to build and execute our own long-term, comprehensive economic security strategy to keep our position safe and secure. I believe that respectful, strong and consistent engagement would be best for both our countries and the rest of the world.

We need to strengthen and rebuild the international order — we may need a new Bretton Woods.

The international rules-based order established by the Western world after World War II is clearly under attack by outside forces, somewhat weakened by its own failures and inability to keep up with the increasingly complex world. This international order relies on a web of military alliances, trade agreements (e.g., World Trade Organization), development finance (e.g., International Monetary Fund and the World Bank) and related global tax and investment policies and diplomacy organizations (e.g., United Nations), which have evolved into a confusing and overlapping regime of policies. You can now add to it the new issues of cyber warfare, digital trade and privacy, and global taxes, among others.

It might be a good idea to convene a group of like-minded leaders to build and improve upon what already exists. The time may be right for a reimagined Bretton Woods — and by this, I mean revitalizing our global architecture. Since too many parts of the world have been neglected, any new system has to take into account and properly address the needs of all nations, including areas of concentrated poverty.

While we hope the wars in Ukraine and in the Middle East will end eventually (and, we hope, successfully from the standpoint of our allies), these other critical economic battles could possibly continue throughout our lifetime. If the Western world is slowly split apart over the next few decades, it will likely be the result of our failure to effectively address crucial global economic challenges.

PROVIDING STRONG LEADERSHIP GLOBALLY AND EFFECTIVE POLICY MAKING DOMESTICALLY

When you travel around the United States and talk with people of all types and persuasions, there is a rather common refrain; namely, why are we helping foreign nations with the safety of their borders and economies when we are not doing a particularly good job of protecting our own? While there is no moral equivalency in these arguments, they are understandable. It is clear that many Americans feel we need to do a better job here at home before we can focus over there . We can understand why some people living in this country, who have been neglected for decades, ask how their government can find the money for Ukraine and other parts of the world but not for them. It is a reasonable question.

From my point of view, our highly charged, emotional and political domestic issues are centered around 1) immigration and lack of border security and 2) the fraying of the American dream, particularly for low-income and rural Americans who feel left behind amid the growing wealth and prosperity of others around them. Please read the sidebar below, which I believe explains the legitimate frustration of some of our citizens. And I agree with them.

In the sidebar, I also explain how two policies (a large expansion of the Earned Income Tax Credit and focus on work skills and job outcomes at high schools, community colleges and colleges) would not only dramatically increase both the income and employment opportunities for many of those left behind but would also have the virtue of actually growing the workforce. The combined effect of all of this would be quite a boon to our GDP.

I believe that many affected Americans are not angry at hardworking, law-abiding immigrants and, in fact, acknowledge the critical role immigrants continue to play in building this wonderful country. Rather, they are angry that America has not implemented proper border control and immigration policies. It is astounding that many in Congress know what to do and want to do it but are simply unable to pass legislation because of partisan politics. Congress did come close on a few occasions — and I hope they keep trying.

Deliberate policies meant to drive healthy growth are needed.

For over two decades, since 2000, America has grown at an anemic rate of 2%. We should have strived for and achieved 3% growth. Had we done so, GDP per person today would be $16,000 higher, which would, in turn, have paid for better healthcare, childcare, education and other services. Importantly, the best way to handle our excess deficit and debt issues is to maximize economic growth.

Growth policies include (the list could be very long so I’ll just mention a few):

• Consistent tax policies, conducive to both employment and capital investment. Capital investment is the primary driver of innovation, productivity and, therefore, growth in America. Tax policies change too frequently, which causes uncertainty and complicates long-term capital investment decision making (I won’t bore you with the details here). A bipartisan committee of Congress is probably required to fix this — and the sooner the better.
• Well-conceived regulations (and related laws). This requires an ongoing concerted effort to streamline regulations to cost-effectively drive better outcomes for the United States. The last thing we need is a constant pile-on of politically driven, fragmented policies. Please read the sidebar, an editorial in The Wall Street Journal by George McGovern, one of the most liberal presidential nominees in our lifetime, in which he clearly lays out the complexity, risks and costs that businesses, large and small, face every day. While he acknowledges the worthiness of the goals of many regulations, he points out their negatives. He also calls out the “blame-shifting and scapegoating" and "the endless exposure to frivolous claims and high legal fees.” Not only is this state of affairs demoralizing, but it also reduces employment, capital investment and the formation of new businesses, as well as cause unnecessary bankruptcies. Estimates of the regulatory costs for America are approximately $19,000 per worker, dwarfing the regulatory burdens in other countries. We all want sensible regulations that make us a better and safer nation – but this number is astounding. We should be able to accomplish our goals while sharply reducing needless and wasteful expenses. And remember, it’s discouraging not only to companies but to all citizens who have to deal with it on a daily basis.

WALL STREET JOURNAL

June 1, 1992

(Copyright © I992, Dow Jones & Co., Inc.)

Manager's Journal: A Politician's Dream Is a Businessman's Nightmare

By George McGovern Wisdom too often never comes, and so one ought not to reject it merely because it comes late.

— Justice Felix Frankfurter

It's been 11 years since I left the U.S. Senate, after serving 24 years in high public office. After leaving a career in politics, I devoted much of my time to public lectures that took me into every state in the union and much of Europe, Asia, the Middle East and Latin America.

In 1988, I invested most of the earnings from this lecture circuit acquiring the leasehold on Connecticut's Stratford Inn. Hotels, inns and restaurants have always held a special fascination for me. The Stratford Inn promised the realization of a longtime dream to own a combination hotel, restaurant and public conference facility — complete with an experienced manager and staff.

In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England just as I was acquiring the inn's 43-year leasehold. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.

Today we are much closer to a general acknowledgment that government must encourage business to expand and grow. Bill Clinton, Paul Tsongas, Bob Kerrey and others have, I believe, changed the debate of our party. We intuitively know that to create job opportunities we need entrepreneurs who will risk their capital against an expected payoff. Too often, however, public policy does not consider whether we are choking off those opportunities.

My own business perspective has been limited to that small hotel and restaurant in Stratford, Conn., with an especially difficult lease and a severe recession. But my business associates and I also lived with federal, state and local rules that were all passed with the objective of helping employees, protecting the environment, raising tax dollars for schools, protecting our customers from fire hazards, etc. While I never have doubted the worthiness of any of these goals, the concept that most often eludes legislators is: "Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape." It is a simple concern that is nonetheless often ignored by legislators.

For example, the papers today are filled with stories about businesses dropping health coverage for employees. We provided a substantial package for our staff at the Stratford Inn. However, were we operating today, those costs would exceed $150,000 a year for health care on top of salaries and other benefits. There would have been no reasonable way for us to absorb or pass on these costs.

Some of the escalation in the cost of health care is attributed to patients suing doctors. While one cannot assess the merit of all these claims, I've also witnessed firsthand the explosion in blame-shifting and scapegoating for every negative experience in life.

Today, despite bankruptcy, we are still dealing with litigation from individuals who fell in or near our restaurant. Despite these injuries, not every misstep is the fault of someone else. Not every such incident should be viewed as a lawsuit instead of an unfortunate accident. And while the business owner may prevail in the end, the endless exposure to frivolous claims and high legal fees is frightening.

Our Connecticut hotel, along with many others, went bankrupt for a variety of reasons, the general economy in the Northeast being a significant cause. But that reason masks the variety of other challenges we faced that drive operating costs and financing charges beyond what a small business can handle.

It is clear that some businesses have products that can be priced at almost any level. The price of raw materials (e.g., steel and glass) and life-saving drugs and medical care are not easily substituted by consumers. It is only competition or antitrust that tempers price increases. Consumers may delay purchases, but they have little choice when faced with higher prices.

In services, however, consumers do have a choice when faced with higher prices. You may have to stay in a hotel while on vacation, but you can stay fewer days. You can eat in restaurants fewer times per month, or forgo a number of services from car washes to shoeshines. Every such decision eventually results in job losses for someone. And often these are the people without the skills to help themselves — the people I've spent a lifetime trying to help.

In short, "one-size-fits-all" rules for business ignore the reality of the marketplace. And setting thresholds for regulatory guidelines at artificial levels — e.g., 50 employees or more, $500,000 in sales — takes no account of other realities, such as profit margins, labor intensive vs. capital intensive businesses, and local market economics.

The problem we face as legislators is: Where do we set the bar so that it is not too high to clear? I don't have the answer. I do know that we need to start raising these questions more often.

Mr. McGovern. the 1972 Democratic presidential candidate, is president of the Middle-Eastern Policy Council in Washington.

(See related letters: "Letters to the Editor: A Politician's Dream Is a Businessman's Nightmare" •· WSJ July 2, 1922)

• Timely permits on projects large and small. There is virtually no industry — from agriculture and construction to transportation, technology, and oil and gas — or business, large or small, that isn’t disadvantaged by the tedious process and the length of time it takes to get approvals for permits to get things done. This includes federal, state and local requirements. These bottlenecks also make investment far more costly and slow. Timely permits would improve infrastructure and save lives, not endanger them.
• Proper federal government budgeting and fiscal management. The staggering inability of the government to draft and pass a proper budget causes deep and unnecessary damage to our growth. Some people estimate that the waste alone (due to improper payments, overlapping programs, and fragmented and duplicative contracts, among other things) could cost the nation hundreds of billions of dollars annually. This uncertainty filters through virtually every part of the American economy and should not be accepted.

We can all forgo a little self-interest to do what is right for our country.

Those of us who have benefited the most from this country bear even greater responsibility to do this. It’s perfectly understandable that institutions, including businesses, unions and industries, lobby in Washington, D.C., to protect themselves — in good ways and bad — but we should more regularly put national interests ahead of self-interests. It’s good to want to ensure well-paying jobs and healthy industries. But it is not good when it reduces competition, stops the deployment of enhanced technology, harms efficiency, creates fake jobs or builds bridges to nowhere or damages the general health of the economy. Doing the right thing, the right way – which is achievable – would be better for everyone. As former President John F. Kennedy said, “Ask not what your country can do for you — ask what you can do for your country.”

Celebrate American exceptionalism.

We can safely say that America is an exceptional nation built and grounded on principles — principles of freedom of speech, freedom of religion, free enterprise (capitalism), and the freedom and empowerment brought to us by our democracy through the power to elect our leaders and of our Constitution, which makes these individual freedoms sacrosanct. Much of the world yearns to be here because of those principles — the right to life, liberty and the pursuit of happiness. We should extol those virtues while recognizing that America has never been a perfect nation, like all other nations. We can acknowledge our flaws and strive to constantly correct them, without denigrating our nation.

Let’s celebrate the shared sense of sacrifice that gives us all strength.

There were very few positives from the pandemic, but I’m mentioning one, which, unfortunately, didn’t last, but reflected the best of us. In New York City, at 7 p.m. every evening, people throughout the city would open their windows, shouting and screaming and banging pots and pans to show gratitude to the essential workers — sanitation workers, police, firefighters, emergency responders, nurses and doctors. Of course, these workers were always essential, but I was hoping that spirit and civility would become deeply embedded and have longer lasting effects in our society.

I can understand when an individual for conscientious reasons chooses not to do work that helps our military. But I cannot understand when an entire company takes that position. How can we have a sense of shared sacrifice, when America is home to 18 million veterans who were willing to risk their lives for America’s safety, and yet some companies are not even willing to use their fingertips to help?

For example, back in 1969 the cancellation of the Reserve Officers’ Training Corps programs by the country’s most prestigious universities and colleges likely fueled the great divide – between elites and others in our country – that persists today. Our strength as a nation is best served when the best students and the best soldiers are brought together and we would all benefit from more civility and better teaching around basic virtues like hard work, shared sacrifice, justice, rationality and more respect for the enduring values of American freedom and free enterprise.

Resist being “weaponized.”

We can start by trying to understand other people’s and other voters’ points of views, even around deeply emotional topics. We can stop insulting whole classes of voters. We can stop name calling. We can stop blame-shifting and scapegoating. We can stop being petty. Politicians can cease insulting, baiting and belittling each other, which diminishes them and the voter. It has also become too acceptable for some politicians to say one thing in private and deliver a completely different message in public. It would also be nice to see some cabinet members from the opposing party. We should also stop degrading and demonizing American business and American institutions, which are the best in the world, because it erodes confidence in our very country.

Social media could do more.

There is no question that social media has some real negative effects, from the manipulation of elections to the increasingly documented negative effects on the mental health of children. These are issues impacting our individual and collective spheres, and it’s time for social media companies to take more action to remedy these challenges — and swiftly. Rapid advances in technology will not only make these existing issues harder to address, but they will likely create new ones. The current state of the online information landscape has wide-ranging implications on trust in institutions, information integrity and more — and it bears on institutions like ours, where platform policy has increasingly widespread implications for concerns about fraud, security and other issue spaces.

A range of tools and approaches is required to address this complex and important situation — and there are several measures that platform companies can immediately enact, voluntarily, while strengthening and improving their business models. One common sense and modest step would be for social media companies to further empower platform users’ control over what they see and how it is presented, leveraging existing tools and features — like the alternative feed algorithm settings some offer today. I believe many users (not just parents) would appreciate a greater ability to more carefully curate their feeds; for example, prioritizing educational content for their children.

Platforms could also consider enhanced authentication measures; i.e., having users identify themselves to the platform or to a trusted third party. This would have the virtue of increasing individual accountability and reducing imposters, bots and possibly foreign political actors on platforms. It would have immediate benefits for users who prefer content from authenticated sources that take responsibility for their postings. There are clear competing values that need to be balanced in such an approach, including those related to our cherished right to free speech, individual privacy and inclusion (for example, roughly 850 million people globally don’t have a way to easily authenticate themselves today). There are also legitimate questions as to whether authentication would be used as a tool to chill or block speech or quash bona fide political dissenters, and real work needs to be done to identify policy and technical solutions that balance such risks and benefits.

I offer these approaches as a starting place, understanding that it's crucial to continue honest conversation across sectors about the immediate, incremental improvements we can make to our online public square, considering the high stakes involved in how information is created and shared.

Effective measures will require time, money, learning and improvement, all in service of significantly enhancing the well-being, quality, and civility of our experiences online and in the world around us.

Healthy collaboration with business is needed.

Companies big and small create jobs, pay for employee healthcare and benefits, and build bridges, roads and hospitals. The people who work for and run these companies care deeply about their country — they are patriots, and they want to see people and communities succeed and prosper.

Unfortunately, the message America hears is that the federal government does not value business — that business is the problem and not part of the solution. There are fewer individuals in government who have any significant experience in starting or running a company, which is apparent every day in the political rhetoric that demonizes businesses and free enterprise and that damages confidence in American’s institutions. The relationship between business and government, in fact, might improve if there were more people from the business sector working in government. Inexperience with business is also evident from the regular lack of transparency or curiosity from regulators as they develop economic policies with potentially seismic consequences for the economy.

When I travel around the country, I experience a very different perspective on the street and at the local level — I see that many governors, mayors and city council members understand they are not facing big challenges alone. They stand shoulder to shoulder with our company, even when some of their constituents disagree or are skeptical about big banks. These government officials know they need partners who have the same stake in helping successful communities thrive and who care about building a prosperous future as much as they do. For example, in fewer than 10 years, Detroit saw one of the greatest turnarounds because of a vibrant collaboration between government and business. And businesses know they cannot succeed if individuals, families, towns and cities are not flourishing. We obviously don’t agree on everything, but there is a shared belief that we must work together. We can and should be full partners in developing solutions to our big problems.

The federal government, regardless of which party is in charge, needs to earn back trust through competence and effective policymaking.

The world is becoming more complex, more technologically competent and faster. Unfortunately the government simply is not built to innovate, compete and move quickly, as in the competitive business world. This may be the reason why government is becoming less effective. We need to take action on this because the loss of trust in government is damaging to society. We should be brutally honest about the staggering number of policies, systems and operations that are underperforming: Too many ineffective public schools do not give students the skills they need to land a well-paying job; we have over 25 million uninsured Americans, soaring healthcare costs and too many bad outcomes; we are unable to plan, permit and build infrastructure efficiently; our litigation system is capricious and wasteful; progress on immigration policies and reform is frustrating; lack of efficient mortgage markets and an affordable housing policy keep housing out of reach for many Americans; problems plague the Department of Veterans Affairs, the Federal Aviation Administration and the Internal Revenue Service; public universities don’t take responsibility for their costs and are often funded by excessive student lending; underinvestment in the electric grid results in high costs and unreliable service; highly inefficient U.S. merchant shipping and ports; and we have unfunded pension plans and no action on deficit spending, Social Security and Medicare. I’ll stop here. This should be unacceptable to all of us.

We need to find a way to bring more varied expertise and accountability to government.

We should be more ambitious in striving for excellence in government. I acknowledge that some of the best and the brightest are in government and the military today. Yet we should return to a government that seeks out more of the best and the brightest people from every background , including the private sector, to benefit from their knowledge and experience. Government also needs to leverage the expertise of business to address problems that it cannot solve on its own. And to be fair, business could use its influence to do less to further its own interest and more to enhance the nation as a whole.

We need good government. And there are some things only governments can do, such as oversee the military and justice systems. And while most innovation happens through the private sector, there are certain types of foundational innovations that can only be advanced by the government, such as basic research that simply cannot be funded by business. The Democrats want the government to do even more and the Republicans even less — I think we should spend more time trying to do even better . But no one, not even my most liberal Democratic friends, thinks that sending the government another trillion a year would be a wise use of money.

OUT OF THE LABYRINTH, WITH FOCUS AND RESOLVE

Even America, the most prosperous nation on the planet with its vast resources, needs to focus its resources on the complex and difficult tasks ahead.

I hope to never read a book about How the West Was Lost, summarized as follows: The failure to save Ukraine and find peace in the Middle East led to more bickering among the allies and weakened military alliances. This accelerated a division within the Western world, splitting countries into different economic spheres and with each nation trying to protect its economy, trade and energy sources. America’s economy weakened, eventually leading to the loss of its reserve currency status. Besotted by populism and partisanship and crippled by bureaucracy and lack of willpower, America failed to focus on what it needed to do to lead and save the Western world. The enemy was within — we just didn’t see it in time.

Paraphrasing what Winston Churchill was thought to have said: America, after it had exhausted all other possibilities, would do the right thing.

What I want and hope to see is a book about How the West Was Won. As the wars in Ukraine and the Middle East dragged on and as the fears of the Western world mounted, America rose to the challenge as it had in other turbulent times in history. America coalesced with its allies to form the alliances necessary to keep the world safe for freedom and democracy.

I remain with a deep and abiding faith in the strength of the enduring values of America.

WE SHOULD HAVE MORE FAITH IN THE AMAZING POWER OF OUR FREEDOMS

The heart and soul of the dynamism of America is human freedom — freedom of speech, freedom of religion, free enterprise (capitalism), and the freedom and empowerment brought to us by our democracy through the right to elect our leaders. Free people are at liberty to move around as they see fit, work as they see fit, dream as they see fit, and invest in themselves and in the pursuit of happiness as they see fit. This freedom that people enjoy, accompanied by the freedom of capital, is what drives the dynamism — economic and social — of this great country.

Our civil liberties depend upon the rule of law, property rights, including intellectual property, and restrictions on government encroachment upon these freedoms. Our Constitution and Bill of Rights secure our individual freedoms and reserve all rights to the individual other than those important but limited authorities given to the government.

The issue of individual rights is not all or none or freedom versus no freedom. There are, of course, terrible examples where individual rights were trampled upon, and the results were devastating — both for the individual and for the economy — in East Germany, Iran, North Korea, Russia, Venezuela, to name a few. And there are many countries that protect individual rights and are on a spectrum closer to American values. Think of Europe, for example. But even in some countries that have some of these rights, a lack of dynamism — often due to bureaucracy, weak institutions and government, and corruption — is palpable and has clearly led to less innovation, lower growth and, in general, a lower standard of living.

Freedom must necessarily be joined with the principle of striving toward equal opportunity. Equal opportunity is what allows individuals to rise to the best of their ability — it also means unequal outcomes. Equal opportunity is the foundation for fairness and meritocracy. The fight for equality, which is a good moral goal, should not damage the rights of the individual and their liberties.

Democracy and freedom are cojoined — together, they make freedom more durable. Democracy also has a self-correcting element — every four years you get to throw out leadership if you don’t like them (which you do not see in autocracies). But we all know that democracy can be sloppy: Maintaining an effective democracy is hard work. Democracy fosters open debate and compromise, which lead to better decisions over time (whether in government or in business). Intelligence is effectively “crowdsourced” with constant feedback. Good public policy comes from good debate and analytics, guided by reason coupled with a firm understanding of what you would like the outcomes to be and complemented with an honest assessment of what is really happening.

Even democracies can become stagnant, bureaucratic and self-perpetuating. Good government does many admirable things, but admitting to mistakes is often not one of them. It takes civically engaged citizens and a strong free press to bring sunlight to issues and keep a nation strong.

Autocratic societies by their nature subjugate the individual to the state. By definition they are not meritocracies — they are more about “who you know,” and they exist to perpetuate the existing ruling class. Their decisions are based on a completely different calculation, and their decision-making process does not encourage and, therefore, benefit from open debate. Democracy means that it is immoral to subjugate individual freedoms to state actors other than to protect the existence of the nation itself.

There are values that many of us hold dear, such as religion, family and country. But none may be more important than the freedoms that allow us to choose to live our life as we see fit. We should do more to applaud the virtue and amazing power of our freedoms.

HOW WE CAN HELP LIFT UP OUR LOW-INCOME CITIZENS AND MEND AMERICA’S TORN SOCIAL FABRIC

To fix problems, we must first acknowledge them. Despite decades of government programs and all the moralizing that surrounds them, we have not done a particularly good job lifting up our low-income fellow citizens. I may be wrong, but I do believe this is tearing at the social fabric of America and is among the root causes of the fraying of the American dream.

The gap between low-wage and well-paid workers has been growing dramatically. From 1979 to 2019, the wage growth of the top 10% was nearly 10 times that of the bottom 10% — which, basically, had not increased at all. The growth of low-income workers’ annualized real wages after the pandemic was, for the first time in decades, higher than the top 60%, but that’s not enough. The net worth for the bottom 25% of households is $20,800, and the net worth for the bottom 10% is essentially $0. This makes it increasingly difficult for low-wage workers to support their families. Of the 160 million Americans working today, approximately 40 million are paid less than $15 per hour.

Low-income individuals bear far greater burdens than the rest of us. Nearly 40% of Americans don’t have $400 in savings to deal with unexpected expenses, such as medical bills or car repairs, which leads to financial distress. More than 25 million Americans don’t have medical insurance at all; of these, one in five are in a family with income below the federal poverty level. People who live in low-income neighborhoods also tend to have worse health outcomes, including higher rates of mental health issues, depression and suicide, and a lower life expectancy — as many as 20 years. Finally, low-income Americans generally experience higher unemployment and more crime.

No one can claim that the promise of equal opportunity is being offered to all Americans through our education systems. Students in the lowest socioeconomic bracket are 50% less likely to attend college than those in the highest socioeconomic groups. Many inner city schools graduate under 50% of their students — and even those who graduate may not be well-prepared for the workforce. In addition, boys growing up in the bottom 10% of family income are 20 times more likely to be incarcerated. Those who do run afoul of our justice system generally do not get the second chance that many of them deserve. Their exclusion from the workforce is not only unfair to them but also results in an estimated $87 billion average annual cost to the economy.

Too many policies that are wrong — affecting housing and mortgage markets, healthcare, immigration, regulation, education and student lending, to name a few — are jeopardizing the opportunity for American citizens to succeed. The people who suffer the most, throughout all of this, are not high-income individuals. I strongly believe that these outcomes are destroying the concept of “fair” in America and are driving populism and diminishing, if not eliminating, trust — not only in government but in all our institutions. Simply put, the social needs of far too many of our citizens are not being met. We should never accept these outcomes — we must fix them.

There are two policy changes that I believe can have a dramatic effect on jobs, growth and equality — and they go a long way toward repairing the frayed American dream. Let’s start by treating all jobs with respect. Even starter jobs, which are the first rung on the ladder of opportunity, bring dignity and create better social outcomes in terms of health, higher household formation and lower crime. Of these two policy changes, one would better utilize existing resources, and the other would cost some money. But both would significantly change outcomes for low-income Americans.

The free one is so blindingly obvious that it’s almost embarrassing to propose. Our schools (high schools, community colleges and perhaps even four-year colleges) should take responsibility for outcomes — they should be judged on the quality and income level of the jobs that their graduates and even non-graduates attain. This means providing graduating students and other individuals with work skills (in fields such as advanced manufacturing, cyber, data science and technology, healthcare and so on) that will lead to better paying jobs. These schools should work with local businesses to replicate effective programs that are in place — because that is where the actual jobs are now. This would be good for growth and, as there are so many examples of successful programs, we already know what to do. With nearly 9 million job openings and just under 6 million unemployed workers in the United States, job skills training has never been needed more. We already spend a tremendous amount of money on education — just not the right way.

The second step is related to the first: Get more income to low-paid workers. While this one would cost money, it is to me a complete no-brainer since it is an expansion of an existing program, the Earned Income Tax Credit (EITC), which many Democrats and Republicans already agree upon. Today, the EITC supplements low- to moderate-income working individuals and couples, particularly with children and people living in rural areas. For example, a single mother with two children earning $9 an hour (approximately $20,000 a year) could receive a tax credit of more than $6,000 at year-end. Workers without children receive a very small tax credit (96% of all EITC dollars were received by families with children). This should be dramatically expanded, including eliminating the child requirement from the calculation altogether. We should convert the EITC to make it more like a negative income payroll tax, paid monthly. Any tax credit income should not be offset by any other benefits these individuals already receive (we have to eliminate benefit “cliffs” that disincentivize work).

An increase in the EITC to a maximum of $10,000 would cost tens of billions a year, but I have little doubt that these policy changes would do more than anything else to lift up low-income families and their communities. Well-paying jobs have been shown to reduce crime, increase household formation, improve health and reduce addiction. Both of these policies would have the virtue of increasing the number of people in the workforce. I also have little doubt that this would add to GDP.

We should attack all our other problems as well, but these two policy changes alone would dramatically improve our low-income neighborhoods, broadly strengthen the economy and give more opportunity to deserving citizens. It would restore the American Dream for many.

It’s been 20 years since the Bank One-JPMorgan Chase merger — and it’s been an extraordinary journey. I can’t even begin to express my heartfelt appreciation and respect for the tremendous character and capabilities of the management team who got us through the good times and the bad times to where we stand today. And I recognize that we all stand on the shoulders of many others who came before us in building this exceptional company of ours.

I would also like to express my deep gratitude to the 300,000+ employees, and their families, of JPMorgan Chase. Through these annual letters, I hope shareholders and all readers have gained a deeper understanding of what it takes to be an “endgame winner” in a rapidly changing world. More important, I hope you are as proud of what we all have achieved — as a business, as a bank and as a community investor — as I am. Thank you for your partnership.

Finally, we sincerely hope to see the world on the path to peace and prosperity.

Jamie Dimon Chairman and Chief Executive Officer April 8, 2024

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Election latest: Sunak not taking questions amid talk of Tory battle to succeed him - as Dragon joins Starmer at brewery

A poll has found Reform's Nigel Farage would be the favourite to take over as Tory leader if Rishi Sunak loses the election. Labour says the Conservatives are already battling over the succession. Earlier, the transport secretary denied that the PM's D-Day blunder had lost the election.

Saturday 8 June 2024 23:04, UK

• General Election 2024

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Election news

• PM not taking questions as D-Day row rumbles on
• Sir Keir joined by Dragon to launch small businesses plan
• Farage should take over from Sunak as leader of Tories, poll finds
• Tories will scrap ULEZ expansion in 'backing drivers bill'
• Sunak vows to axe stamp duty for first-time buyers
• Electoral Dysfunction:  What could be in the party manifestos?

Expert analysis

• Rob Powell: It beggars belief someone didn't sound the alarm about PM leaving D-Day events early
• Tamara Cohen: Labour can't believe their luck

Election essentials

• Battle For No 10: PM and Starmer taking part in Sky News special
• Campaign Heritage: Memorable moments from elections gone by
• Trackers: Who's leading polls? | Is PM keeping promises?
• Follow Sky's politics podcasts: Electoral Dysfunction | Politics At Jack And Sam's
• Read more: Who is standing down? | Key seats to watch | How to register to vote | What counts as voter ID? | Check if your constituency is changing | Your essential guide to election lingo | Sky's election night plans

The Lib Dems have announced plans to create 1,000 new  hospital beds to end the "corridor crisis" in hospitals. 

The party is ramping up its focus on health and social care ahead of its manifesto launch next week, which will include a dedicated chapter on care.

The issue is personal to leader Sir Ed Davey, who is a carer for his son John, who has a neurological condition and learning difficulties.

On the campaign trail in Wokingham, Berkshire on Saturday, he told broadcasters: "The Liberal Democrats are putting health and care right at the centre of our election campaign, and on ambulance delays and waiting times, it's been a crisis.

"We've seen in some parts of the country people's loved ones dying before the ambulances arrive.

"We've seen queues at hospitals as ambulances are waiting to hand over their patients and something has to be done."

Sir Ed said he would "turn around this mess the Conservatives have made" by investing £400m per year to add an extra 1,000 staffed beds in hospitals.

The party says this would help end excessive handover delays and the scandal of patients waiting in corridors to be treated. 

It has also pledged an upfront capital investment of £280 million to expand urgent treatment centres and A&E wards. 

The Lib Dems did not say where the money was coming from, but insisted the the pledge is "fully funded" and more detail will be unveiled in their manifesto - which will include a chapter on care. 

Rachel Reeves has accused the Tories of acting like Jeremy Corbyn with a "fantasy manifesto". 

The shadow chancellor, who campaigned twice to be an MP under Mr Corbyn's watch, has written an op-ed in The Sun in which she said she "totally rejects" the former Labour leader's approach. 

Accusing the Tories of making unfunded promises to cut taxes, Ms Reeves said: "The approach the Conservatives are taking now is the same as the approach Jeremy Corbyn took - and I totally reject it. 

"I’m not going to offer you a fantasy manifesto that writes cheques we could never cash. I will never do this."

CCHQ were quick to point out that Ms Reeves, an MP since 2010, will have campaigned twice for Mr Corbyn's manifesto - at the 2017 and 2019 general elections. 

"Imagine her shock when she finds out she campaigned for this manifesto, and to make Jeremy Corbyn Prime Minister… twice", they said in a post on X. 

The Labour shadow cabinet have been at pains to stress how much the party has changed since its historic defeat at the 2019 election. 

Ms Reeves in particular has been painting herself as fiscally conservative, in sharp contrast to Mr Corbyn who made a number of big spending pledges such as free school meals and the abolition of tuition fees.

The latest attack could risk angering the Labour left, who are keen to see greater spending commitments. 

But Ms Reeves made clear there would be no surprise spending announcements in the party's manifesto when it launches next week, repeating her mantra: "We are a changed Labour Party. I will never play fast and loose with your money." 

Question. If a prime minister is heckled at a rally and there's no backdrop scandal to imbue it with meaning, should it still end up on the news?

I ask because so often in election campaigns, individual and often innocuous events get sucked into the black hole of a political narrative and spat out as something very different and much more dangerous.

Exhibit A - the torrid two days Rishi Sunak has had after his early departure from the D-Day commemorations.

Such was the scale of this saga that even a solitary road sign in rural Gloucestershire was transformed into a symbol of the hapless Tory campaign stumbling from one PR disaster to another - simply because it read "Veterans Way" and happened to be next to a school the prime minister was visiting.

A GP with gripes about the widening of access to medical care topped off the party's hell day after she interrupted Mr Sunak at a rally in Wiltshire.

This was inevitably seen as another blow for the embattled campaign, despite the prime minister giving a fairly convincing defence of his policy.

You wonder how such a situation would have been received had it happened to Sir Keir Starmer - the drama potentially diluted by his huge lead in the polls and polished campaign machine.

None of this is to deny the importance of the D-Day story.

As one pollster put it, the debacle seemed almost "laser guided" to inflict the maximum amount of damage on a leader leaking votes to the right and facing frequent accusations of being out of touch.

That was certainly evident in Bishop Auckland on Saturday.

The Tories took this seat for the first time ever in 2019, but metres from a Conservative campaign stop one former candidate for the party told Sky News he could "never vote for that man" after events of the past two days.

"He's leading them off the cliff like rats following the Pied Piper," he said.

So how can Rishi Sunak change the weather?

Read Rob's full analysis below... 

The polls are stubbornly refusing to move for the Conservatives.

Sky's latest average poll tracker shows Labour on 43.6% while the Conservatives trail on 22.8% - a commanding lead.

And - despite Rishi Sunak appealing to the right of his core vote with policies on immigration and national service, Nigel Farage's Reform party are nipping at the Tories' heels. 

One YouGov poll this week showed the party on 17% - just two points behind the Conservatives on 19%.

Conservative peer and poll expert Lord Hayward has said the Tories have been "flatlining" in the polls. 

"I think the polls have somewhat overestimated the Labour lead but it's still solid and it's still very substantial," he tells the Politics Hub. 

He says Reform's position is "dangerous" to all other parties. 

"What's interesting is that Reform, and other disruptor parties like the Greens, are taking away votes from the major parties," he adds. 

"It will hit all parties, not just the Conservatives, and this what people have to be aware of nbecause voter loyalty is very low." 

He adds that he believes his party's chances of achieving a majority is going to be "pretty difficult". 

Ali Fortescue is joined now by our political correspondent Tamara Cohen , and the pair are discussing whether the Conservatives can dig themselves out of the hole they've found themselves in after a bad week. 

Tamara says there is a lot of deep despair in the Tory ranks. 

"Rishi Sunak refusing to speak to journalists today and just look at the seats that they're visiting. The prime minister in Bishop Auckland, where the Conservatives have an 8,000 majority," she says. 

"Whereas Labour today is in Aldershot - a seat the Conservatives have held for 100 years. 

"Next week we have the manifestos released. Is that a moment for Rishi Sunak to regain a bit of momentum?

"We've also got more debates including our election event and the Tories are chucking out a lot of ideas here." 

Next up on the show is Labour's shadow treasury minister James Murray. 

Ali begins by asking him about Labour's plan to overhaul the business rates system if it gets into power. 

Mr Murray explains that his party wants to replace the current system with one that "rebalances the burden away from high streets and make sure that online giants pay their fair share". 

"People want high streets to thrive... but at the moment they pay a disproportionate amount of tax through business rates," he adds. 

He explains that bricks and mortar stores would be given extra support under a Labour government. 

He reiterates Labour's pledge to not rejoin the single market, the customs union and it will not have the freedom on movement again.

But he says that the party wants to "reduce friction" with the European Union to improve the economy. 

Business Minister Kevin Hollinrake is the first guest to appear on tonight's Politics Hub with Ali Fortescue. 

He is asked about the Conservatives defenders seemingly missing in action, saying everybody's time in politics eventually comes to an end, and they have their own decisions to make. 

Mr Hollinrake is among those standing again as an MP. 

"Politics isn't the only thing to do in your life," he adds. "But there are some fantastic people coming through, and we have a fantastic leader in Rishi Sunak." 

Ali pushes him on the criticism surrounding Sunak over his decision to leave D-Day commemorations early. 

"He made a mistake, and he was of course in the commemorations in the UK and in the British commemorations in France," Mr Hollinrake says, adding that the PM has apologised. 

He adds that only one person he has spoken to in his constituency have raised D-Day as an issue. 

"I think it's time now to talk about other issues," he says. 

Moving on now to the Ultra Low Emission Zone in London, he insists the Conservatives want to make sure the cost of moving to a cleaner environment is "sensible and proportionate". 

   Prime Minister Rishi Sunak has been trying to move on from anger over his decision to leave D-Day commemorations early – today he refused to speak to journalists.

Last night though, a cabinet minister speaking on live TV told the country his decision was "very wrong". 

But where have all those who would be out defending the Conservatives got to? 

Boris Johnson, long-time deputy Prime Minister Dominic Raab, Sajid Javid, Liz Truss, even Michael Gove, have all deserted the field.

None - apart from Liz Truss - are even standing at the election.

Here's our political correspondent Rob Powell's latest report from today's campaign trail... 

In the last few moments, Rishi Sunak has posted on X about the release of four Israeli hostages in Gaza. 

He said it was a "huge relief" to see them returned home after their "unimaginable ordeal". 

"We will continue to strive towards an end to the fighting as well as safety and security for all," he added. 

Earlier, Labour leader Sir Keir Starmer reposted a message from shadow foreign secretary David Lammy, which said the hostage's rescue was a "glimmer of hope in the darkness". 

Tonight's show begins with a look at the rescue of four Israeli hostages from Hamas captivity in Gaza earlier today.

Israel's Prime Minister Benjamin Netanyahu said his forces had acted with "creativity and boldness" and they will not relent until all hostages have been returned home. 

Palestinian President Mahmoud Abbas has accused Israeli forces of a "bloody massacre". 

The Hamas-run government in the enclave has said at least 210 Palestinians were killed during the rescue mission. 

You can read all the latest updates in our dedicated Israel-Hamas war blog below...

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