In August, 2019, nearly 200 chief executives, including the leaders of Apple, Pepsi and Walmart, met in Washington, U.S.A. to redefine the role of business in society. Revolutionising decades of assumed corporate orthodoxy, the Business Roundtable agreed an evolved ‘purpose of an organisation’.
The group decided that companies should no longer perform just in the interest of their shareholders, but that businesses must also invest in their employees, protect the environment and deal fairly and ethically with their suppliers.
This was a major shift in how businesses saw themselves - prioritising people and planet alongside profit, and taking an important role in creating a more positive future for all. It was a stake in the ground for what has become a global corporate movement in identifying and living with purpose.
But what is ‘purpose’ and why do businesses need it?
In this complete guide to purpose within business, we’ll look at the role of purpose in our changing world, the importance of prioritising people and planet, and how purposeful businesses can be more profitable than those without. You’ll discover how to empower leadership teams, and how to effectively communicate and embed your vision throughout your organisation and beyond.
What do we mean by purpose & why do we need one?
Business purpose isn’t about economic exchanges or financial performance. It reflects something more aspirational. It re-establishes why a business exists, explains how people involved with that organisation are making a positive difference to their customers and the world, and gives all employees a sense of meaning.
Purpose gives employees something to get behind
We spoke to Ali Fox-Robinson, Head of Colleague & Community Engagement at Pfizer in our Connecting Your People To Your Company Purpose Webinar, Ali told us:
“About three years ago, Pfizer articulated its purpose: ‘Breakthroughs that change patients' lives’. It's been hugely energising because 90,000 people around the world can get behind something and have a framework they can really live and work by.”
Ali was clear that purpose in business isn’t background wallpaper. It directs the positive social impact an organisation has on its communities or customers and is an integral part of how it shows up to its people, customers, partners, and the wider world.
In addition to the philanthropic and philosophical meaning having a purpose brings, there are concrete and proven business benefits:
1. Purpose attracts talent (and retains it)
People want to come and work at a place that genuinely cares about the community, the environment and causes – but also, about them.
2. Purpose delivers performance
A Korn Ferry study from 2016 found purpose-driven consumer product firms posted compound annual growth rates of 9.9% from 2011-2015, compared to purposeless peers who averaged only a 2.4% growth rate.
In an interview with the Financial Times’ Moral Money, Danone’s CEO Emmanuel Faber said that being a mission-driven company is a “competitive advantage”.
Having a business with a purpose is meaningful, empowering, and ultimately delivers better performance. And after the global economic impact of 2020, uniting your employees with a shared vision is more important than ever.
However, what you’re telling the world you believe in, can’t just be a slogan on a wall. It has to be embedded in your company culture. Only when your purpose is a part of your business DNA can it drive success. But those businesses that successfully articulate and live their purpose will be the ones that survive and thrive.
Read more: What Do We Mean By Purpose & Why Do We Need One?
Purpose & a world in change
The global economic events of 2020 have fundamentally changed the way we do business.
2020 was a litmus test for businesses with a purpose, with the strength and authenticity of that purpose (and its employees’ belief in it), dictating how well companies responded to the pandemic. It was crucial to stay focused, motivated and positive – having a clear vision was key to surviving the biggest changes businesses and employees have weathered in decades.
How does purpose enable business to survive change?
A fully realised and authentic purpose is a stake in the ground, a declaration of an organisation’s reason for being and what they believe in. This value-led statement of intent guides daily and strategic decisions, giving clarity and direction during periods of change and uncertainty.
Purpose enables businesses to survive change in several key ways:
1. Purpose enables worthwhile collaborations
Periods of change often require businesses to work together to keep performing. In the ICAEW 2020 Quarterly Insight, Emma Cox, PriceWaterhouseCoopers Partner and Head of Purpose, says:
“Alliances will be another pillar of the future – businesses not doing things in isolation for their own self-advantage, but looking at where they deliver impact, who they do that with, how they can work with suppliers, customers, stakeholders and investors in a broader platform on a range of topics they can influence.”
2. Purpose retains and attracts talent
According to Gallup, culture is responsible for attracting and retaining the right talent for your business. Involving and inspiring your existing workforce and potential talent with your mission and purpose is the key to attracting and retaining the top 20% of your relevant candidates.
In our Connecting Your People To Your Company Purpose Webinar in September 2020, Head of Colleague & Community Engagement at Pfizer, Ali Fox-Robinson, told us:
“During the Covid Pandemic, employees felt disoriented, anxious and unsure. They needed to rely on leadership, to shape, articulate, define and establish a constant.”
“People want to come and work at a place that genuinely cares about the community, the environment and causes – but also, about them.”
3. Purpose delivers performance
Purpose has been linked to profit for years. Even before the pandemic hit, momentum was building behind the idea that “company purpose” would help businesses operate profitably as well as benefiting all stakeholders and the wider community.
Larry Fink, BlackRock’s influential CEO, has emphasised the importance of company purpose in his last three annual letters to CEOs, writing that “a company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders”.
Unilever’s ‘sustainable living’ brands (i.e. those with a focus on reducing Unilever’s environmental footprint and increasing social impact) are shining examples of how businesses can do this well. Dove, Vaseline and Lipton delivered 75% of the company’s growth and grew 69% faster on average than the rest of its businesses in 2018 (Deloitte Insights 2019).
Company purpose isn’t just a ‘north star’ to keep a business focused and employees connected and motivated during times of change, it’s also a driver and a generator of profitability.
As changes across the business landscape continue, business survival will become increasingly more dependent on having a purpose. Successful organisations will use this purpose to seek out collaborations and partnerships with like-minded companies, focusing on attracting people who align with that purpose, and continuing to connect with the world in a meaningful and authentic way.
Read more about: Purpose & A World In Change
Purpose VS Profit - making purpose tangible for all stakeholders
Developing your vision and mission from a snappy strap line to an integral part of your business DNA, requires the buy-in and support from all stakeholders. But how do you speak their language and convince them to embrace your company’s purpose across all levels of decision making?
- Reason that the purpose already exists within the business, it just hasn’t been articulated or communicated effectively yet
- Prove that customers want to engage with businesses with a purpose
- Demonstrate employees want to work for a business with purpose
- Convince them that investors and investing firms want to place their funds with businesses that have purpose
- Show them that purpose empowers better performance and therefore profit
1. Many businesses have a purpose already
In our ‘Connecting Your People To Your Company Purpose’ webinar in September 2020, Ali Fox-Robinson, Head of Colleague & Community Engagement at Pfizer, said:
“About three years ago, Pfizer, articulated its purpose: ‘breakthroughs that change patients' lives’. It's been hugely energising because 90,000 people around the world can get behind something and have a framework they can really live and work by.”
It wasn’t that Pfizer didn’t have this purpose already, rather it hadn’t been clearly articulated, nor had it been communicated to employees or made relevant to them as individuals. Understanding the company’s vision and mission in the world was a more inspiring message than the financial growth so long seen by stakeholders as the only measure of success.
2. Customers want to engage with a business with purpose
Where the heart goes, the mind follows. A study by Professor Virginia Harper Ho, a researcher at the University of Kansas, found that many millennials are demanding companies be more socially responsible members of the communities they exist within.
Millennials surpassed baby boomers as the largest living adult demographic in 2019, with a collective estimated spending power of $1.4 trillion in 2020 – that should make shareholders sit up and take notice!
3. Employees Want To Work For Businesses With Purpose
According to a 2017 Korn Ferry survey of more than 1000 recruiters, candidates made final job decisions based on a company’s culture and purpose rather than their benefits package.
And in our Connecting Your People To Your Company Purpose Webinar in September 2020, Head of Colleague & Community Engagement at Pfizer, Ali Fox-Robinson, shared an anecdote demonstrating how important articulating their purpose has already been in attracting and retaining talent:
“I interviewed one of our graduates earlier this year and I asked her why she chose Pfizer. She said ‘I came because I really loved what I heard about the purpose’. And when I showed up and started working here, it turned out to be true’”.
4. Investors Want To Back Businesses With Purpose
In Larry Fink’s 2019 letter to the companies it invests in, he stated that he expects company directors to be able to express how their firm intends to grow profits and benefit the community over the long term:
“To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”...“Profits are in no way inconsistent with purpose – in fact, profits and purpose are inextricably linked.”
A direct insight from one of the world’s most influential investment firms should be enough to convince shareholders of the benefits of being a purpose-led business.
5. Purpose Drives Profit
Ultimately, profit is what excites shareholders. Fortunately, where purpose goes, profit often follows.
In another study – as far back at 2011 – by Harvard University Professor Michael Porter and senior fellow Mark Kramer, businesses that took a long-term approach to growth, over short term profitability were identified as having higher brand loyalty, higher employee retention rates, better resource allocation and an overall competitive advantage. That retention, resource and competitive advantage was fuelled by purpose.
In his book, Grow the Pie: How Great Companies Deliver Both Purpose and Profit, Alex Edmans details his study into purpose and its positive impact on profit. Companies with high employee satisfaction rates [delivered by engagement programmes communicating authentic purpose], outperformed their peers by up to 3.8% over a 28-year period.
There is also an overwhelming and growing body of evidence that demonstrates the improved performance of purpose-led businesses, both culturally and financially, detailed in our blog on this subject.
Conversations with your shareholders shouldn’t be about whether or not your business needs a purpose, but how quickly it can be articulated, communicated and embedded in your culture – get this right and business growth will follow.
Read more: Purpose VS Profit - Making Purpose Tangible for all Stakeholders
How do you empower business leaders to understand the importance of purpose?
Ensuring your leadership team is on board with, supports and lives your purpose in business is critical to it being embraced by your teams.
Ali Fox-Robinson, Head of Colleague & Community Engagement at Pfizer, said:
“Four or five years ago when we first started discussing the idea of purpose, before Pfizer global had articulated what we stood for and why, it just wasn’t landing everywhere.”
“Some leaders instinctively understood the importance of purpose, whereas others were concerned it felt too ‘soft and fluffy’. It was definitely still, at that point, a discussion topic, rather than an actionable mandate.”
Clearly articulating your purpose in a way that’s tangible and actionable is the first step in empowering your business leaders to understand its importance. There are four key steps to ensure your purpose in business is embraced, celebrated and driven forward by your leadership team:
- Identify and appoint a senior cheerleader
- Empower your “change agents”
- Create a framework and normalise purpose within your business
- Give leaders the tools to make the difference
1. Identify and appoint a senior cheerleader
Having just one senior, influential cheerleader of your business purpose can have a huge impact on energising and inspiring others. At Pfizer, this was Ben Osborn, their UK Country Manager. Ali told us:
“One of the things that really helped was having Ben so invested in having a business purpose. Ben’s personal belief in our purpose made it a lot easier for us to prioritise and implement all the ideas and programmes we had wanted to roll out for a while.”
Having just one inspirational or senior figure leading from the front gives other leaders the confidence to embody your business purpose in their own way.
2. Empower your “change agents”
Your “change agents” are the people who will take your renewed purpose and weave it into the aspects of everyday business. The leadership team are the obvious “change agents” but take time to identify who else could be consulted to support the start of your business’ change. Getting the support of cultural leaders, long standing, respected members of staff or natural influencers is important to reinforce what you are doing.
Once identified, empowering your “change agents” to translate your business purpose into actions and activities that feel authentic to them, will encourage and embed sustained and genuine transformation.
3. Create a framework and normalise purpose within your business
Normalising having a purpose (both as a business and as an individual) gives employees confidence to overtly live your business purpose and generates pride and normalcy around changing their behaviours.
Ali Fox-Robinson, told us:
“We did a lot of work around personal energy management; the theory being that key to becoming a well rounded human being is the need to identify and focus on your mental, physical, spiritual and your emotional wellbeing.”
“Because we were explicitly including the mental and spiritual aspects of our lives with the more traditional physical aspects, it legitimised all conversations we were having around ‘purpose’ and cemented the idea that having purpose was simply a part of being a good human and therefore, should be part of everyday life.”
4. Give leaders the tools to make the difference
During the transformation into a purpose-led business, leaders need tools to make practical changes throughout the organisation.
Work through all internal and external operational aspects of how you do business, identify which areas need developing to fully align with your business purpose, and what needs to change. Then work with the leaders in each of these areas to drive the operational and cultural changes needed.
Whatever structural changes the business needs to fully align to your purpose, be brave enough to take it. Then, support and empower your leaders to drive the change with confidence and integrity. To quote a famous example, this may even mean ditching product lines. US pharmacy chain CVS Health, famously stopped selling tobacco products in 2014 because they didn’t align with its purpose in business to “help people on their path to better health,” forgoing $2 billion in annual revenue.
Read more about : How To Empower Business Leaders to Understand the Importance of Purpose
Embedding purpose within your organisation
For a business to benefit from the transformative power of purpose, it must become embedded in the culture and woven throughout internal communications.
There are five best practice steps to effectively embed purpose within your organisation:
- Allow it to guide your decision making
- Establish your lead storytellers
- Make it personal for your employees
- Celebrate purpose-aligned achievements
- Review systems and processes in line with your purpose
1. Allow purpose to guide your decision making
Having your business purpose as a ‘North Star’, ensures any business decision, big or small, is guided by what you stand for and what you believe in.
For example, PayPal’s brand values and purpose are around ‘inclusion’ and it considers its employees as its most important stakeholders. Consistent with this, PayPal is proud of – and vocal about – its commitment to LBGTQ rights.
When North Carolina passed a law in 2016 preventing cities from passing non-discrimination policies based on gender identity, PayPal cancelled plans to open their new operations centre in Charlotte, explaining that every person, including each of their employees, should have equal rights under the law.
Their decision to withdraw from Charlotte demonstrated the authenticity of their purpose, their value of inclusion and their stated commitments to employees' rights.
2. Establish your lead storytellers
When compelling leaders visibly and publicly articulate their belief in the business purpose, it has a big impact. Not only do they inspire others within the business to find their own way to embody the collective purpose, they also instil faith in what the business stands for.
3. Make it personal for your employees
Ensuring all employees not only understand and can articulate your business purpose, but can also relate it to their own personal experiences, will create a genuine sense of community and connection to the business.
An example of a company-wide internal communications campaign engaging employees in purpose is from truck manufacturer, Scania. They hold an annual climate day and stop all operations so employees can join sustainability training.
4. Celebrate purposeful achievements
Internally recognising and rewarding purpose-driven employees reinforces what you are trying to achieve as a business. For example, patient health services business mdgroup’s purpose is “Expect Remarkable”, which they bring to life in one way with their 'family matters' internal newsletter, which showcases the ‘remarkable' achievements of their employees in and outside of work.
5. Review systems and processes in line with your purpose
Systematically work through your company processes, identifying which ones will need developing or overhauling. This could be as simple as creating a more purpose-focused interview and recruitment process, to as involved as reviewing the carbon emissions produced by the business and implementing more sustainable processes or reviewing suppliers (McKinsey, 2019).
Read more: Embedding Purpose Within Your Organisation
How do you communicate purpose effectively?
When you put purpose at the heart of your organisation, you embark on a cultural shift from being a commercially-led business to both purpose-led and commercially-led, which means organisational wide behavioural change needs to happen.
But if change isn’t communicated effectively, you risk employees becoming disengaged or confused. A communications process for embedding company purpose must be clearly defined, with a series of specific tactical steps to ensure effective comms.
1. Being positive and inspiring
Address the ‘why’ behind the business purpose first when it comes to internal comms. To motivate and excite employees to be involved and understand their role in the bigger picture. Employees want to work for businesses with purpose and see where their role makes an impact.
2. Being accountable
If you want employees to fully embrace your newly articulated business purpose, your leadership team will need to lead from the front. That means they’ll need to explicitly exhibit and demonstrate what it looks like to live and breathe the company purpose.
3. Being open and honest
Being honest about potential challenges as the business transforms will inspire faith and trust, helping employees understand the nuances and complexity of changes to operations and ease the emotional load.
There may be new suppliers to work with, new processes implemented, new ways of doing business that are different than before – and as these logistical and operational changes happen, the working environment might become busy, stressful or difficult for a period of time. Being open and honest about what this means for employees on an individual level manages expectations and inspires confidence.
4. Being clear and relevant
As well as the bigger picture, be clear on the specific next steps. Communicate what’s happening when and what support you need from them at what stages. When they buy into the bigger picture and see how it aligns with their personal values, they’re more likely to be actively involved in driving the business forward.
5. Being human
Use simple, everyday language to keep corporate barriers down and build trust. Authenticity is key and your teams need to know this process isn’t just another slogan on a wall.
Being human and down to earth is key to communicating your purpose in a way that resonates – so, avoid peppering internal comms with corporate and marketing speak and instead focus on speaking the language of your employees.
6. Choosing the right channels
How you communicate with your delivery teams may be very different to how your customer care teams need to be consulted. Whether you’re using email, face to face meetings, intranet, virtual meetings, or internal message platforms, make sure employees get the messages that are relevant to them, at the right time, in the right place, and in the right format.
7. Being consistent
Although communicating purpose effectively may mean using different channels and formats to reach different teams, ensure there’s no discrepancy in how your purpose is being described.
Creating a ‘comms toolkit’ for line managers and organisational leaders will empower them to embrace the purpose in a way that is authentic to them while also being consistent.
Read more about: How To Communicate Purpose Effectively
Looking for support with communicating business purpose? That’s what we’re here for.
Get in touch with us and let’s have a conversation.