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. No longer just committed to delivering shareholder value – but as players on society’s stage; dedicated to the future successes of not just the company, but their communities and countries. It was a stake in the ground for what has become a global corporate movement in identifying and living: purpose.
What is Purpose?
But what is a business purpose? Purpose isn’t about economic exchanges or financial performance. People more than ever are looking for ‘purpose’ in their personal lives and have an increased drive to contribute to their community or society in a more meaningful way. Purpose in business, therefore, reflects something aspirational. It re-establishes why a business exists, explains how people involved with that business are making a positive difference to their customers and the world, and gives everyone working in that business a sense of meaning.
The purpose of your business is what you stand for. It’s an anchor to guide decisions. It empowers behaviours and drives culture.
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 of an example that had inspired her from apparel brand Patagonia:
Patagonia’s purpose is “Do No Unnecessary Harm To The Environment”.
My husband bought a bag from them 10 years ago and the buckle broke recently. They claim that they’ll always fix old products, rather than shipping you a new one and to my surprise, even though the bag was more than 10 years old, Patagonia replaced the broken buckle and sent the bag back! Not only that, but the bag came back with a personal note . Hi, Richard, here are some pull tabs and buckles. Hope it keeps your sling going strong for a while longer. Happy adventures, Patagonia customer services.’
“I think that is epic. The person in customer services didn't need to write that! But it’s evident that he genuinely buys into the company's purpose and is living it though how he communicates with customers.
“If commercial organisations can do that - support the planet, produce excellent products and have great customer service. That's amazing. That’s how business can be a good force for society which is a really exciting place to play and is one of the things that keeps me going in my job at Pfizer”
Purpose gives employees something to get behind
Ali, continued: “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.
“If you dig deep into the company, what we are about is innovating to transform the lives of patients. Our purpose articulates why we exist as a business and also underlines what we do to make a difference to the employees that work at Pfizer and the communities that they serve.
“The Covid-19 pandemic has been a real time to test that purpose, but Pfizer has really shown up in terms of what we're doing around our science in terms of trying to find a vaccine for the disease.”
As Ali made clear, purpose in business isn’t background wallpaper to corporate performance, It directs the positive social impact a business has on it’s communities or customers and is an integral part of how a business shows up to its people, customers, partners, and the wider world.
Why has purpose become so important?
Purpose answers three core questions of your businesses’ existence:
- Why do we exist?
- What are we here to do?
- Where can we go?
But in addition to the philanthropic and philosophical meaning having a purpose brings concrete and proven business benefits. A recent McKinsey study revealed that people who have a strong sense of purpose are five times more likely to report higher levels of well-being. They are at 15% lower risk of dying, and at work, are four times more likely to report higher levels of engagement and to help the organization deliver higher EBITDA margins.
Purpose attracts talent (and retains it)
People, especially millennials and younger generations want to come and work at a place that genuinely cares about the community, the environment and causes – but also, about them.
Having a purpose is a key indication to prospective talent that your business cares about it’s employees and the world they live in.
Ali Fox-Robinson highlighted just how powerful purpose is in attracting talent in our webinar:
“I interviewed one of our graduates earlier this year and 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.’
However, she also highlighted that you have to walk your talk when it comes to purpose if you want to retain talent in the long term:
“You have to be authentic when storytelling about your purpose, however! You can’t market something that isn't real; because the second people come expecting the culture to be a certain way, if it isn't like that, then you're not doing anyone any favours.”
Purpose delivers performance
Although one of the main functions of a purpose is to show you’re more than financially motivated, there have been huge swathes of research since the early 2000s that evidence purpose driving profit.
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”.
Once they understand the potentially transformative affects it can have on their business, sceptical CEOs often end up leading the charge towards articulating company purpose.
In a Harvard Business Review case study, Gerry Anderson, President of DTE Energy was interviewed about the organisation’s extraordinary growth post the 2008 US economic recession. In the years between 2008 to 2017, DTE received a Gallup Great Workplace award five years in a row and its stock price more than tripled.
When asked what he attributed the success to, Anderson said it was because he had learnt valuable lessons about connecting people with DTE’s new business purpose, launched in 2008: “We serve with our energy, the lifeblood of communities and the engine of progress”.
It was the first time their work had been framed as a meaningful contribution to the greater good. DTE’s leaders dedicated themselves to supporting their invigorated purpose and wove it into onboarding and training programs, corporate meetings and culture-building activities such as film festivals and sing-alongs. As people began to live and breathe the purpose it became authentic and a transformation began to take place, employee engagement levels soared and business performance went from strength to strength.
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 behind your business purpose is more important than ever.
Your purpose can’t just be a slogan on a wall. It has to be embedded in your company culture, lived and breathed to empower and motivate your employees, and communicated effectively to attract the right talent. Only when your purpose is a part of your business DNA can it work to drive the success of your business.
Businesses with purpose are the ones that will survive and thrive.
Looking for support communicating and embedding your business purpose? That’s what we’re here for.
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