Original publication in Forbes on October 31st 2019
As untamed capitalism and corporate greed come under increasingly fierce and widespread siege, the business world has begun to respond, loudly.
In August, the elite CEOs of the Business Roundtable lobbying group released a statement promising to move away from the decades-old corporate belief in “shareholder primacy” toward a more holistic, purpose-driven approach that “serves all Americans.”
Let’s be clear: this move is a huge milestone in the recent history of management. After all, the signers of this statement lead organizations that take in a combined $7 trillion in revenue and employ 15 million people. However, whether the group’s stated goal of shifting commitments actually transpires remains to be seen.
The advantage of purpose-driven companies
Still, the business roundtable’s announcement, while greeted excitedly, shouldn’t have come as a huge surprise. Over the 11 years since the start of the fiscal crisis, more and more attention has been paid to the ethical, social and environmental responsibilities of co~rporations.
Yet businesses that do operate with a sense of purpose and of bettering society reap economic benefits. Recent studies have shown that the performance of companies with a clear sense of purpose grew by 10 times the median rate of companies on the S&P 500.
What’s more, purposeful organizations appeal to younger people just entering the workforce. This generation has grown up connected in unprecedented ways by technology to a global community, alert to what threatens it and attuned to social justice. To reach these new or future workers of the Greta Thunberg generation, companies can’t ignore social ethics.
How to promote purpose throughout your business
Purpose is a word that packs a punch. It’s an idea whose meaning, while lofty, may be easily grasped. But attaining a sense of purpose can prove daunting, especially in the context of business and its more practical economic goals.
This can be seen in the gap between society’s expectations of businesses and its perception of results: just 39% of people think that organizations work with the goal in mind of improving the quality of life and well-being of their employees and surrounding communities.
It was with this challenge in mind that I, along with my colleagues A. Lleo-de-Nalda, C. Rey, A. Alloza and N. Pitta, set out to research the promotion of purpose in business. And to develop what we call the Purpose Strength Model compiling the successful techniques and strategies drawn from analyses of 25 purposeful businesses.
How can CEOs and managers promote purposeful business? It’s helpful to first recognize the three pillars of purpose:
1) Coherence, or the alignment between what a company says and what it does.
2) Authenticity, or the true motivation and intention behind the things a company does.
3) Integrity, or the naturally occurring behaviors that help maintain a purposeful drive.
Then, it’s necessary to understand the first and most fundamental step toward building and sustaining purpose, which is constructing a shared purpose that enters the minds and hearts of all employees and inspires them to do their best, most purposeful, work.
How exactly can this communal purpose be achieved? Our model presents four factors, or levers, to attend to while sowing purpose in your organization:
1. Strategy. The company should define a strategy for the development of a clearly defined purpose. This may sound simple, but it requires deep, prolonged reflection and understanding of corporate responsibility and ethical objectives. This strategy should include specific mile markers to be met along the road to purpose.
2. Leadership. Company leaders must be depended upon to capably transmit the company’s purpose to employees so that it enters their minds and hearts. This leadership includes directors who promote purpose from the top of the organization and, so that purpose permeates each employee, leaders at all levels and divisions of the company.
3. Management. Systems of management and organizational procedures that guide day-to-day work and ensure that purpose is remembered each day. The organizations we studied saw fit to integrate the company’s purpose into all daily aspects of work including budget planning, talent recruitment and performance assessments.
4. Clear communication is paramount to demonstrating that what the organization is, what the organization says it wants to be, and what it is perceived to be, all align.
By following the model of companies who are ethically and financially successful, managers can help lead their companies into a thriving, purposeful future.