Beyond shareholder happiness
Share price is on the up, bonuses have been paid out and you’ve hit all your targets and most importantly you’ve got happy shareholders. Then the cycle starts again and this time, the targets are higher, the budgets leaner and the share price trend is showing a plateau. How do you top last year’s performance? Welcome to the cyclical nature of growth, profit, more growth and more profit.
How do businesses keep up the act of outperforming themselves year in and year out? Emergent research shows that higher purpose can lead to good results. According to the Global Leadership Forecast 2018 report, purpose-driven companies outperform the rest of the market by a huge 42%. Engagement levels are 12% higher, employees are 14% more likely to stay in post and the overall culture tends to be more positive.
Developing a clear sense of purpose, that is shared across the board internally and at all levels of operation is vital if businesses are to thrive in these times where the competition is global, the speed of information is unprecedented and the demand for and value of transparency is on the rise. So, what exactly is a “purpose-driven” company anyway and where did the concept spring from in the first place?
The EY Beacon Institute, which undertakes research into what it takes for companies to be successful, defines them as organisations with an aspirational reason for being — beyond simply making a profit — that endeavour to make a positive impact at both the global and local level.
Rather than simply offer a short-term gain for shareholders, “purpose-driven” businesses aim to provide a long-term benefit to society in terms of the products and services they offer. They also understand that companies are made up of human beings and so work hard not only to nurture and develop their talent, but also the communities they operate in.
Arguably, the first time such ideas were clearly articulated was in The Purpose Economy a book by Aaron Hurst CEO and co-founder of Imperative, a website intended to help individuals connect with their purpose, the book acted as a catalyst for the emerging ‘purpose’ movement and helped to pull a confluence of forces together in a coherent way.
One such force is the internet and the impact it has had in terms of militating for transparency. Because information is now so readily available and transmitted around the globe so quickly, it is impossible for companies to hide their activities, whether good or bad.
As a result, they are increasingly being held to account and need to demonstrate that they are true to their convictions, rather than simply paying lip service to them. This situation requires that they commit to a set of values and beliefs in a fashion that was previously unheard of.
Another change broker has been the emergence of the younger generation in predominantly G7 nations. The great majority will never earn as much as their parents and, in many instances, are unlikely own a flat or a house. The knock-on effect has been the attitude to work. Young people are clear they do not wish to buy into the same “factory mentality” as previous generations have. In addition, because they do not perceive the same divisions between life and work as past generations did, they are looking to do something more meaningful than just earning a wage.
But added to this mix are also some older impetuses. On the one hand, there is the concept of corporate social responsibility, which has been around since the 1960s and aims to ensure that organisations conduct business in an ethical way. On the other, the Great Place to Work Institute, which first introduced its ‘Best Workplaces’ awards in 1997, has been helping to change how companies relate to, and treat, their staff ever since.
So while some of the elements of ‘purpose’ have been around for a while, it is only now that they are coalescing together to create something new. As for how many purpose-beyond-profit companies are out on the market, in reality, it is still early days — although a handful are definitely starting to be turned on to this approach as a more sustainable way of doing business.
Nonetheless, there are still lots of blue chip firms keen to talk about the positive impact they have on the world, despite the large amount of boilerplating that goes on as opposed to truly living their convictions. Because to really do the idea of ‘purpose’ justice, it must be approached in an holistic fashion and embedded at every level of the organisation.
Being genuine and authentic
A company cannot be told by someone else what its purpose is or should be – it has to come from within, and it must be genuine and authentic. Simply tacking a motivational quote to the wall is not enough. Purpose is a way of being that must be lived by every individual across all aspects of the business every day.
For those HR professionals keen to start down this path, however, a key secret to success, as ever with these things, is getting senior leaders on board. Winning the debate here involves making an appropriate business case based on tried and tested statistics such as those laid out in the Global Leadership Forecast 2108 report.
But it also entails being honest with yourself about where your company truly is in its journey to uncover its true purpose. This involves showing a willingness to confront the uncomfortable truths as well as the positive elements and not simply hide things under the carpet.
Finding ways, or even just fresh approaches, to articulating your purpose is also a must. This means taking the leadership team on a journey of discovery to express what the organisation’s purpose really is. We are not talking generic ‘we would like to make the world a better place’ stuff here, but rather focusing on the specifics of what you are doing now.
Another thing to bear in mind is how vital it is to speak from the heart. It is about expressing yourself in ways that touch others so they instinctively understand why they should care. It is about telling stories so people don’t get bogged down in the facts and statistics, but are motivated to act because they buy into the same shared values.
But most of all, purpose is something that you can’t bolt on or ever say ‘job done’ about. You have to live it with every tiny step you take day-after-day until it becomes second nature and everyone trusts in the reality they see around them. So don’t fake it, don’t force it. Let it happen naturally.