Purpose is your enduring and meaningful reason to exist. And a clear organisational purpose is now a basic expectation on all companies from employees, customers, regulators, and even investors. But stakeholders will sense inauthenticity if your company’s actions do not align with its purpose. And having a fake purpose can be more damaging than having no purpose at all.
What is organisational purpose?
Purpose is the cornerstone of a company. It is the “why” that underpins every action and decision. It aligns financial performance with a societal or environmental goal, provides a clear context that guides daily decision making and unifies and inspires people towards achieving it.
Why is purpose important?
A clear purpose is now a basic expectation on all companies. An expectation of employees, customers, regulators and even investors. Larry Fink’s Letter to CEOs, the Business Roundtable and the UK Corporate Governance Code have made it so.
But COVID may be the catalyst that forces the shift from ‘stating’ to ‘living’ purpose. Society has supported business; society will look for a return. Black Lives Matter and #metoo have further exposed persisting injustices. Employees demand action. Consumers shun businesses that fail to live up to their responsibilities…
It is no longer enough to state a purpose. Purpose must be authentically and demonstrably lived.
Purpose is not just the right thing to do
But this is not just a moral responsibility. Measuring purpose in organisations across the globe has taught us that purpose can have a dramatic impact on people and performance. People everywhere are far more motivated, far more engaged and far more productive in purpose-led businesses. It also makes them happy. And that means the business performs better.
But there’s a problem. This isn’t about ‘having a purpose’. It’s far more complex than that.
The benefits of having an activated purpose
The numbers consistently show that being aware of the organisation’s purpose, knowing the words, has almost zero impact on how people feel and behave. For purpose to engage and clarify, for it to inspire commitment and ignite creativity, it must be authentically lived.
People who experience purpose in this activated way show:
- levels of commitment 40% above typically colleagues
- levels of openness 30% higher
- levels of adaptability 25% higher
- they are also 25% less likely to quit
Colleagues who merely understand the purpose show none of these behavioural shifts.
And what activates purpose, consistently, across companies and cultures globally, is a specific set of key cultural attributes. It is these attributes and not purpose itself that create the startling performance gains of the most purposeful companies.
The danger of having a fake organisational purpose
And an inauthentic purpose is worse than no purpose at all. Where the purpose message is heard but not seen to drive how the organisation actually behaves it creates confusion and can lead to damaging levels of mistrust and detachment.
An authentic purpose is a powerful force to align companies and inspire people. But purpose is not about crafting some clever words. It is a complex cultural process which must be brought to life in communities across the businesses. And that requires accurate, robust and actionable metrics to understand purpose at source and track and adjust its impact over time and across the business.