Are you purpose-ful?
The value of making corporate purpose central to an organisation's outlook and performance has been highlighted by the Covid-19 crisis, it converges with long term shifts in investor reporting standards, employee expectations, ESG and societal expectations of brands, corporations and institutions.
The rise of purpose
To effectively use purpose as a part of addressing these multiple agendas and needs, a common mindset shaped round purpose is required at every level in an organisation, rather than a slogan.
In hindsight, Covid-19 was bound to highlight purpose. Around the world, Covid-19 raised existential questions at personal, organisational, community and societal levels. What difference can we make? Why do we really exist?
For organisations a purpose should provide a compass, a focus and a rallying point. It should apply and be useful on its own without the corporate strategy, vision and long term goals, or even when they are no longer relevant and in unexpected circumstances. It should be timeless and be a guide and motivator for everyone involved in an organisation.
Inevitably, crises are a good test for this adaptability and true sense of purpose. As Satya Nadella, CEO of Microsoft put it in an email to the company in March 2020 (and then in a post on LinkedIn): “It is in times of great disruption and uncertainty that our ability to stay grounded in our sense of purpose and remain true to our identity is of the utmost importance.”.
Articulating purpose is far more than a brand marketing and communications response and trend. On a longer timescale than the emergence of the virus, the role and importance of purpose has also emerged in investor relations, corporate governance and ESG as a whole to become a central requirement in best practice for public companies.
This has been apparent for many years, but over the last two, it has manifested in statements and guidance for business from groups, such as the FRC (the Financial Reporting Council, which sets the UK’s corporate governance and stewardship codes) and the Business Roundtable (an association leading US CEOs). In 2020 the FRC’s Stewardship Guide made purpose, along with culture and strategy the basis for reporting performance and corporate intentions. While the year before the Business Roundtable launched a redefinition of corporate purpose as a commitment to all stakeholders.
On a different tack, and probably a decade-long timescale, HR directors and CEOs in the euphemistically labelled 'the war for talent' have increasingly recognised that employees want to work for and are motivated by organisations that have clear 'higher' purposes. Although this need for purpose tends to be compartmentalised as an HR and recruitment challenge in EVPs (employer value propositions) and recruitment brand campaigns, it is all part of the same trend to the centrality of purpose.
One purpose to guide them all
The conclusion about the role of purpose coming from all these agendas, from corporate reporting and brand to HR is consistent. It should not be treated as a 'tick box' statement, but should genuinely underpin an organisation's activities and decision-making, from shaping ESG activities and actively engaging with wider stakeholders in the creation of social value and impact, through to showing how purpose is driving long term strategy and value creation.
This is more than a publicly quoted company phenomenon. In a straw poll of client conversations over the last couple of years, we have found privately-owned companies and not-for-profits are recognising the centrality of purpose and the need to articulate powerfully, just as much, if not more than publicly quoted ones.
With all these different drivers to articulate a powerful purpose a variety of terminology is used, such as 'brand purpose', 'societal purpose' and 'mission and purpose'. There should only be one fundamental answer for an organisation to the purpose question 'Why do we exist?' or 'What difference do we make?'. So any organisation should only have one purpose. Creating variants adds complexity and is essentially at odds with making a purpose credible and authentic to the organisation for all stakeholders.