Purpose – the new Culture?
Claremont Communications, one of our clients, launched this white paper at the RSA in London on 17th May. It’s a good read, and the Q and A session raised some important issues for businesses.
What is Purpose?
Most of us intuitively understand what Purpose is, but when we start talking about it, like Strategy, Leadership and Wellbeing, we find it means something very different to each of us.
Porter and Kramer, in the Harvard Business Review, defined Purpose in business not as a ‘what’, but as a ‘how’ – not simply making profits but generating value in a way that helps society deal with the challenges it faces.
That’s fine at a global level, but individual businesses need something more specific. Something that will often overlap with mission, values and positioning. And at the individual level, employees need to be able to internalise what the business Purpose means to them if they are consistently going to behave in a ‘pro-Purpose’ way. Making Purpose personal is a far bigger challenge than just defining it.
Why does Purpose matter?
At the global level, the need for Purpose driven businesses couldn’t be clearer or more urgent. The ‘Three Earths’ problem – to maintain current levels of consumption with our existing population we need three Earth-sized planets – should in itself be enough to drive significant change.
At the business level, companies are struggling with the increasingly competitive global war for talent. Why should the best people work for you instead of the competition? Purpose can be a critical differentiator, as Unilever has found to its benefit over the last few years.
Also, most businesses now realise that, in a hyper-competitive global market, nobody needs what you sell. There are plenty of competitors they can buy from. But if how and why you do what you do reflects well on them, people are more likely to choose you.
For individuals, Purpose can align personal and corporate values, drawing more motivated, higher quality people to your business who share your vision, allowing you to retain them longer. They also get bragging rights with their mates – not to be underestimated in the social media age.
Purpose is a raison d’être. It informs everything you do. And ‘how we do things around here’ is how we commonly describe culture.
How can you tell if it is working?
Purpose is not culture, but it is about culture. If Purpose is important to your business then you will want it to change ‘how we do things’. That means setting up evaluation criteria – KPIs – before you start the process of becoming Purpose driven. This means you know what to measure, so you can see the ‘before and after’. And if you can’t measure it, you can’t manage it.
When Purpose is properly embedded in the business, it affects everything it touches. Employees, clients, suppliers, and the communities it operates in. Your behavioural KPIs need to reflect this. And your management challenges will extend beyond the ‘borders’ of your business to people who aren’t on your payroll, and who have no need to buy in to your Purpose.
The business case for Purpose – Productivity, Retention and Margins
Purpose helps cynical and disengaged staff become more productive.
Purpose helps employees to act more autonomously, freeing up management time, as it gives them a context for their decisions.
Purpose can dissolve the inertia generated by the ‘silo mindset’ present in many businesses.
People have a ‘why’ they can believe in, so they find the energy and time to makes things happen.
People with Purpose try harder and stick around longer, continually improving things and sharing their knowledge with each other. This, in turn, cuts your recruitment and training budgets.
Employees want to link their personal sense of Purpose to that of their employer, and in doing so it helps the wellbeing of both, meaning fewer sick days.
All of these things improve operating margins, which in turn make the business more valuable.
Purpose has consequences
Businesses with Purpose will be more emotional, and too many businesses sweep emotions under the corporate carpet in the mistaken belief that emotions have no place in the office.
Purpose brings emotion, good and bad, out into the open. Your senior people have to understand how to deal with these below-the-surface feelings as they arise. Incidentally, that’s where we come in.
It’s not plain sailing. If living by your Purpose doesn’t hurt at least a bit, and cost you money, and cause you to make some tough decisions, then you’re not doing it right.
Download the report