Corporate purpose: the what, the why, and the how
This article ties together some of the most prominent research on the business case of purpose.
With its increasing popularity, the amount of knowledge regarding corporate purpose is also growing exponentially. Great news, because the more purpose enthusiasts, the larger the positive impact they can collectively make!
Then again, many business leaders familiarising themselves with purpose are overwhelmed by a surplus of information. That’s why, as insiders in the world of purpose, we’re often asked what we consider to be essential knowledge on the topic.
You’ll find a summary of our findings in the infographic below. Feel free to share.
What is corporate purpose?
Firstly, let’s clarify on what we consider to be purpose.
There are multiple definitions of purpose in the sense of corporate purpose. One of our customers, EY, defines purpose as “an aspirational reason for being that is grounded in humanity, and which inspires a call to action”. Harvard Business Review defines purposes as a way “to inspire your staff to do good work for you, find a way to express the organization’s impact on the lives of customers, clients, students, patients – whomever you’re trying to serve”.
Both definitions focus on both your organisation and the impact you want to make on society. At GoodUp we use the following definition of purpose:
“Where your core skills and expertise make a positive impact on society.”
- Clearly shows that purpose is different from your mission and vision statement.
- Also shows it’s bigger than a CSR strategy, and it should definitely be more than something your marketing department invented.
A successful purpose is incorporated into your overall business strategy. It lives throughout the entire company and explains your bigger why. Like why your organisation exists, why your product matters, or why you chose to provide this product or service.
When purpose is done well, it grows your authenticity, success, and profits. Which leads us to the reason why your business needs a purpose in today’s society.
Why does your business need it?
The time that consumers accept anything you put in front of them is long gone. People are becoming more critical, more aware, and want to know what the big corporations are up to. Especially Generation Z, today’s teenagers who are growing up fast, care about a brand with values. In a recent studyover 50% said that knowing a brand is socially conscious positively influences their purchase decisions.
But not only your customers, also other stakeholders are looking for brands with a deeper meaning. More and more people want to work for a cause they care about and even investors are catching on to the fact that businesses with an authentic purpose are doing well financially.
Essentially, all your important stakeholders choose purpose-driven businesses over companies that are solely driven by their own profit. By using purpose as a framework for your business, you can leverage the core benefits of purpose and make sure people stick with your company. And the numbers proof it.
The business case
Purpose is a hot topic, and there’s tons of research that proves its business case.
Business culture is shifting, since companies embrace their responsibility in making a positive impact on society. Nine out of ten (93%) business leaders agree that the purpose of business is to have an impact on society, beyond pursuing profits and wealth. 34% of executives even ranks “societal impact” as the most important factor to evaluate their annual performance.
Most C-suite executives believe the trend for purpose-driven companies will continue. Most also believe that a company’s success will depend on its social purpose. 73% of executives predict the demand for purpose-driven companies among stakeholders will increase within the next decade. And, the external pressure to move to a more impact-driven business model is also growing: 64% of people globally expect CEOs to lead on social change rather than waiting for government intervention.
More and more examples are showing great promise for purpose as a profit booster
Purpose is also showing significant potential for the bottom-line. In an EY study, 58% of respondents that prioritised purpose experienced growth of 10% or more over the past three years. And brands with purpose grow faster. Purpose brands at Unilever are growing 50% faster than other brands and deliver 60% of total growth. A 2017 BCG study shows that organisations with high purpose scores, seem to outperform their low-purpose peers. They are performing more than twice as good in long term total shareholder return. So, purpose does indeed pay—and it does so over the long term.
A driver for employee engagement
From a personal perspective, purpose is what drives you out of bed in the morning. That’s why leading with purpose inspires and has the power to create an engaged workforce. And embedding a higher sense of purpose into the Employee Value Proposition (EVP) unlocks individual potential and spurs people to be change agents. Purpose even trumps salary: nine out of ten employees are willing to earn less to work with purpose. They’re also 69% less likely to quit within the next 6 months if they find work highly meaningful. And they stay on average 7.4 months longer than employees who find their work lacks in meaning.
According to a survey among Fortune 1000 top executives, employees are driving company purpose. Both new hires (77%) and current employees (76%) are the primary drivers of demand for purpose-driven companies. Next in line are customers (68%), followed by “other stakeholders” (61%) regulators and policymakers (53%) and investors and shareholders (52%). These stakeholders are expected to continue pushing companies to have more purpose in the coming decade.
And it’s not just millennials. Executives say that over the last five years, they’ve also seen an increase in the number of Gen-X (69%) and baby-boom employees (46%) who have asked for more opportunities to engage in purpose work. Roughly 70% of the executives report employee desire for purpose is impacting HR’s ability to recruit and retain top talent. 66% report it is transforming traditional approaches to talent recruitment and development, including compensation packages. 75% believe that compensation alone will not be enough to recruit and retain talent.
The business case for purpose is solid. Now, it’s time to act!
Make purpose work for your business
In this blog series, we’ll explore the depths of purpose. What are the benefits for your business, how do you define a corporate purpose, and how can you turn that purpose into a business success? Read on and become a purpose expert yourself!
- Purpose, mission, vision, what’s the difference?
- Mission statement and purpose examples from world’s most successful companies (coming soon)
- How to define your corporate purpose (coming soon)
- 10 companies that successfully put purpose into action (coming soon)
- How to use authenticity to create a successful purpose (coming soon)
- The essential role employees play in your corporate purpose (coming soon)
- The difference between purpose marketing and being purpose driven (coming soon)