There is a reason purpose matters more today than ever.
On August 19th, 2019, 181 businesses in the US as part of the Business Roundtable signed up to a new definition of the ‘purpose of the corporation’. At that time Jamie Dimon, chairman of J.P Morgan Chase said, “The American dream is alive, but fraying.” The reimagined idea of the corporation removed the idea that the function of a business was, first and foremost, to serve shareholders and maximise profits. Those businesses pledged to invest in employees, deliver great value to customers, deal ethically with suppliers, and enhance their support for the communities in which they work.
One year later, in August 2020, the US Business Roundtable said, “During a time of tremendous challenge, Business Roundtable CEOs have shown what it means to live the principles we announced almost a year ago.”
The meaning of Purpose
Purpose is the critical ‘why’ behind everything you do. It’s the difference your business makes in the world.
As Ed Bastian, CEO of Delta Airlines said, “… the idea that putting people before profits is, in fact, in the best interests of our planet, our communities, our employees, and our shareholders.”
Through being clear on their purpose, businesses will not only drive earnings but more importantly impact people’s lives, and when they recognise that fact, they can have the greatest impact and create legacies they can be proud of.
In the time since the world effectively ‘shut down’ due to the Covid Pandemic in 2020 we have seen many different approaches to managing staff as companies wrestle with how to remain solvent, how to motivate people remotely and how to work with suppliers and customers alike. Some companies opted to make swift cuts to their wage bills through mass redundancy programmes while others have maintained that, at least in the short term, their employees are essential to their long-term survival and will continue to invest.
Whatever your thoughts on creating wealth it stands to reason that the way you choose to invest your money is key to future success. When businesses make the decision to put purpose first, and to announce it to the world, there is often a backlash as people look immediately at the reason why those companies have made that announcement and often conclude it’s just for PR. However, those that truly buy in to the concept of a purpose ‘above and beyond making money’ are those that, in the long term, build more a sustainable business and change the world.
However, at this time, many business leaders are ‘struggling’ with how to grow revenues, increase productivity, cut costs and remain positive about the future for their employees and their customers. With this in mind it’s evident that businesses need a clear focus. Something that will guide and inspire. Something around which to build a culture of success where employees feel truly valued and that also inspires customers. We believe this is the role of purpose, yet it’s often difficult for leaders to ask themselves the searching questions that will enable them to get to the real reason they do what they do. This is where great coaches can really help.
Purpose creates the real reason a business exists and bonds all stakeholders together. A clearly defined purpose…
… and in the end, all this leads to happier people who are more engaged in the business and so give more without asking for more.
As the government and businesses in the UK, and globally, look to rebuild after this pandemic it is clear that those with a defining purpose are the ones who will lead the field. Indeed, long after this pandemic is ‘over’ people will remember those businesses and leaders who treated employees, customers, suppliers and communities with respect and empathy and worked together to rebuild the economy.
And that’s why purpose matters more today than ever.
 Research shows that when employees buy into the purpose of the organisation, they will give you 40% more discretionary effort because they feel engaged with their hearts and not just their heads.
Phil Rose is co-founder of Ignium. We are leadership development, growth and change management experts. This matters to us because we know that those companies that sustain growth long term are the best companies to work for. They have the best leaders who lead with humanity and they want the best talent for what they do. To achieve that they educate and develop their people and continually evolve their business to create real value.
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Business & Executive Coach with 10 years experience working with business leaders