Corporate Purpose: Shifting From Why To How

Corporate purpose. What is it? Although it may sound like a strange concept, it isn’t. From a very young age, many individuals are taught the importance of finding their life purpose. To achieve this, people emphasize finding themselves by unearthing their talent – an attribute buried deep inside them. The overall aim of doing this is to make a valuable contribution to the world. Take this picture and transpose it on a larger scale entity, say a multinational company, and what corporate purpose means becomes clear.

Hardly is there a company in existence without a mission or vision statement. Yet, only a few follow up on this with their day-to-day activity. An organization operating without a defined corporate purpose (and sturdy commitment to this) is bound to make unfavorable decisions. There would be a lack of coordination in their activities, and it wouldn’t bode well for such a company.

The benefits of having an organization follow the tenets of its corporate purpose are countless. But for creating one requires the diligence, dedication, and visionary mindset of company executives. In addition to that, company executives looking to create a corporate purpose must be ready to initiate a dialogue with the organization’s stakeholders – members of the top team, and members of staff.

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Initiating a dialogue among members of the top team

In the early days of many organizations, there’s usually a purpose towards which they work. It’s, more often than not, the motivation for starting the company. But as time passes, organizations drift away from this initial motivating factor, and they make no effort to rescue the situation. One reason behind this is a lack of discussion about a firm’s corporate purpose. It either doesn’t come up enough, or it doesn’t come up at all.

What makes organizational management shy away from discussing issues relating to their corporate purpose is no mystery. The principal causes are either they believe the company’s mission statement is good enough, or they believe purpose isn’t an important topic since the main objective is to keep shareholders happy. The general silence that ensues as a result of the silence is taken as a sign of agreement.

However, research that looks to understand this phenomenon suggests that not everyone agrees. In reality, many executives wish to talk about the corporate purpose of their organization. But, because they don’t want to be called soft, they don’t try to bring up the conversation. 

Research shows that a large proportion of company leaders (39%), and employees (24%) desire to change the purpose of their organization. They want their firms to become more involved in societal development. But, with none of them bold enough to initiate the conversation of corporate purpose, this remains a dream.

A corporate purpose is a long term plan, a commitment to doing things differently in a bid to improve lives. To achieve this, the status quo must change. And to change the status quo, one must be ready to engage in tough discussions to bring everyone to see the merits of doing this. 

One way to initiate this type of dialogue is through an ESG (Environmental, Social, and Governance) teardown. An ESG teardown approach is effective. It encompasses the company’s ESG priorities because it’s around these priorities an organization would want to build its corporate purpose.

With this approach, the discussion can begin with a focus on the issues that matter to the leadership team, the “why” it matters. This discussion can then proceed to the phase where the team can compare their firm’s performance with that of their competition. Once the team begins to talk about these issues, ideas would form as to ways in which the company can reassess its corporate purpose.

Initiating a dialogue among members of staff

Making big changes in an organization requires the involvement of top members of the management team. Any meaningful discussion about changing corporate purpose must begin from there. However, it should not end there. Employees must also be involved in the process of determining the corporate purpose of the organization. Otherwise, it will be difficult to achieve whatever purpose the top team creates.

On the face of it, involving employees in corporate purpose creation may seem like a simple and straightforward thing to do. Research suggests to the contrary. Findings reveal that 38% of top leaders failed to involve employees in the corporate purpose development process. In addition to this, only 56% of frontline employees agreed and 29% disagreed as to the direction of their company’s purpose.

While there’s a very good chance that many employees wouldn’t be on board with the company’s new purpose, it’s no reason for which to exclude them from the process. This reaction is not dissimilar to that of the members of the top team at first.

According to research, frontline employees are less likely than leaders to say the company purpose matters to them personally or to say they understand how their role contributes to the purpose. However, according to another research, non-management employees are highly likely to consider purpose a top priority, although they might disagree as to the nature of the corporate purpose.

This complication that arises from employee involvement is exactly the reason for involving employees in the process of purpose development. Leaders need to connect with employees to understand where the personal sense of employees intercepts the company’s purpose. When leaders involve employees in the process, they understand the employee mindset. Employees and top management teams may be widely different notions of what makes sense. By excluding employees from the process, there will be a disconnect that would hamper the process of achieving the company’s purpose.

Top team members should seek the viewpoints of employees. This way, leaders can help employees understand the new purpose. And they get to more successfully convince employees of the changing environment. In addition to this, as much as possible, leaders should integrate their corporate purpose with employee expectations. The more company purpose engages employees and makes them feel involved, the more success the organization can benefit from taking on a new corporate purpose.

Reference: Purpose not platitudes: A personal challenge for top executives | Arne Gast, Nina Probst, and Bruce Simpson | December 3, 2020

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