Purpose vs Profit: Are they compatible in 21st century business?

  • CMI explores the shift in thinking as companies dig deep to communicate their purpose to engage millennials, keep profits on track and avoid corporate crises

The Chartered Management Institute (CMI), the professional body for management and leadership, today launched its whitepaper The What, the Why and the How of Purpose: A Guide for Leaders in association with Blueprint for Better Business.

The report includes in-depth interviews with 14 big brands, including Unilever, BT and Marks & Spencer. It sheds light on why successful organisations are shifting their focus from pure profit to a more fully-rounded, purpose-driven focus, which runs through the entire organisation. It was written by Charlie Ebert of Judge Business School Cambridge, Dr Victoria Hurth of the University of Plymouth, and Prof Jaideep Prabhu of Judge Business School Cambridge.

It defines purpose in business as: 'An organisation’s meaningful and enduring reason to exist that aligns with long-term financial performance, provides a clear context for daily decision making and unifies and motivates relevant stakeholders.'

The bottom line is that purpose-driven, people-centric, values-driven companies outperform. Not just because they do better sustainably over time, they also avoid the risk. They avoid the Volkswagon and the Tesco-type reputational problems, and they help to prevent the damage that wipes 30% off share prices.

Ann Francke, CEO, Chartered Management Institute

So why is this report on purpose in business needed and why now? With the continuous flow of business crises – such as the Carillion catastrophe – the reputation and legitimacy of business is under scrutiny. There are too many examples of the harm that can be done, to business and society, when companies focus purely on profits and maximising shareholder value.

This is reflected in the recently revised UK Corporate Governance Code, with its sharper focus on purpose and recognition that reforming business culture is key to rebuilding trust and driving productivity.

As for the millennial workforce, those born between 1981 and 1996 are proving increasingly attracted to organisations that can demonstrate a purpose that they can relate to. Businesses are having to fight hard to attract the best talent and recognise the need to incorporate business purpose to attract and retain talent.

It's about creating meaning, and answering the question, 'why do you do what you do?' I’ve worked for professional services firms and for some banks. They are all realising that, with young talent, they want purpose. Why? Because they want meaning in their lives. They want to work for an organisation that’s got a sense of meaning. And people are beginning to get that.

Geoff McDonald, Former Global Vice President of Human Resources, Unilever

According to CMI and a Blueprint for Better Business, the five reasons companies are becoming more purpose-driven are:

  • To maintain and increase legitimacy in business
  • To attract, motivate and retain talent
  • To drive strong customer and stakeholder relationships
  • To increase employee psychological well-being
  • To increase business performance

Many people are talking about the potential of purpose, but a lot remains to be done to ensure it works in practice. This report is a useful contribution to this conversation, helping leaders and managers cut through the noise and build their understanding of purpose based on insight from in-depth interviews with their peers. We hope this research gives businesses confidence that exploring purpose seriously, even if not easy, offers clear, practical benefits.

Charles Wookey, CEO, A Blueprint for Better Business

There is no doubt that modern business works best when it has a clear, meaningful purpose at its heart. When an entire company makes daily decisions based on a powerful business purpose, it can deliver profits to shareholders, meaning to its workforce and benefit society as a whole.

Ann Francke, CEO, Chartered Management Institute

For more information on CMI’s new The What, the Why and the How of Purpose white paper written in association with Blueprint for Better Business, visit: www.managers.org.uk/purposeinbusiness @cmi_managers

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Notes to editors

The 14 companies interviewed for The What, the Why and the How of Purpose: A Guide for Leaders include:

  • BAM Nuttal – John Hutton (Head of Sustainability)
  • Brunswick Consulting – Meaghan Ramsey (Partner)
  • BT – Richard Spencer (Strategy Director)
  • Chartered Management Institute – Ann Francke (CEO)
  • Contexis – John Rosling (Owner)
  • EasyJet – Paul Moore (Communications and Public Affairs Director)
  • Flood Re – Brendan McCafferty (CEO)
  • Unilever – Geoff McDonald (Formerly Unilever’s Global Vice President of HR)
  • Interserve – Tim Haywood (Group Finance Director)
  • Marks & Spencer – Mike Barry (Director of Sustainable Business)
  • Pearson – Amar Kumar (Senior Vice President, Office of the Chief Education Advisor)
  • PwC – Neil Sherlock (Head of Reputational Strategy)
  • PwC – Alison Sharpe – (Director, Corporate Affairs)
  • Vodafone – Matt Peacock (Group Director Corporate Affairs)
  • Walgreen Boots Alliance – Richard Ellis (Group Head of CSR)

About CMI

The Chartered Management Institute (CMI) is the only chartered professional body for management and leaderships, dedicated to improving managers' skills and growing the number of qualified managers.

Our professional management qualifications span GCSE to PhD equivalents, including the unique Chartered Manager award, which increases earning potential and improves workplace performance. We have been registered as an apprentice assessment organisation by the Skills Funding Agency.

CMI has led the way in developing a suite of trailblazing management apprenticeships with a 40-strong group of employers. These start from Level 3 (team leader) and Level 5 (operations manager) through to Chartered Manager Degree Apprenticeship. The Senior Leader Master's Degree Apprenticeship gives employers the option to upskill up to executive and C-suite level. CMI is a Skills Funding Agency-registered apprentice assessment organisation.

We provide employers and individual managers with access to the latest management thinking and with practical online support that helps them to embrace change, create high-performing teams and keep ahead of the curve.

With a member community of more than 157,000 managers and leaders, we promote high standards of ethical practice through our Professional Code of Conduct, and help managers to build their expertise through online networks, regional events and mentoring opportunities.

About a Blueprint for Better Business

A Blueprint for Better Business is an independent charity which works as a catalyst to help businesses be guided and inspired by a purpose that benefits society. We are funded by charitable foundations and individuals and do not accept funding from business. Our work is about stimulating and energising a different way of thinking and behaving in business rather than about compliance, kite-marks or regulation. If you would like any more information about Blueprint or the Five Principles please contact enquiries@blueprintforbusiness.org.

Blueprint Trust is a registered charity no: 1159150. Registered in England & Wales as a Company Limited by Guarantee no: 9006403. Registered Office: 12A Charterhouse Square, London, EC1M 6AX