Seven hard truths about igniting your organisation's purpose
How do leaders move corporate “purpose” from a lofty ideal to something that’s lived out every day? The discussion got pretty robust at the most recent CMI Companions roundtable about “Purpose beyond the boardroom”
There is a troubling disconnect between society and business, a widely held suspicion about the motives of private-sector companies. Businesses are seen as “takers, not makers”; as only caring about financial returns to their shareholders. This lack of trust is contributing to consumer and employee dissatisfaction, aggressive anti-establishment campaigns such as the Occupy movement and, in turn, a rise in populist politics.
For many companies, the response has been to stress their mission, their “purpose”. But despite the many well-intentioned words about companies’ role in the world, they’re still generally not seen as positive contributors to society.
CMI has been engaged in this agenda, producing research into the reasons behind falling levels of trust in senior leaders. And over the past few months, a team of researchers from the University of Plymouth and University of Cambridge, working with Blueprint for Better Business and CMI, have conducted in-depth interviews with large corporations that are committed to becoming genuinely purpose-driven.
The initial findings were shared at a lively – and sometimes robust – CMI Companions roundtable, the latest in the “Shaping the future of management” series. Here are six messages that came through at the event, which was hosted by the Financial Times’ management editor Andrew Hill and CMI chief executive Ann Francke.
1. Purpose drives performance
In 2014, CMI’s Management 2020 report showed that positive, purpose-driven leadership unlocks long-term growth. These latest findings reinforce this. “Purpose is an emotional trigger that switches people on to better performance,” says Charles Wookey, chief executive of A Blueprint for Better Business.
There is a growing movement of people who feel the same way, says Dr Victoria Hurth from Plymouth University Business School. Companies such as Marks & Spencer, Vodafone, Unilever, BT, PwC and others are discovering that if they operate at the level of humanity, and provide employees with a deeply held inspiration for doing their work, they will feel a sense of ownership, they will care. And “companies where employees are aligned at an identity level also have customers who are more aligned,” says Hurth.
2. Purpose must be defined (and not just in a mission statement)
Companies have a big job on their hands, says the Financial Times’ management editor Andrew Hill: “I have a deep journalistic scepticism about purpose.” Guests agreed that some organisations will claim to have a higher purpose, but really it’s little more than a bunch of words. “Mission statement are the point at which purpose gets blanded out,” says Hill.
Part of the problem is that there’s no commonly shared definition of purpose, so the team from Plymouth/Judge Business School have developed one.
For managers, and especially middle managers who are charged with making purpose real in an organisation, such a definition can provide a litmus test for daily behaviours.
Source: University of Cambridge Judge Business School; University of Plymouth
3. Middle managers are the key
Purpose shouldn’t just be owned by the CEO, or even just the board. Guests at CMI’s roundtable agreed that purpose must be lived and breathed within the organisation, and especially by middle managers. “CEOs are temporary; the key thing is to get boards and management engaged with organisational purpose,” says the chair of CMI’s Board of Companions Patrick Dunne. “The middle management is the transmission mechanism,” says the FT’s Andrew Hill.
But this is a big ask. “Often the middle management, which really drives the company forward, is caught between a rock and a hard place,” says Professor Jaideep Prabhu of Judge Business School, “in the sense that they have a very concrete role of making the company profitable and operate to shorter timeframes; on the other hand, in purpose-driven organisations, they are being told that they must also work to a social purpose. Balancing those objectives can become quite hard.”
Message to organisations: it’s your middle managers who will make your purpose real.
4. Purpose begins with people
Brands are what connects businesses to people inside and out, says Rebecca Robins, global director at Interbrand. “Purpose drives culture, which drives strategy, which drives [customer and employee] experience.”
Interbrand has just published the 18th annual Best Global Brands study, which values the world’s top 100 brands. “Strong brands grow from within, which is more relevant now than ever,” says Robins, “as one of the big challenges that we face as businesses is how we attract, retain and motivate talent."
5. Purpose is hard-nosed stuff
Matt Peacock, group director of corporate affairs at Vodafone (one of the interviewees for this project), says that his company is absolutely committed to becoming the world’s best employer for women by 2025. It’s a lofty purpose, but “it’s not that noble”, he says. If it realises this aim, Vodafone will see huge commercial benefits in terms of employee engagement and productivity, improved maternity returner numbers and reduced costs.
Companies must be hard-headed about their purpose, says Peacock. “If you go into this saying, ‘we’re doing this because it’s right’, everyone will nod and go back to their day job’.” Purpose must align with both social and commercial goals. “It’s about trying to drive self-interest into line with public interest.”
6. Hire people who live your purpose
To strengthen your organisation’s sense of purpose, you’ll need to hire people who believe in that purpose and are prepared to live it. Andrew Hill of the FT: “if everyone can recite the mission statement, that’s one thing; but if they can act it out day to day, that’s purpose.”
“We hire for people who do more than just show up for work,” said one roundtable guest. If your organisation’s purpose is deep-rooted and authentic, then you’ll quickly see whether it’s replicated in your potential recruits: “we know it when we see it”.
7. Measurement and incentivising can be tricky
The most robust part of CMI’s roundtable was around how to measure purpose; and how to incentivise managers to deliver it.
Jaideep Prabhu says that apps are coming into the market that will allow employees to record in the moment how engaged and inspired they feel. John Rosling of Contexis, whose company has created with Cambridge an index to measure the impact of purpose, raises some concerns about where purpose measurement may lead. “Purpose needs to be intrinsic. It's self-defeating to link the implementation of purpose with extrinsic reward such as CEO pay.”
As for incentives, Nicholas Mazzei of BT believes that organisations must make the financial goals the same as the purpose goals: “If I measure people on their quarterly results alone, you can forget about purpose; they’ll just deliver quarterly results.” However, there are complexities in trying to incentivise purpose-driven behaviour. “Individuals are motivated by a desire to do things right, and that is an intrinsic motivation that is incredibly valuable,” says the FT’s Hill, who is also chairman of A Blueprint for Better Business. “If you start paying people to do the right thing, you can distort their behaviour.” And bonuses for non-financial objectives can “confuse the objectives of corporate leaders” who are used to being paid for very strict, formulaic objectives.
We’re on the right track with pushing for greater corporate purpose, but the devil will be in the details…
CMI and the Blueprint for Better Business will publish the findings of research into purpose in business in 2018
Find out more about how CMI Companions are shaping the future of management