The business case for purpose is clear. A study conducted by EY in 2018 identified that a strong sense of purpose drives customer loyalty and employee satisfaction. The same survey also found a significant link between purpose and financial performance, with 58% of companies that prioritise purpose experiencing growth of 10% or more in the past three years. However, even with these facts and figures, and a year since the new Corporate Governance Code was released, only 51% of the FTSE 350 have an explicitly stated purpose. It’s time for companies to step up.
So, what exactly is a purpose?
What we often see with our clients is a struggle to untangle purpose from other strategic components such as:
- vision – the direction of travel, your goals and ambitions for the organisation
- proposition – what your company does, what you uniquely offer your key stakeholders and what sets you apart from your competitors.
Put simply, a purpose is why your organisation exists beyond profit and the role that you play in society. If your current purpose is ‘to create shareholder value’, which disappointingly is a common statement among the FTSE 350, there is a need to revisit the drawing board because it does not satisfy the very definition of a purpose.
Purpose is NOT a high-level marketing tool
It must be backed up by action and behaviour; in other words, your organisation’s strategy, sustainability, vision and values should all be aligned to establish how you are going to deliver against your purpose statement. Additionally, any objectives and deliverables should be clear and measurable. A holistic perspective allows you to generate and preserve value, reaping the long-term business benefits. Without this, it’s just empty promises on a page and will eventually lose traction with employees, investors, shareholders, and prospective talent. Purpose should be the backbone of your organisation and take you through a transformation journey – use it as a driver for innovation, progress and collaboration.
Luminous’ top three tips to guide you in unearthing your organisation’s purpose
Take a bottom-up approach
When working with our clients on a purpose project, we always recommend involving as many stakeholders as possible. In a recent project with CLS Holdings, we conducted interviews with top management followed by workshops involving all employees across the company’s key markets in Europe. As a result of the inclusive process, the final articulation now resonates across the company and there is an air of excitement about bringing it to life. We have seen from experience how a statement crafted solely by senior leadership members falls flat and lacks longevity. It’s crucial to get buy-in from the employees of the organisation, as ultimately they will be the ones helping to deliver against the purpose.
Invest the time to find a purpose that is true to your organisation – one that isn’t just a wrapper for small, existing initiatives or is lofty and unrealistic to achieve. While we recommend a purpose to be aspirational, the majority of organisations are not able to single-handedly ‘save the world’. Instead, think about the issues and areas that your organisation can have the most impact in and the purpose statement should try and reference these key points.
Be open to an external point of view
Purpose is one of the harder exercises to go through, especially for financially successful FTSE 350 companies that have been profitable thus far without one. Therefore, often when a purpose is being developed in isolation internally, it may be difficult to detach it from the commercially driven culture (hence ‘creating shareholder value’). Getting a neutral, professional opinion helps bring different perspectives to light and draw out material themes.
The Luminous view:
Every purpose statement is unique, and it should be bespoke to your organisation. While there are no specific metrics to measure and evaluate how good/bad a purpose statement is, there are signs of ‘purpose washing’ that Luminous can help identify. Each company has its own set of obstacles and challenges. This was evident from the attendees who came to speak to us personally after the set of presentations from Luminous.
It was a memorable event – the feedback from our attendees was very positive, with most being interested and inspired to learn more about how their organisation can ‘do’ purpose right and avoid the pitfalls of generic, meaningless purpose statements.
At the event, we launched the second issue of our thought-leadership publication, Brand Matters, now available to read online here. The main theme focuses on the importance of getting your brand ‘building blocks’ right but there’s also a great opinion piece from Richard Hytner about ‘the purpose of purpose’.
If you’d like to know more about how your organisation can uncover purpose and better articulate it through your reporting and communications, please get in touch.