CVS Health famously dropped tobacco sales — even though the move was estimated to cost them $2 billion annually in revenue — because it conflicted with their established principles. That is unmistakable commitment to company purpose.
Does purpose matter? Some say it works, others suggest it’s tricky and flawed. Who’s right?
Enter important new research, released last summer, which shows that companies that instill a sense of purpose reap meaningful financial benefits. “Ultimately, our study suggests that purpose does, in fact, matter,” write two of the study’s co-authors, George Serafeim and Claudine Gartenberg, in the Harvard Business Review.
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But the researchers have a warning: It’s easy to mess up.
“It only matters,” they explain, “if it is implemented in conjunction with clear, concise direction from top management and in such a way that the middle layer within the firm is fully bought in.”
Instilling a greater sense of purpose in our organizations — not just at companies but also at big institutions like the university where I work — has been an increasingly important goal for business leaders over the past few years. Public discussions about corporate and organizational purpose have increased fivefold since 1994, according to Oxford University and Ernst and Young. Most millennials (87%, in fact) believe “the success of a business should be measured in terms of more than just its financial performance.” And 47% of consumers buy from companies that boast a purposeful brand.
A November PricewaterhouseCoopers report shows that 92% of CEOs “say promoting ethical behaviors and principles that go beyond external compliance was important to their organization’s success.” And yet, the report also acknowledged LRN’s HOW Report, which PWC says “found that only 29% of employees in large organizations described their leadership as exhibiting an ability to ‘enlist all employees in a commitment to a shared purpose,’ compared with 38% of employees in medium-sized organizations and 42% of employees in smaller ones.”
In other words, it’s tough to scale purpose.
To distill purpose more equally throughout the company, many firms are considering hiring chief purpose officers. Shannon Schuyler, newly hired first chief purpose officer at PricewaterhouseCoopers, defines the role as, “how you connect purpose to an individual so they know what they need to do in their roles and how do you help them see personally how they connect with values and behaviors.”
Given what the latest research says, this may not go far enough. It is important for each and every employee to be trained for this mindset. By helping every employee see that at least part of their job is chief purpose officer, we can further break down the wall between rhetoric and action. Part of being a chief purpose officer, then, is pulling out the meaning and benefit from any business and connecting your people more directly to that, regardless of whatever (perhaps narrow) slice of the business occupies most of their time. Importantly, this includes even everyday things that we too often overlook, like creating jobs, or serving customers profoundly well. When your people can see themselves in this role, it is, in effect, a shift in identity.
An interesting thing happened to me when I got my job running a business school. Someone told me that I was the chief purpose officer. This was news to me. (My background is in economics and finance.) Once I got over that initial bewilderment, I realized this kind of thinking makes me better at motivating and connecting our people, and pushes tangible outcomes like innovative and collaborative thinking. And now, every fall, I tell all our incoming students that chief purpose officer will be part of their jobs as well — instilling a larger sense of purpose in the people around them. As one more example of my own behavior change, I regularly pass on more widely emails that I receive from people we serve that hammer home why we do what we do, and why it matters. Like Simon Sinek’s concentric circles, we should be going after the “why” just as carefully as we go after the “what” and “how.”
I was 45 when I got that first job running a business school — I wish someone had told me beforehand that this is part of what “leading” and motivating people is about. Early in our careers most all of us think of ourselves first as individual contributors. At some point many people begin to realize that their most important work will get done by working through and with other people. If your company can play a role in making this transition happen sooner, coupled with responsibility for instilling a greater sense of purpose in others, you will benefit from the ripple effects.
Give your new hires greater opportunity to understand the width of your company’s purpose, and why working together has meaning. Don’t assume that this will automatically be communicated by simply reading your stated vision, mission and values. Set expectations — and give them regular opportunities to flex their own purpose-officer muscles with their own direct reports and teams. Define what specific actions work best for your company along these lines and measure whether they are practiced at multiple levels.
Talk about purpose adds little without clarity on the deeds and roles that back it up.