“Just as people cannot live without eating, so a business cannot live without profits. But most people don’t live to eat, and neither must businesses live just to make profits.” – John Mackey
In the past, work was regarded mainly as a means to an end, an activity with which one made a living. Today it is more than that. A higher standard of living has allowed many people to pursue work they feel intrinsically connected to, thus allowing them to not only pursue their job, but their vocation.
Companies also have this vocational characteristic, albeit under a different name: Corporate purpose, or simply purpose, does not explain what or how a company does what it does, but rather describes the inner conviction, in other words, why a company does what it does.
Dvorak and Ott, analytics experts and editors at Gallup, define Purpose as an affirmation of the reason for doing business. It conveys what the company stands for in historical, ethical, emotional and practical terms. So no matter how it is communicated to employees and customers, it remains the driving force that enables a company to define its true brand and create the corporate culture it aspires to attain.
At this point, you have probably already been able to deduce for yourself how relevant the purpose of the company can be for the morale and motivation of the employees.
There is a study conducted by PwC depicting that Millennials in particular would be 5.3 times more likely to stay within a company, if they were able to identify with its purpose. The same study found that 79% of managers surveyed by PwC believe that the purpose of a company is of high relevance for company success. The business consultancy Korn Ferry documents this in a study named “People on a Mission”, which aims to show that purposeful companies grow three times faster than others. Furthermore, business professors Claudine Gartenberg, Andrea Prat and George Serafeim wrote a highly renowned article that argues for a positive connection between company purpose and employee commitment. However, they also link numerous other factors to this success, but more on that later.
Many companies recognize the benefits of this and subsequently try to fabricate a purpose for themselves or try to communicate an existing one more effectively. This is often attempted, but not executed successfully. Depending on the company and industry, the ease by which one is able to find a motivating purpose differs a lot and so does formulating it accordingly. Even if you have a solid corporate purpose and can put it into words, this does not necessarily mean that it convinces or inspires the employees.
The aforementioned PwC study also states that although many companies communicate their purpose strikingly, the overwhelming majority of employees remain uncommitted and only 33% of those surveyed draw real meaning from the corporate purpose of their employer. In addition, 68% of respondents said that the corporate purpose is not used as a guide for decision-making in the upper echelons within their organisation.
But why does company purpose affect just one third of all respondents? This is understandable for various reasons. Some organizations are, by their very nature, driven by a noble purpose and do not necessarily need an internal campaign or a catchy slogan to communicate their values to employees and customers. The execution of their everyday business is sufficient for this.
Non-profit organizations are a good example. Many non-profit organizations are committed to a goal that some people find so rewarding that they even volunteer for it in their spare time. This is regularly not the case.
It should also be noted that people may feel more motivated by a company that aims to provide clean drinking water on a global scale or to uphold human rights, than a company whose main goal it is to produce cars or develop software. This does not mean, however, that the latter cannot have a meaningful purpose. All you have to do is identify and communicate it clearly.
Purpose at Honestly
I, for one, enjoy going to work. The reasons for this are not the regular team events, the roof terrace with a view of the Cologne Cathedral, or the solid foosball table in our meeting room (although I do consider it a significant contributor). I enjoy going to work because I am convinced that our company carries out meaningful work:
At Honestly, we offer our users the opportunity to get anonymous feedback in real time from their employees and customers through the use of a terminal or tool (e.g. email survey or app). The obtained information allows the user to identify and address problems in their company at an early stage.
So far this is all concerning the what and the how we do business. But what do we really do at Honestly?
Our main concern is to establish a better relationship between people and companies. People should be able to trust their company as much as they trust a good friend. For this, companies must become more accessible, more humane even, and this can only be achieved if we can talk candidly to one another. Our product offers just that: a platform for sincere communication between people and companies. In essence, we want to make companies more human. In essence, we aim to put people first.
When it comes to the question of how to instrumentalize one’s purpose, or whether it would even make sense to do so, there are many differing approaches and suggestions provided by experts. We have compiled the most compelling suggestions here.
1. Purpose driven or not?
The first question that arises is whether energy and working hours should be invested in establishing and/or formulating a company purpose. Reiner Straub, publisher of personal.magazin, a highly authoritative German magazine in the field of business and HR, sees it as follows:
“Many companies formulate a purpose in order to motivate their employees. This rarely works out well”.
The reason for this is that in many cases the formulation seems artificial, because it is merely an abstract summary of corporate goals. The respective summary may be good, but it does not reach the soul of the addressee. The truth is that some organisations simply conduct more meaningful work than others. If a company happens to belong to the latter group, it would make more sense to create employee motivation through good working conditions or a solid product, rather than through artificial purpose fabrication, says Straub.
2. Purpose clarity
The aforementioned essay by Gartenberg, Prat and Serafeim illustrates that an existent (even well formulated) company purpose alone does not suffice. Positive relationships between purpose and success can only be established when the management fulfils further requirements; Management should therefore not only be aware of what the company purpose entails, but should also have a clear idea of the goals and measures with which it can be achieved. This happens to be one of the main deficits depicted in the PwC study we just mentioned. In addition, these goals and measures must also be communicated effectively to employees.
“Corporate purpose may be a trend, but it also stands in a long tradition of personnel research and within the New Work movement” – Heiko Weckmüller
Prof. Dr. Heiko Weckmüller gives valuable insight on this in his article “Corporate Purpose: Management Fashion or Must-have?”. The influential factors on an individual’s sense of meaning of work are manifold, complex and interdependent. Defining the corporate purpose and bringing it into the organization through workshops usually does not achieve the desired success.
As a matter of fact, it is highly relevant that this purpose is linked to other factors such as the promotion of autonomy, the reduction of hierarchies and the substitution of authoritarian leadership styles with a strong culture of trust. In addition, Mr. Weckmüller also emphasizes the effectiveness of employee surveys, which specifically take into account differences in sensory perception between employees or departments in the company.
A question on a potential survey could be formulated as follows:
On a scale of one to ten, how likely are you to recommend our company as a potential employer to one of your friends?
There are many ways to align company purpose with employee motivation. If you want to give employee surveys a chance, you can find inspiration and a free demo here.
Company purpose is not only a new trend, but also stands in a long tradition of empirical personnel research and the New-Work movement. Under no circumstances does the Purpose represent a pure management method.
Against this background, it would make sense for a company to think about its actual purpose and to communicate this to its employees. Of course, one should bear in mind that successfully implemented elements of employee commitment can accelerate successful communication and the associated motivation of their colleagues.