Why organisational purpose must lead from the top
The topic of purpose has been trending for long enough now, that the conversation has shifted from whether purpose is important, to ‘how’ an organisation discovers and embeds its purpose within the business. This begs the question, who should lead this work?
Some might argue that this is the role of HR, because purpose must be owned first and foremost by your own people. The brand team might champion the importance of the role of brand in a purposeful organisation, not just to its external customers, but also internal ones. Your people. Your CSR team may also fight for a look-in, highlighting their work in building strategic partnerships with impact organisations that are making a meaningful difference.
The reality is all these perspectives are true. Each one of these stakeholders needs a seat at the table when it comes to uncovering your organisation’s higher purpose and building your purpose strategy. In fact, the entire executive leadership team should be involved. Most importantly however, the CEO must be at the head of the table. Without the CEO leading on purpose, it loses relevance, because it signals to everyone else that the CEO and Board do not consider it to be the key driver of the organisational strategy.
An organisation whose purpose is not led from the top either has the wrong “purpose” or the wrong leaders.
Purpose can no longer just be framed as a passive context for what you do in your business. It is equally about identity and human endeavour: who you are and how you show up for the common good.
So, if your purpose does not drive your business strategy, you cannot claim to be a purpose-led organisation. You may have a purpose statement, but your organisation is not led by its stated intention. The true purpose your organisation serves is inconsistent with what your purpose statement articulates. Therefore, you either have the wrong purpose statement, or if your leaders are not aligned with that purpose, they are the wrong people to bring that purpose to life. Either way there is a misalignment that is likely to impact negatively on the organisation. Unmet expectations usually do end in tears.
Having a purpose statement vs being purpose-led
The Global Leadership Forecast 2018 found that getting purpose right builds organisational resilience and, crucially, improves long-term financial performance. It found that the real benefits come when leaders walk the walk by behaving in a manner that exemplifies their organisation’s purpose. Of 1500 global C-Suite executives surveyed, 84 per cent said their business operates in an increasingly disrupted environment. In a disrupted world, purpose is a north star; a fixed point to help navigate through change and uncertainty.
Global Leadership Forecast identified three types of organisations:
- Those without a purpose
- Those with a purpose statement
- Purposeful organisations where leaders bring the stated purpose to life through behaviours.
The report found clear evidence that companies in the third category were earning a significant performance premium. The results tracked the financial performance of the companies surveyed, showing that companies with a purpose statement performed at the average (mean) of the organisations surveyed. Companies without a purpose statement underperformed by 42 per cent. Purposeful companies outperformed the average by 42 per cent.
How does being purposeful deliver stronger performance? The key advantages outlined in the report included:
- Significantly stronger culture with higher levels of psychological safety.
- Higher engagement levels and intent to stay.
- Higher agility.
- Higher levels of trust and loyalty, leading to more resilience when the going gets tough. This impacts on retention of customers, employees and shareholders during times of crisis and transition.
- Having a broader vision which serves all stakeholders and aspires to improve society, gives purposeful organisations an advantage in their ability to identify risks and unexpected opportunities.
- Purposeful organisations create a culture of coaching, development and cultivate better leadership.
Societal leadership now considered a core business function
The context to this is that society is experiencing a crisis of leadership. Trust has collapsed in democracies around the world. Society’s traditional leaders are no longer trusted. Yet there are hints of optimism. According to the 2022 Edelman Trust Barometer, business and NGOs are the only institutions considered both ethical and competent, with the ability to act as stabilising forces. “My CEO” is trusted, alongside “My co-workers”. Societal leadership is now considered a core business function.
By embracing their role as stewards of their organisation’s purpose, leaders will deliver on society’s changing expectations of them. Consequently, they will be better able to navigate their organisation through difficult times, positioning their businesses well for the future.
Written by Carolyn Butler-Madden.
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