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The rise of purpose driven organisations

These days, the view that the only purpose of business is to make money and maximise shareholder value is obsolete and may even come across as selfish. Leaders are instead encouraged to shift their organisations’ focus to wider value creation, as consumers and employees increasingly identify with an organisation’s purpose, seeking to connect at a deeper level with brands and initiatives that align with who they are and who they want to be. From Patagonia (clothing and outdoor gear company committed to sustainability and environmental protection) to The Body Shop (beauty and skincare company committed to cruelty-free and sustainable practices), purpose-driven organisations are leading the way across many industries, and gaining larger market share and faster growth whilst achieving higher employee and customer satisfaction.

Purpose driven organisations in practice

Before diving into purpose-driven organisations, it is important to understand what “purpose” is. At the organisationsal level, purpose serves as the foundation for the organisation’s mission, vision, values and operations, and helps to align employees and stakeholders around a shared sense of meaning and direction. At the individual level, purpose is an intimate personal concept connected to self-identity. For example, employees at work typically discover and define the purpose of their work, and it is assumed that they are the only ones who can fully assess the scope and meaning of their work.

Purpose-driven organisations are thus organisations that prioritise a meaningful and impactful purpose or mission beyond generating profits. They often have a clear sense of their values and strive to make a positive impact on society as well as the environment. They also tend to focus on creating a positive organisational culture and fostering employee engagement, while maintaining financial sustainability.

The attraction for employees

There are several factors that are driving the desire for employees to work with purpose-driven organisations that align with their personal values. The body of research on purpose-driven organisations suggests that the two main drivers are greater access to information, which has also resulted in increased awareness and concern for social and environmental issues.

With the rise of the internet and social media, employees now have more access to information about an organisation’s values, mission, and impact. This increased transparency allows employees to make more informed choices about where they want to work and who they want to work for. In addition, as societal concerns such as climate change, gender and wage inequalities, and social justice become more pressing, employees are also more aware of the impact that their work can have on these issues and are looking for ways to align their personal values with their professional lives.

What leaders can do about it

Leaders play a crucial role in creating and fostering purpose-driven organisations. Through their leadership, they help to define their organisation’s purpose, align its values and goals, and inspire employees to pursue a shared mission. Authentic and empathic leaders are essential in building and sustaining purpose-driven organisations, and they do so by:

  • Creating opportunities for employee engagement and voice: Encourage employees to share their values and ideas and provide opportunities for them to get involved in initiatives that align with their personal values.
  • Being transparent about the organisation’s impact: Communicate clearly and openly, and be transparent about the organisation’s values, and actively work to address any areas where the organisation’s values may not align with those of employees.
  • Connecting their own purpose to the organisational purpose: This connection creates an effect that enhances purpose-driven leadership beyond the individual possibilities of each of organisational members, and enhances the leader’s influence.
  • Making the purpose part and parcel of the organisational culture: Incorporate values alignment into the organisational culture, and recognise and reward employees who demonstrate alignment with the values.
  • And finally, leading by example: Leaders “walk the talk” by showing how the organisation’s purpose is put into action.

By enacting the above practices and behaviour, employees are more likely to buy into the organisation’s purpose if they see their leaders taking concrete steps to make a positive impact on social and environmental issues.

The business case for purpose driven organisations

Many leaders ask, “can purpose and profit co-exist?” The short answer is yes. A more detailed answer is purpose and profits are inextricably linked, and if leaders can harness the power of purpose, their organisations are better placed to achieve long-term sustainable value.

At the most fundamental level, purpose drives employee satisfaction because when a purpose is authentic and linked to employees’ personal values and beliefs, they are reminded of that which “gives meaning” to their actions and efforts. These employees are also more likely to stay in the organisation, thereby increasing the organisation’s talent retention and reducing turnover-related costs in the short-term, and enhancing talent attraction in the long-term. Organisations with a strong sense of purpose are also able to transform and innovate better. A Harvard Business Review Analytic Services Report showed that leaders who treat purpose as a core driver of strategy and decision-making reported enhanced ability to drive successful innovation and transformational change, thereby achieving consistent revenue growth.

What to do if your business isn’t necessarily geared towards socials issues

Organisations can positively impact society even if their core business or activity is not directly geared towards social issues. In fact, most organisations already have some form of corporate social responsibility (CSR) program in place through which they might give their employees autonomy to volunteer or support certain social and environmental causes, partner with other organisations to tackle social issues, or raise funds or donate their profits for social causes.

Nevertheless, organisations can also look inward to make a positive impact on society. For example, organisations can incorporate social and environmental considerations into their daily operations by implementing sustainable practices. There is wide range of sustainable practices that organisations can introduce, including but not limited to reducing waste, building energy-efficient workplaces, and promoting sustainable travel.

In summary

The good news is that more organisations are embracing purpose-driven leadership and organisational practices, but the alignment of values amongst various stakeholders and communication of purpose still bring with them multiple challenges and obstacles, especially in light of evolving socioeconomic and environmental changes. Successfully navigating the tension and fine balance between purpose and short-term financial gains is key to harnessing the potential of purpose within organisations.

Dr Carys Chan is a Research Fellow with the Centre for Work, Organisation and Wellbeing at Griffith University in Queensland.

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