The craving for purpose is a defining characteristic of human beings. Numbers of acclaimed psychologists assert human beings require a purpose or suffer psychological difficulties. According to numbers of business pundits, the same holds true for a business. Businesses that lack a real purpose suffer.
A purpose is the reason for which something is done or created – the reason something exists. The “why” as Simon Sinek distinguishes it. The rai·son d'ê·tre - the most important reason or purpose for someone or something's existence.
Ultimately, purpose is about giving yourself to something bigger than yourself. In business, the purpose is about having something bigger than your company’s success be the driving force. It is about wanting to make a difference for others—to help, to give, to serve. Purpose is about a legacy you are intending to leave behind.
There is often a misconception that companies must either be purpose-driven or profit-driven, but they cannot be both. This has been proven wrong. Research proves that purpose fuels profits.
Purpose-driven companies have these key ingredients.
1. Greater Employee Engagement and Emotional Commitment
A recent Harvard Business Review study found that employees who derive meaning from their work report almost twice the job satisfaction and are three times more likely to stay with their organization to fuel business success.
Currently, 71% of millennials report feeling not engaged at work. Although not yet studied, my experience and those of my colleagues informs us Generation Z is also feeling disengaged.
It’s straight forward - purpose creates a condition where employees derive meaning from their work. When purpose is present, it has tremendous impact individually and on the culture of the business.
2. Loyal and Satisfied Customers/Clients/Patients
According to New York Times bestselling author Simon Mainwaring, 91% of consumers would switch brands if a different one was purpose-driven and had similar price and quality. Developing a driving purpose as a distinctive competence seems like a clear competitive advantage.
Not only does having a strong purpose engage employees, it also helps attract customers and make them more loyal. When a company is purpose driven, the kind of empowering relationships that are inherent within the company also radiate to customers. Customers can feel it.
4. Better Results
Given that companies with purpose better engage employees and satisfy customers, it is not surprising that these companies also have higher business success. In Corporate Culture And Performance, Harvard Business School professors John Kotter and James Heskett show that over a decade-long period, purpose driven companies outperform their counterparts in stock price by a factor of twelve.
Leaders and executives of purpose-driven companies are much more open to being coached. They are energized by something much bigger than themselves which has them realize they need greater personal and leadership growth and development to be able to achieve their purpose.
The purpose creates a kind of continuous gap between where they are and where they need to be for the purpose to be achieved. They know they need to improve and grow to become the leaders and managers that can move people to be fully and continuously committed to the purpose.
The Most Common Mistake
The most common error in companies is they hold purpose as a concept. Concepts are simply information. Information has little mind-changing or emotional impact. Purpose must be much more than information.
If purpose is a concept, the spoken purpose is not the real purpose of why the company is in business. Rather the true purpose is often making money, industry dominance, increasing share value or polishing the CEO’s reputation.
A purpose that exists as a concept lacks authenticity, truthfulness and heart. The words are hollow. The purpose isn’t genuine. The purpose has no integrity. The purpose does not match the world in which the business operates.
The purpose must be tangible – palpable in the culture, spoken often by leadership, validated by employees. The purpose must be about making a real impact.
During my initial assessment phase, I don’t talk to many at the top first. I first speak with employees at various levels and ask basically two questions about purpose: “What is the purpose of the company? And, on a scale of 1 to 10, how true are the actions of the company in terms of fulfilling its purpose?
I won’t ask question two if they don’t know the answer to number 1. Nor would I ask question 2 if everyone has the same exact answer for number 1, since a purpose is a ‘come from’ not a ‘get to,’ not something to be memorized and repeated.
Purpose-driven companies attract the best minds, have the most passionate customers, achieve significant success and powerfully influence in their industry. When purpose and passion are combined, the impact is powerful not only for individuals, the company as a whole, and also in the markets they serve.