We talk a lot about corporate values these days (think Uber, CVS and DICK’S Sporting Goods), and the need to know what an employer stands for. When our employer’s values are clearly stated and actively embraced by leaders, managers, and all employees, we feel more closely aligned with our employer — culture can thrive.
Another key element of a thriving company culture is purpose. If we think of values as guardrails for how we make decisions, act, and react, then purpose functions more as a north star, as one overarching, ultimate goal that guides the company.
But what is purpose in this context and why does it matter to your employees? How can it help instill a greater sense of fulfillment and inspire employees to be more productive and deliver a higher quality of work?
In my mind, purpose for a company is defined as the reason for being beyond profit. Or to cite EY, it’s the organization’s single, underlying objective that unifies all stakeholders. Purpose should embody the company’s ultimate role in the broader economic, societal, and environmental context for 100 or more years. A clear purpose goes beyond products or services and instead describes what impact or change the company can make in the largest context possible. Some examples of good purpose statements are:
- Merck: “Our purpose is to preserve and improve human life.”
- Southwest Airlines: “We connect people to what’s important in their lives.”
- Zappos: “Our purpose is to inspire the world by showing it’s possible to simultaneously deliver happiness to customers, employees, community, vendors and shareholders in a long-term sustainable way.”
Clearly defining and articulating purpose can truly propel a company forward. Purpose helps set long-term business strategy, creates a bigger competitive advantage and differentiation in the marketplace, inspires innovation, increases brand trust and loyalty, and ultimately, helps the company stand the test of time. EY and Harvard Business Review co-authored a research project which revealed that 58% of companies that are truly purpose-driven report 10% growth or more over the past three years, versus 42% of companies that don’t have a fully-embedded purpose reporting a lack or even decline of growth in the same period.
Purpose also has the power to positively impact employees. In order for that to happen, purpose needs to be relevant, aspirational, and actively embedded in the whole company. If that’s the case, a multitude of benefits materialize for employees.
1. Smart goals connected to purpose increase productivity
First, and maybe most obvious, is that purpose can help set a north star not only for the company as a whole, but also for departments, groups, and teams. Informed by the big aspirational north star, setting smaller, more tangible, and achievable goals can help subsets within the company grasp how their work matters to the bigger picture. When teams and individual contributors understand how their roles specifically fit into the team’s goals — and especially the company’s long-term vision — they feel more fulfilled. A purpose-driven employee and team will positively impact results and increase productivity levels. Research by Bain & Company concludes that if a satisfied employee’s productivity level is 100%, an engaged employee’s level is 144%, but the productivity level of an employee that is truly inspired by the purpose of their employer is a whopping 225%.
2. Purpose improves retention rates
When employees know how they fit into the bigger picture and how the work matters to the company, they tend to genuinely enjoy their work. As a result, retention rates soar, which helps the bottom line. Employees are two times more likely to stay with a company when they feel connected to the overarching purpose. For millennials, that number is even higher; when they have a strong connection to their employer’s purpose, they’re five times more likely to stay.
3. Purpose enhances recruitment
A clearly defined purpose eases the process of recruiting top talent. Just like knowing a future employer’s values, talent likes to know what the higher goal is for the company and determine if their personal values align with that north star. According to a research project by Rutgers University, two-thirds of students prioritize the potential to positively contribute to society and make the world a better place when searching for work. When a company’s purpose resonates with them, they will be eager to work there and are much more likely to quickly adapt to the new work environment, feel fulfilled in their role, and stay with the organization long-term.
4. Purpose increases employee pride and engagement
Without purpose, employees often lack pride in their work resulting in low levels of engagement. The daily grind of the job can take its toll, especially when leadership tends to focus on short-term, top-line growth and quick gains for shareholders. t But rooting all strategy, plans, and actions in that higher goal — the purpose — inspires employees to know what they’re ‘doing it for’. When employees know what they’re working towards, engagement booms.
5. Purpose-driven employees become brand ambassadors
When employees are proud of what they do and love the company where they work, they naturally become authentic brand promoters. Not only do they spread the love within their team and company, but they also share that pride in their communities and with customers. Purpose-driven employees help propel external marketing efforts in an authentic and meaningful way. Think of Southwest Airlines and how each employee is the brand; they make it clear that they truly care to connect customers to the people that matter in their lives.
So how does purpose come to life? It starts with leaders clearly defining the organization’s purpose and embedding it in all aspects of business strategy and daily operations. Communicators and managers also must articulate the purpose, empowering every stakeholder to truly embrace and live by it. Just like your values and key brand messages, purpose needs to be consistently communicated across all levels, from simple reminders in the break room to compelling stories about how purpose elevates the company to success. If you make your purpose meaningful and genuine, you will naturally attract the right employees who are excited to champion your business, which will ultimately enhance your culture and bottom line.