79% of business leaders surveyed by PwC believe that an organisation’s “purpose” is central to business success, yet 68% shared that “purpose” is not used as a guidepost in leadership decisions when making processes within their organisation. As a company grows their “purpose” can be lost mainly caused by poor communication and competing prioritise, but failure to have a clear purpose is a sure way for productivity and moral to plummet consequently losing your most talented team members.
Why a company's purpose is important
Quite simply purpose is the bedrock of a company. It provides the reason why you are in business. A company may have its purpose as part of its mission statement. “Purpose” and “Mission” are sometimes used interchangeably and should not to be confused with a company’s strategy or goals.
A good purpose and mission statement keeps you focused on why you exist. Done well, it will inspire and motivate the team and improve financial performance.
A company without a mission statement or one that fails to inspire is like a boat without a rudder heading for the rocks. The mission statement provides clarity on your vision and is a statement that sets you apart from your competition.
A Company's purpose improves performance
In the book, The Business Case For Purpose written by Valerie Keller formally of EY, writes in her book companies that had a clearly articulated and understood purpose out performed those that are in the process of developing one and those that are still thinking about one over a 3 year period. She said, “companies perform better if they have a clear sense of purpose. Purpose-driven companies make more money, have more engaged employees and more loyal customers, and are even better at innovation and transformational change. It seems to be easier to win the game when you care about the game.”
As well as having a direct correlation to the bottom line, “purpose” also allows teams to innovate and transform. Michael Beer of Harvard Business School and Director of the Center for Higher Ambition Leadership said that purpose streamlines the way decisions are made. It’s an inside-out strategy rather than outside-in: you don’t just look at where the opportunities are and where you could make a lot of money as a way to decide where you ought to be. You decide where you want to be strategically, based on what you want to do.
Although there is little argument against having a mission, companies struggle to have it firmly embedded into their culture, mainly due to a lack of regular and clear communication. I have witnessed over the years professionals wanting to move jobs because they don’t feel valued. If they had regular communication on how their contribution is making a difference in line with the business objectives and goals then they may well have committed.
Does your mission statement meet the test?
Your mission statement must have 4 key components:
1. What you do
2. Why you do it
3. Who’s it for
4. The value and benefits it brings or how it helps
A useful exercise is to find out what your employees think of the mission statement. Do your employees remember it? Is your mission intrinsic to your strategic decision making?
For example, Southwest Airlines has consistently decided against charging customers for checked bags. Sure, the airline would gain an immediate profit increase by levying such a fee. But the airline's stated purpose is "To connect People to what's important in their lives through friendly, reliable, and low-cost air travel." Choosing not to charge a customer for their first two pieces of luggage is consistent with this purpose - and the company differentiates itself and demonstrates its commitment to that purpose in its national advertising campaign "Bags Fly Free."
Good examples of a mission statement
Tesla: “To accelerate the world’s transition to sustainable energy.”
Starbucks: “To inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.”
YMCA: “To put Christian principles into practice through programs that builds a healthy spirit, mind and body for all.”
1. “We revolutionise how the world engages with ideas and information”
Does it motivate you? Do you know what they do?
2. “Through all our product, services and relationships we will make your life more enjoyable”
Is this inspiring? Does it help the company recruit top talent?
3. “Simpler… faster… better… together….We deliver on our promise”
Will is increase productivity? Does it define a clear vision?
Your purpose is the foundation of your business which must be your guiding beacon for everyone within and outside of your company. Without a clear purpose you will find it difficult to attract top talent win new and retain clients. Your companies’ purpose beyond making a profit will resonate much more with your employees giving them a compelling reason to join, stay and commit.
Andre Thomas is the is the writer and founder of Thomas Telman Consulting where they help law firms hire, engage and retain talent.