2013-05-31

Co.Exist

Businesses With A Strong Sense Of Purpose Are More Successful

Want to make more money? Make sure your employees feel like they’re working for something greater than just profit.

You may have already sensed that companies with a clear sense of purpose do better than those without one. A new study from Deloitte confirms it: organizations that focus their energies beyond pure profit do better than those without a "culture of purpose." And yet, the survey also reveals that most executives and employees think that businesses aren’t doing enough to create this kind of culture.

The survey, which sampled 1,310 U.S. adults, found that 90% of people who believe their organization has a strong sense of purpose also report a strong financial showing in the business over the past year. They also report high employee and customer satisfaction. Only 65% of respondents who say they work for an organization without a strong culture of purpose report a good financial performance in the company. Customer satisfaction is relatively low (63%) and employee satisfaction is dismal (19%).

There’s a disconnect, though, between how employees and executives view their organizations. While 64% of executives believe their company has a strong sense of purpose, only 54% of employees think the same thing. Just 59% of employees think that their company’s business strategy goes hand-in-hand with providing products that are good for society—but 73% of executives share that belief. "The disconnect is that there is a difference between intent and actual execution. It’s not just enough to talk about a culture of purpose," says Punit Renjen, Deloitte’s chairman.

Dunder-Mifflin, the fictional paper company portrayed in The Office (RIP), is the perfect example of a company without a culture of purpose. Employees are directionless, managers provide no mentorship, most workers are apathetic about the product they’re selling, and they don’t do much for the community.

Deloitte, believe it or not, thinks it has a strong sense of purpose—and that it creates a meaningful impact for clients, the investing public, and the surrounding community. "For clients, we’re helping them achieve the goal they’ve hired us to do. Clients are also the investing public. The impact for them is making sure that financial statements have the highest levels of quality and integrity," says Renjen. "For people, we hire the very best individuals, and through mentorship, we help them become good at their craft. The impact in that instance will be the mentorship we provide and our ability to really help our people thrive and become very good at what we want to do."

Renjen also says that Deloitte makes an impact in the communities where it works, in part by holding an annual Impact Day where employees are encouraged to volunteer for local nonprofits.

Creating this sought-after culture of purpose sounds simple in theory. Renjen recommends figuring out the culture first and measuring it second. "I’ve always believed and it’s born out by our research that if you aspire to be an exceptional firm over time, you must do a couple of things: you must have a clearly articulated strategy based on your core competency, the competitive landscape, and the environment that you operate in," he says. "Exceptional organizations also answer questions as to who they are."

That’s easier said than done for large, older organizations that have stumbled along for decades without a real sense of purpose. But it’s a big opportunity for newer companies that can embed their values into the business from the start. Companies who succeed will be handsomely rewarded by passionate young employees. Says Renjen: "It’s very important—in fact it’s critical that when millenials and talent of this generation making decisions as to where they’re making careers that they look to organizations with a clearly defined culture of purpose."

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5 Comments

  • Tracy Lloyd

    I've come back and read this ore than a few times. Our agency has written quite a lot of the topic of Purpose Beyond Profit and Purpose Driven Brands. I am happy to see this becoming more front and center. If you have any interest in our POV you may enjoy Purpose Beyond Profit paper: http://www.emotivebrand.com/th... Let me know what you think!

  • Shamrock

    I just glanced at the original survey to confirm one important detail.  Respondents (more than 75% of whom are non-executives) were simply asked whether they thought their firm had performed well financially over the past year.  No effort was undertaken to correlate true financial performance with the respondents' views on culture.

  • Tracy Lloyd

    Thanks for the great article Ariel. I'm seeing more and more articles on the subject of purpose lead companies, but it is refreshing to see the shift to the importance of not just articulating a purpose beyond profit, but a culture of behaving the same way. Our agency Emotive Brand has authored multiple papers on the subject. I thought I'd share for anyone interested the two I thought were most relevant. The Meaningful Workplace: http://www.emotivebrand.com/th... which talks to the advantages of building a purposeful,
    values-driven workplace with a meaningful culture that better balances
    the needs of both the employer and the employee. The 2nd is the Purpose Beyond Profit: http://www.emotivebrand.com/th... - I'd love anyone's perspective on either.

  • Mike Azcue

    Great article!  I love
    seeing more validation of businesses excelling by doing the right thing!  I own a 7 year old company that has really
    honed it’s purpose and core values over the past few years and it’s undeniable
    the difference it’s made in employee turnover, morale, growth, profitability,
    and employee happiness.  What we haven’t
    been doing is measuring it, which we will now do moving forward.  Thanks for the reminder that the managements
    experience with purpose isn’t necessarily the same for the rest of the
    employees.
     

  • Larryalobo

    A strong sense of purpose helps any group do better (families, businesses, organizations, clubs, etc.)  In business money making is a primary issue but the reasons to make money and what you're trying to accomplish beyond just doing the work helps unify those who work there.  All should know the mission, goal or purpose of the business or endeavor to be on the same page even when purpose changes or you are just someone doing the same as others, a little better or worse.  A sense of purpose and having a common enemy rallies the troups.