The Powerful Influence of Purpose on Your Organization’s Performance
Purpose is not a defined set of issues, a collection of goals or metrics, or something of interest only to a select set of stakeholders…
– Indra Nooyi, PepsiCo’s Chairman and CEO
Instead, Nooyi advocates that purpose is an enabler of performance. It’s a way of doing business that betters the organization, its people, and customers. It’s this mutual benefit that makes purpose so powerful and relevant—it’s a win-win-win.
Another compelling message in Nooyi’s quote: Purpose is not a strategy.
Strategies come and go. They are developed in response to market forces and the organization’s quest for growth. So that leaves us with an unanswered question: If purpose isn’t a strategy, what is it?
Purpose is an underlying belief of why an organization exists. It is what mindfully guides how leaders generate value for its stakeholders and create the firm’s competitive advantage. The use of an organization’s aspirations to guide a firm’s activities and benefit stakeholder groups (rather than shareholders) is a newer perspective. It challenges the longstanding belief that the primary goal of any business is to generate value for its owners. The belief, championed by Milton Friedman, even advocates that a business should not seek to solve social problems.
[ctt template=”4″ link=”n8MAq” via=”no” ]Purpose is an underlying belief of why an organization exists.[/ctt]
While Friedman’s advocacy for a shareholder viewpoint is a long-standing belief in business, the use of purposeful intent from a stakeholder perspective often shifts the focus to improving social issues. Consider the stated purpose from company’s like Barry-Wehmiller, Luck Companies, and the outdoor retailer, Patagonia.
- As a global manufacturing company, Barry-Wehmiller’s purpose is “improving the lives of those who make our business possible.”
- Luck Companies’ “Why” is igniting human potential. Luck is in the stone business, providing stone, sand, and gravel to its clients.
- And Patagonia’s “reason for being” (their phrasing) is “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”
Each business’s purpose can be a source of intrinsic motivation for employees. What’s more, scientific research has found a link between purpose and it positively influencing employees’ well-being. Additionally, a clear purpose has been found to help contribute to solving key business problems like engaging, and attracting and retaining talented employees.
So, the intangible nature of purpose has measurable benefits to the business and its employees. Let’s look at the three benefits mentioned above in more detail.
Purpose and Intrinsic Motivation
Purpose has another dimension to it beyond the company’s purpose—it’s the employee’s purpose that also matters. When an employee finds alignment between their personal purpose and that of the company’s, intrinsic motivation increases. For example, an employee who believes in the importance of civic duty will find it easier to feel motivated doing government work or volunteering for their preferred political candidate.
Intrinsic motivators, like purpose, come from within the person. It is not dependent on external factors like pay, promotions, or highly visible opportunities. In our experience, the cognitive effects of intrinsic motivations last longer. For employees, doing work that improves something that is perceived valuable or important–impacting the customer experience or even making positive advancements that simplify employees’ work–brings greater work fulfillment. Another important factor about the influential role commitment to a bigger cause has on motivation is it is deeply personal. Purpose is a personal conclusion often understood through life experiences. It becomes core to a person’s identity.
The Direct Impact of Purpose on Performance
In research conducted by EY Beacon Institute and Harvard Business School, 85 percent of purpose-oriented organizations showed positive growth.
Unfortunately, a study conducted by Imperative found that only 28 percent of the workforce has a purpose-focused orientation.
The good news: managers are best positioned to help sync individual purpose with the employee’s role. The bad news, since few managers are in tune with their role in this area: managers are best positioned to do this. However, the bad news becomes good when managers seek to understand how a person’s “Why” powerfully motivates. Simply put: The more we know about an individual’s “Why,” the easier it is for a manager to align personal and organizational purpose.
Purpose and Well-being
Well-being has many dimensions to it beyond a physical component. I prefer Gallup’s definition of well-being. Through their research, they advocate for well-being in five areas of a person’s life: career, financial, social, physical, and community.
Researchers have found positive links between purpose and physical health and in career well-being. In one study, researchers found that a sense of purpose may promote greater longevity in adults. And in college students, a commitment to goals positively affected their well-being into middle adulthood. In a separate study, having clarity about what drives you to live and do well, was also linked to a greater sense of resilience. It’s not hard to connect how purpose can help a person more quickly recover from a setback. One manager we’ve worked with was driven by a purpose to help disabled individuals find work. Despite struggles with team members who contributed to a negative work environment, she pushed through the problems. How? Instead of leaving the organization because of the added stress and anxiety triggered by some of her team members, she kept the bigger picture in mind.
Purpose is not a magic bullet that fixes all problems. It is, however, a meaningful conversation starter. And, as explained earlier, it is a source that ignites performance.
Purpose and the Experience of Work
At WorqIQ, we focus on helping leaders shift the experience of work for their direct reports to be positive, energizing, and optimistic. The experience of work is shaped by many factors, including employee engagement and the quality of people the company attracts and keeps.
[ctt template=”4″ link=”007ec” via=”no” ]We believe purpose is a significant influencer on human potential.[/ctt]
We believe purpose is a significant influencer on human potential. As a result, when it is a major part of the experience of work, employees have more moments of engagement. Luck Companies proudly boasts an employee engagement level above 90 percent. Why? Employees believe they are valued and not viewed as replaceable cogs in the corporate machinery. Employees tell us that they are committed to the company because their managers care about them as people. The company’s purpose, ignite human potential, shapes company HR practices, policies, and is central to growing employees’ talents. Caring for and growing employees strengths and competence are significant factors that help attract and keep talented people.
Purpose and Performance
Consider Pepsico’s “Why” as an example of how purpose drives performance. I’ve bolded the parts of the statement that reflect the mutuality intent between the employer and stakeholders.
PepsiCo is focused on delivering sustainable long-term growth while leaving a positive imprint on society and the environment . . . Our focus includes transforming our portfolio and offering healthier options while making our food system more sustainable and communities more prosperous. In doing so, we believe we will pave the way for PepsiCo’s future growth and help others thrive.
In short, PepsiCo’s purpose is to improve the health of the world’s population as it develops products its consumers want. They do what they do because they want to “help others thrive.”
Has the mega-company fulfilled its purpose? No. It can be argued that the sodas, chips and other processed foods the company sells diminishes the quality of its consumers’ health. PepsiCo’s leaders, guided by the company’s purpose, will need to continue to improve the nutritional value of the beverages and snacks they sell.
Purpose is Personal
It is also a force that simultaneously unifies employees and turns doubters into supporters.
Purpose can fuel performance when managers help their employees see how their work contributes to organizational outcomes. Equally as important, leaders can help employees perform at higher levels by learning their purpose and harnessing it to achieve greater results.
Executives cannot effectively make purpose a strategy with measurable goals that cascade down from the top. Instead of making purpose an organization’s goal, it is part of the normal experience of work; it summons greater conviction for doing the work it takes to achieve great performances.
A strategy, its objectives, and measures and metrics are nothing without the inspired people who bring them into reality.
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