Today, leaders have a very tough job. You need to direct the company to achieve business targets while balancing employee engagement and revenue generation. Most importantly, you need to form a vision for the business, creating a direction in which the company will expand and develop further.
This is where a good business purpose is invaluable; a purpose unites a business, providing a common objective that plots the intended course of the company. It also fosters engagement, allowing employees to become part of something bigger than the sum of its parts. Furthermore, a unified purpose shows both customers and shareholders the fundamental direction of the business, and in turn builds brand value and loyalty. What is a company purpose? What is a company purpose? A core company purpose is a question of “why does this firm exist?” It is an idealistic motive or reason for the company’s existence, defining why it operates. In a company with a well-defined purpose, every product it produces, every new industry area it expands into, every daily activity, will be geared towards achieving a unified objective. A company purpose is an ideal or goal above and beyond tangible results, encompassing the core of the business, and is always briefly attainable but unachievable. For example, a pencils producer may list their purpose as “provide writing tools to help further the education of children”. Note that this goal is briefly attainable but unachievable in the long term, and also explains how the company will better the world or society that it operates in. It also has zero financial consideration – all businesses exist to generate revenue, but the goal of simply earning money is not a direction. How the firm earns money is where the importance of purpose lies. Business leaders should establish a clear purpose for their businesses, and use it to create a clear path for both short-term and longer-term goals of the company. Senior executives should act on the company purpose, creating a vision for where they want the company to be in the foreseeable future and placing down tangible goals for the business. Employees in turn follow the core purpose of the company through aiming for these tangible and short-term objectives. Essentially, the vision and values of the leadership team should guide the employee, but the purpose of the company should guide senior management and the business as a whole. Why should your company follow a purpose? The biggest benefit that a good company purpose brings to the table is employee engagement. Studies have shown that there is a positive correlation between company purpose statements and work performance, highlighting the importance of a purpose in influencing corporate citizenship. Engaged employees not only perform at a higher level at work, but they are also less likely to desert the company in times of economic turmoil. An employee that is fully engaged with his work will stay because of what he can provide to the company, while an employee that has little motivation will stay only for what the company can provide him. As well as improving employee engagement, a company purpose helps build brand reputation and loyalty. By displaying commitment towards bettering others, it displays the company’s strong moral principles, encouraging customers to buy from the company as well as potentially attracting new talents to its cause. Additionally, following a company purpose can make succession planning easier. Often, there is confusion and uncertainty following the departure of a senior executive, as there is the perception that direction has been lost within the company. However, a good company purpose ensures continuity: not only will the replacement executive have an objective to build a strategy towards, but employees will still have the overarching goal of the business to follow, and investors can remain confident that the company retains the same ambitions. A good example of a company that employs a solid forward-looking purpose is Merck & Co, the oldest and second largest pharmaceuticals and healthcare company in the world. Merck aims to “improve human life”, and this core objective has guided the company for decades. George W. Merck, who led the company from 1925 – 52, said “We try to remember that medicine is for the patient. We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear.” Overall, there are key benefits to having a company purpose. Not only can it be an effective compass for the company’s future direction, but it also increases employee engagement as well as acts as a great marketing tool to for brand development. Companies that have yet to establish their core purpose should do so. By having a purpose, leaders can solidify the company internally and chart a specific direction, efficiently and effectively guiding the future of the business.Its core competencies are in handling senior level positions including CFOs, CEOs, Regional Heads, General Managers, and Functional and Business Heads.