Written by: Mark Donohue, CEO of LifeGuides
CEOs of organizations large and small know that running a business means constantly pushing forward, seeking new ways to grow and innovate. But do you ever take a step back and consider the why – the purpose behind it all?
If not, maybe you should.
Today, more and more organizations are turning to purpose-driven business models that strive to balance earning profits with making the world a better place. And recent studies reveal that employees, consumers, and investors care increasingly about companies’ values:
A BetterUp study found that 9 of 10 workers would trade money for meaning.
In a MetLife survey, 70% thought their companies should address societal problems, and 76% wanted employers to make a difference in the local community.
68% of American consumers polled by Cone Communications thought businesses should lead on social and environmental change, and 87% would buy a product or service based on a company’s social advocacy.
In 2018, Socially Responsible Investments (SRIs) increased to over $6.5 trillion.
A purpose-driven business model is not only better for society; it can do wonders for an organization’s success. LinkedIn’s comprehensive study found that 58% of companies with a clear purpose experienced 10%+ in growth, compared to only 42% of companies without purpose. The key is determining what values lie at the heart of your organization – determining your why – and letting them guide your company’s culture and operations.
What Does it Mean to Be “Purpose-Driven”?
Raj Sisodia, co-chairman of Conscious Capitalism, Inc. and author of Firms of Endearment, defines purpose-driven companies as those that:
“operate by a guiding vision of service that takes into account all their primary stakeholders: customers, employees, suppliers, and partners in the supply chain, the communities in which they operate, and, of course, their investors.”
These companies project a passion for doing good in the world and prioritize people and relationships. Take ice cream company Ben & Jerry’s. Not only is their mission rooted in social justice and environmental sustainability, but they also pay livable wages and follow fair trade practices.
This passion for the greater good translates into authenticity in the eyes of stakeholders, explains Nicholas Pearce, author of The Purpose Path. Authenticity is a natural by-product of “letting our best and highest values guide how we do our work and how we behave at work,” in addition to “what work we do in the first place,” he says. This begins at the human level: the most successful purpose-driven companies treat their employees with respect and make work meaningful.
The Benefits of Purpose-Driven Business
Integrating a more socially conscious, purpose-forward culture into your company can be a boon to your business in many ways, the foremost being your labor force.
Studies show that values-driven organizations have happier, more engaged employees. In fact, a MetLife study found that when workplace and employee values aligned, 85% of employees expressed loyalty and 54% a willingness to go above and beyond their job description – this compared to only 44% and 4%, respectively, at companies where values did not align. And purpose becomes more important the higher up the ladder one climbs: research shows that when managers find their jobs meaningful, turnover rates drop dramatically.
Socially conscious companies win over consumers and investors as well. A 2018 Christmas shopping season study found that a surprising 63% of respondents preferred to purchase gifts from brands that supported “social causes,” specifically environmental sustainability, education, and diversity/inclusion.
Socially responsible investing is climbing to an all-time high as investors recognize the benefits. Even politically risky decisions, if guided by a company’s values, can have positive results. Both Nike’s Colin Kaepernick ad campaign and Dick’s Sporting Goods’ ban on assault rifles boosted share prices, mainly due to the perception of these brands as authentic and principled.
How to Build a Socially Conscious, Purpose-Driven Culture
Evidence shows that purpose-driven companies are thriving in today’s business climate. But if you’re a CEO of an established company, how do you make the leap to a more socially-minded model? The following are things you can do today to put your company on a more enlightened path.
1. Before taking action, listen, learn, and educate.
As Raj Sisodia explains in Firms of Endearment, purpose-driven companies thrive on relationships and community. So before evolving, gather feedback from everyone at your organization. Ask:
What are your workers’ values, and what does their work mean to them?
What do they see as the company’s strengths and weaknesses?
What are they hearing from customers or clients?
You might hold a workshop or training to help employees – particularly managers – adjust to a purpose-driven perspective.
2. Identify your values – and keep it simple.
The next step is establishing a purpose that fits your existing culture. Start by identifying a value or set of values that drives your organization. KIND snack company, for example, lets the concept of kindness – right there in the name – guide all operations, from its advertising to its employee relations to its charitable work for education. A straightforward purpose like this can be easily applied throughout your organization and makes an impact on employees and consumers.
3. Connect your purpose with a cause.
A purpose becomes a mission when the personal connects to the global. Once you’ve defined your company’s values, you can begin to work for the greater good through community service and nonprofit partnerships. While most companies engage in some form of philanthropy, socially conscious companies take it one step further: instead of, say, getting the staff together for an annual day at the food bank, make tackling food insecurity a central goal. Supermarket chain Food Lion took this tack with Food Lion Feeds, an initiative that serves the company’s purpose of fighting hunger through service events and food drives.
4. Set goals and track progress.
Becoming a socially conscious company is not as simple as creating an “our values” page on your website – with altruism comes great responsibility. You’ll need to carefully research the social causes you support to see how your company can best address them. Establish goals that are specific and will stand the test of time, and regularly evaluate your progress. Don’t be afraid to experiment: not everything will go perfectly at the start, but building an authentic culture takes clear-eyed understanding of what works and what doesn’t.
5. Be transparent.
Transparency is important for any socially conscious company looking to build trust. Sixty-seven percent of consumers in a 2018 SAP poll stated that brands must be transparent in business practices in order to prove their authenticity. Follow the example of American-made clothing companies like Everlane and Reformation, which have carved out a niche in a competitive market by being transparent about their environmental and business practices, or Whole Foods, which has gained traction with its recent GMO transparency project.
6. Prioritize meaningful work.
Once you’re over the initial hump of establishing your company’s mission, resist the temptation to let your focus drift back to profit-driven mode. Truly great companies are those that continue to motivate and engage employees by making their work meaningful, day in and day out. Do this by giving employees more control and offering regular feedback, showing them the impact they’re having, and providing opportunities for growth and development. It’s also wise to schedule regular meetings designed to reinforce your organization’s mission and the role each team member plays in achieving goals.
7. Create a culture of caring.
Some companies that strive to be purpose-driven make a crucial mistake: they don’t extend their vision for improving society to their own workplace culture. See the example of Google, a company that touts its support of diversity and inclusion, which faced a walkout last year as employees protested pay inequity and inadequate sexual harassment policies. But any company that considers itself socially conscious must make an effort to understand its employees’ needs and offer fair wages, benefits, and support for work/life balance.
In addition to the standard benefits, socially conscious companies often go beyond to create a culture of caring. Spotify, for instance, has reduced turnover by providing six months of flexible, paid parental leave over three years. Other innovative benefits include wellness programs, flexible work schedules, and emotional support services LifeGuides, which helps employees through their Life Challenges by pairing them with a peer who has faced the same struggles.
Though it might seem intimidating to revolutionize your company culture, the advantages of a purpose-driven model are too numerous to ignore. Companies that consider the greater good, and not just profit, seem to be the way of the future – so don’t get left behind.
A crucial part of improving your company’s culture of caring is being there when your employees need you most. Learn how LifeGuides can help offer confidential, and valuable support by scheduling your free consultation today.