How can organizations bring more power to purpose? Over the past year, the COVID-19 pandemic has catalyzed lasting and indelible changes in the ways that both companies and their workforce perceive purpose. There has been a visible shift from Shareholder to Stakeholder Capitalism that includes a strong focus on purpose. Indeed, according to recent research by McKinsey, nearly two-thirds of people in the workforce say the pandemic has led them to reflect on their purpose in life and two in three are considering a job change. However, despite these upward trends, only one in three people believe their organization strongly connects their actions to purpose – underscoring a critical gap in driving workforce engagement.
As threats of the “The Great Resignation” continue to loom large in the United States, companies need to think strategically about how to integrate purpose into day-to-day work – particularly since research shows that companies who integrate purpose not only build an engaged workforce, but also outperform on their financial goals.
This is corroborated by our findings, reported in our annual ROL100 ranking published in partnership with Fortune, which included ranking elements such as whether these companies had a clearly articulated purpose that was visibly integrated into strategy. The top 25 companies on the ranking typically saw three times the Total Shareholder Return, five times the EBITDA per employee, and seven times the revenue growth over the past 3 years, as compared to organizations in the bottom quartile of the ranking.
Bringing Power to Purpose
Below are key insights into how companies can make purpose more concrete and measurable, and consequently, build a stronger and more profitable organization.
Bring purpose down to the individual Level
Find ways to help individuals to connect their work to the organization’s purpose. The more meaningful work is, the higher engagement is and this inspires individuals to do better work.
Leverage purpose strategically
To ensure companies are truly driving purpose-driven change over time, organizations and their leaders can’t simply focus on reporting metrics. In addition, and perhaps more importantly, they should re-align their strategies to create organization-wide clarity and leadership alignment on how top priorities will drive their purpose and metrics.
Measuring a company’s “success” has long been based on reporting requirements. The SEC’s recent approval of the NASDAQ board diversity rule change, for example, is a step in the right direction of prioritizing metrics that matter – an indication of a company’s fulfillment of purpose and leadership effectiveness. Still, this initiative is not enough. Reporting metrics alone often create strategies and cultures that focus on the metrics as a strategy versus as an outcome. This is not enough to drive real change.
Build an infrastructure capable of delivering the highest possible value
The other challenge that leaders face in driving purpose-driven work is the sheer overwhelm and burnout of their people as more and more requirements get layered into the mix. This is why a completely different way of working, one that necessitates ongoing and relentless prioritization of high-value focus areas, is also needed. This is particularly true, given that 41 percent of knowledge workers’ capacity is currently spent on low-value work, and according to research, 64 percent of leaders are reporting too many conflicting priorities. It has become harder than ever for individual managers within an organization to deliver on what really matters to the organization. As a result, companies and leaders are failing to do purpose driven work.
Accordingly, companies should leverage new technology tools that help leaders to apply the 80/20 Pareto principle to strategy execution- the idea that 20 percent of managers’ focus areas deliver 80 percent of their output value. Such solutions should identify opportunities and risk areas in a company’s purpose-driven initiatives, which builds an infrastructure capable of delivering the highest possible value in the process and avoids wasting valuable resources on low-value work.
By measuring how successfully a company’s people connect to, and act on, its purpose, business leaders can more strategically drive a greater return from their most expensive and influential resource – their leaders and managers. This is, in fact, the basis for Indiggo’s own Return on Leadership (ROL) platform, which arms companies with the technology necessary to bring power to purpose, ensuring that leadership effort is driven by value creation.
As we enter the final quarter of 2021, organizations and leaders are still struggling to navigate the seemingly endless realities of the pandemic while also addressing the new demands of Stakeholder Capitalism. Amid all of this uncertainty, however, one thing has remained abundantly clear: this has caused a paradigm shift in how every leader must view and act on purpose, and how every company must be willing to adapt if they hope to survive and also lay the groundwork to improve financial performance in the years to come.