Why you are nothing without a sense of purpose

18 February 2015 -

Purpose is key to management styles that help corporations engage and flourish – and moral purpose is the most important of all

Anne Francke, chief executive, CMI

If you were making a recipe for well-led organisations with effective leadership styles, what would the ingredients be? When we went gathering evidence for our Management 2020 report, we found them. Three Ps: purpose, people and potential. Purpose is the salt in the stew, because it gives life to the other two.

Purpose is key in helping corporations engage and flourish – none more so than moral purpose.

Purpose creates meaning and is essential for engaging your employees. It gives your customers a connection to your company and creates ties to communities. It’s nothing to do with size: purpose can be found in the smallest places, and it can also be found in the biggest. I was thrilled to hear how our interviewee, Unilever chief executive Paul Polman, has ditched quarterly reporting so that his staff’s purpose might be protected from short-term rushes for shareholder value.

You don’t want to lose your purpose. When you do, you might lose a lot more. Look at Tesco. Look at the banks. These are once-great organisations that have become tarnished by blunders. They lost their sense of direction because profit became more important than purpose, and their moral compass fell apart.

In an age when 51 of the world’s top 100 GDPs belong to corporations not governments – and when austerity means this government has to find another £21bn a year by 2020 – business needs to give back to society. Purpose helps firms to do this. It works better than corporate social responsibility programmes, because rather than being an add-on, it’s what they live for. It is also hooked up to the business model – the better they deliver the purpose through strong management styles, the more profits they make.

When we feel connected to the values of the organisation we work for, we perform better and behave more ethically. We know that from our MoralDNA report.

Paul Polman told me that since infusing Unilever with the social purpose of its sustainable living plan he can compete favourably with investment banks in attracting top talent – despite the fact that Unilever can’t match City pay.

So get your organisation a purpose and make sure you do two more things. First, communicate your purpose often. Second, measure your progress against your purpose for each of your stakeholder groups every year.

Check back on that recipe. If you get purpose – and the resultant culture – right, the rest will come naturally.