BlackRock’s CEO Larry Fink said, “Without a sense of purpose, no company can achieve its full potential.”
Many organisations claim to have a shared purpose, but do they mean it? Recent research suggests that while shared purpose isn’t everything, it can make or break an organisation’s performance. Those that don’t embrace purpose at all or allow only short-term focus do even worse than their industry peers on financial and non-financial measures.
What is Purpose?
Organisations that effectively activate purpose in their cultures perform better, and significantly so, across the full range of performance measures. Specific cultural factors activate purpose. Where these are present, purpose drives performance and where they are absent, it does not. Culture is like a prism; different aspects of it refract reality differently; some aspects may be more critical than others depending on how you look at them, or what you see depends on how you choose to view it. Purpose is multifaceted. It comprises values, aims and beliefs as well as behaviours and activities.
Set a clear, shared vision of your organisation’s purpose and make sure that you and your employees are both committed to it. Make a point of including a sense of purpose in every initiative and project. Ask people to share what they think is important for their part of your organisation to contribute. Acknowledge those efforts publicly, both within teams and with stakeholders outside them. Finally, make every effort to celebrate wins, big or small.
Does purpose drive performance?
The simple answer is yes. In a large scale meta-analysis of research on purpose in organisations, we found consistent support for purpose as a driver of performance across studies and fields. We analysed 18 quantitative studies and found that organisations with a clear sense of purpose outperformed others by 60% over a five-year period. And we synthesised 41 qualitative studies and found that those where leaders had a strong sense of purpose could maintain employee engagement under conditions where other firms see high levels of turnover and low levels of commitment. Overall, we found that purpose drives organisational performance and helps people remain committed to their work even when it’s difficult or stressful. It, therefore, makes good business sense to create cultures where there is a shared understanding about why an organisation exists and what its reason for being is.
Building Shared Purpose
An organisation’s shared purpose is a driving force behind every action taken within it. This applies to an organisation as a whole and to its employees and individual departments. Purpose must be felt at all levels of an organisation for it to inspire those who work there.
Discovering your organisation’s purpose and how it can be effectively activated in practice requires careful consideration of all its components. This includes understanding why it is important, knowing where to look for purpose-activating drivers in your culture, ensuring there are appropriate mechanisms to activate these drivers and considering how they might be developed to increase their impact on organisational performance. However, when organisations do succeed in activating purpose, they can experience significant gains.