Is having a company purpose a luxury?

With so much else to focus on, purpose, outside of commercial survival, might seem unimportant. But having one speaks to a lot of what HR owns...

Words by Sophie Parrott| Design by Matt Bonnar

There is a benefit to having a purpose for an organisation. A recent Forbes article explained that, simply put, the purpose of an organisation is to have a meaningful vision and this, if well-executed, will result in profitable and long-term sustainable returns. In June 2016, a report by PwC Putting Purpose to Work: A study of purpose in the workplace found that eight in ten business leaders believe that purpose is central to a business’ success and survival.

I believe purpose should be at the heart of every organisation

Despite this just 34% agreed that purpose is a guidepost for leadership decision-making. Aside from providing the organisation with increased commercial success, having a definitive and strong company purpose also enables organisations to retain and engage their existing workforce. Simply put, employees will be more productive and stick around longer if they feel they can add value, better the organisation’s product or service offering and feel as though they properly understand the company’s purpose and direction.

In fact, PwC’s research found that Millennials who have a strong connection to the purpose of their organisation are 5.3 times more likely to stay at their place of work. There is also a strong argument that if employees feel more connected to the organisation’s purpose then they can add greater value to the business. Despite this, the accountancy firm’s research found that just 33% of employees draw meaning from their employer’s purpose which will do no favours for either organisations or employees. But just how important is having a company purpose? HR Grapevine spoke to the experts to find out.

‘Purpose should be at the heart of every organisation’

According to Rachel Credidio, Group People and Transformation Director at the housing association Aster Group, 'purpose should be at the heart of every organisation'. She explains: “As a housing association with a strong social purpose, our values are intrinsic to the way we operate. This approach is easier for some organisations to follow than others, but it’s about making that purpose visible to everyone in the business so that they’re united and driven by the same goals.”

To achieve this, Credidio told HR Grapevine about a set of cultural principles called The Aster Way that the organisation works to which are embedded in the firm’s purpose and makes sure that staff have a clear sense of direction. “I think it helps that our vision – that everyone has a home – is so tangible. It motivates people,” she adds. Her thinking correlates with research from Bain & Company which highlighted just how important company goals connected to purpose are for increased employee productivity. As was reported by Think Parallax, the study concluded that if a satisfied employee’s productivity level is 100%, the productivity level of an employee that feels genuinely inspired by the purpose of their employer is a staggering 225%.

“Our employee forums, from our Colleague Council to our Transformation Network, and our Annual Colleague Survey, mean everyone in the business can feed back on our approach and the way we do things. By involving employees in our purpose and values, we’ve found we’re more likely to retain and attract talent as they know they have a voice in shaping our identity,” Credidio says. The talent attraction piece is supported by statistics from Workable, which found that nine in ten candidates would apply to a job opening when it comes from an employer brand that is actively maintained.

Having a company purpose is not a luxury; it is absolutely a necessity

‘Company purpose is not a luxury’

As the studies show, working for an organisation that has a strong purpose and a well-maintained employer brand is something that candidates actively look for when switching roles. And, now more than ever, Cary Cooper, Professor of Organisational Psychology and Health at the Manchester Business School, told HR Grapevine that having a company purpose is a necessity rather than a luxury, particularly with a ‘major recession’ on the cards.

In Cooper’s eyes, the main way to attract, engage and retain talent is by having a strong sense of purpose, which is particularly critical for businesses wanting to survive the harsh impacts of the coronavirus pandemic. In line with PwC’s research – which found that Millennials that have a strong connection with the organisation’s purpose are 5.3 times more likely to stay at work – Cooper said that the younger generations will switch jobs to work for a company that gives them a greater sense of purpose, rather than because they are looking for more money. “They want to be valued, they want to be trusted, they want the organisation to know who and what it is and they won’t tolerate organisations that don’t provide them with [it],” he adds.

While many employers and HR teams will prioritise the importance of company purpose – both for employee engagement and commercial success reasons – Cooper explained that employers without a strong purpose will likely experience issues such as high labour turnover figures, poor performance and increased sickness absence levels.

Essentially having company purpose is key as the HR people have said

He continues: “You won’t retain employees, you will get them ill particularly if they are people who can’t move jobs. If they are not the Millennials who will move, but the other people who for whatever reason can’t move because you’re the only employer in the region given their skillset you can work for, they will be dissatisfied, they won’t produce the performance that you need and ultimately they will suffer from a stress-related illness.”

In fact, Cooper added that purpose can actually be the ‘catch-all’ HR tool that speaks to a lot of what the function owns. He said: “How do you retain people? How do you get the most out of them? How do you attract new entrants to your organisation? There is only one way to do that and that is a sense of purpose.

“It is important that you know who and what you stand for and that is very fundamental in terms of organisational and individual resilience. Now talent retention is going to be fundamental because we are going to have fewer people, all organisations are going to downsize and we know that is going to happen and everybody therefore matters and they have to feel part of something, something that is going somewhere and has a purpose to fulfil in society.”