Corporate purpose is a popular buzzword one comes across almost daily on LinkedIn or in news articles. While the global pandemic may have been a catalyst, the great “search for purpose” in the world of work had begun way before then – presenting companies and HR managers with new challenges.
What is Corporate purpose?
But what exactly does it mean to be a “purpose company”? Corporate purpose encompasses a company’s mission statement, vision, and values. Purpose companies assume ecological, economic, and social responsibility – this is particularly evident in corporate governance, employee rights, and participation, and their influence on the environment, society, and customers. It is not only customers who are increasingly searching for products that are good for humanity and the environment in terms of sustainability, working conditions, and general impact. Employees also want to be able to identify with the values of their employers — and feel a sense of purpose in their work.
Corporate purpose is here to stay
Gone are the days of Milton Friedman’s doctrine, “The Business of Business is Business.” Even BlackRock CEO Larry Fink is convinced that companies need a social purpose beyond generating a profit. While there appears to be a broad consensus, and global players like Google, Patagonia, Dr. Bronner’s, and VAUDE are incredibly successful with and proactively communicating their respective corporate missions, many other companies still find it difficult. Despite these challenges, finding a corporate purpose is a worthwhile endeavor – especially regarding recruiting. Top Generation Z talents and previous Generation Y candidates also, are increasingly looking for more than good advancement opportunities.
Recruitment benefits of Corporate purpose
Younger candidates overwhelmingly want a job with purpose – this is an undeniable trend. The emergence of special job platforms dedicated exclusively to “sustainable jobs with purpose” is the best proof of this.
“A company with purpose has an easier time attracting talent from Generations Y and Z. By communicating its corporate beliefs directly and authentically, it can win over especially dedicated candidates,” explains Thorsten Brunsemann, Client Partner at InterSearch Executive Consultants in Frankfurt.
But purpose is not just an effective tool for filling vacancies. Employees who feel they are working towards a meaningful goal are demonstrably more satisfied. They are also more motivated – and justifiably so. Because if you cannot understand or identify with the meaning and purpose of your work, why should you give the fabled 110% to fulfil your company’s goals?
Lastly, purpose is also a powerful means of long-term employee retention. When companies see their employees as relevant stakeholders whose interests, and those of shareholders, are also crucial to a company’s strategic direction, those employees will feel valued. When someone can identify with their work and see how their company is actively improving the world, they feel like they are part of a good cause – and want to stay for the long haul.
Corporate purpose needs to be more than just a marketing tool
Despite all the enthusiasm, one should exert caution when setting out to create a corporate purpose. In 2020, a study by consulting agency McKinsey revealed that over 80% of all employees surveyed felt that purpose was essential in their companies. Unfortunately, many of the surveyed companies had no official purpose statement, and even if they did have one, only about 40% of respondents felt that it was at all effective. For many companies, purpose is used purely as a marketing tool – which becomes evident to new employees as soon as they immerse themselves in the company culture during orientation. If you want to motivate your employees and retain them in the long-term, you have to deliver on your purpose promises. The only way to do it right is to pursue your company’s purpose holistically—and integrate it in all your activities.