Alice asked the Cheshire Cat,
who was sitting in a tree,
“What road do I take?”
The cat asked,
“Where do you want to go?”
“I don’t know,” Alice answered.
“Then,” said the cat,
“it really doesn’t matter, does it?”

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The challenge of aligning corporate purpose with people’s expectations

Whiplash Team, 14th May 2021

The challenge of aligning corporate purpose with people’s expectations

The gap between corporate purpose and what stakeholders demand of organizations, especially consumers and employees, is a reality that business leadership must address to improve the performance and results of their companies. Better communication and more dialogue between management and stakeholders is the key.

The concept of corporate purpose is not new to business circles, although in recent times it has become more prominent and much has been written on the subject. According to various investigations, most managers are aware of the importance of purpose and its impact on the organization, both internally and for users of their product and/or service. However, there is a significant gap between the expectations of the various stakeholders –mainly consumers and employees– and the commitments assumed by companies and their leaders in terms of purpose.

The cause of this lack of harmony is, according to the study “The benefits of a shared purpose to get out of the current crisis” by the communication consultancy firm LLYC, is the absence of dialogue between the companies and their employees, consumers, suppliers, and partners. The research has been based on online surveys of 80 CEOs of Ibero-American companies (23% Spain and Portugal; 34% Mexico, Panama and the Dominican Republic; 19% Peru, Colombia and Ecuador; and 25% Argentina, Brazil and Chile) from different sectors, carried out during the first quarter of 2021. Also, on the analysis of social conversations between January and December 2020 held on Twitter (in Spain) about global challenges and sustainable development goals.

Among the results, what stands out is that, of most of the companies that have defined a corporate purpose (81.3%), only 17% have consulted their employees and 9% their clients. The definition of the purpose, according to the research, is a process in which most of the members of the board of directors intervene but few others do and sometimes it is a task of the CEO alone. Hence, while the expectations of people who participated in social conversations (more than two million tweets were analysed) focused on environmental sustainability (10.4%), education (9.9%), health (9.1%) and social justice (8.2%), the priority for companies was environment (25%).

But if the purpose defines the raison d’être of an organization, why is it so important that there be a dialogue with the various stakeholders? In essence, because these days business strategy alone is not enough to maintain the relevance of brands. A corporate purpose is necessary to provoke a positive social impact and that this is aligned with the expectations of society and the users of the brand.

In the post-pandemic era, businesses need to step up and understand that business shouldn’t be about wealth but prosperity. Social, economic and environmental prosperity. This is what today’s consumers demand, empowered by access to information provided by the Internet and the interaction offered by social networks, in addition to a clear awareness of the role of companies in shaping social and economic models.

On the other hand, the purpose, which business leaders’ value in strategic terms –because it serves as a moral compass, facilitating both long-term and immediate decision-making to respond to the demands of an environment marked by uncertainty–, on the other, for employees it implies a formula that offers fundamental value to their work. At the same time, it is what allows them to understand clearly what their contribution to the company is and to society, according to a report by PWC.

This feeling, that daily work has a meaning that goes beyond the mere fact of obtaining an economic reward, is essential to reinforce the sense of belonging, as well as to enhance the commitment to the company, its values ​​and its culture.

According to a study carried out in the United States by the McKinsey consultancy firm, the vital purpose of individuals is unique and can be defined as “a lasting and global sense of what matters in the life of each one”. But, when taken to a labour level, this vital purpose is intrinsically linked to that of the tasks we undertake on a daily basis. Thus, although the organization does not have any control over the personal purpose of its employees, it can influence it by adding value to the individual through corporate purpose. To do so, it is necessary for business leadership to understand what motivates their people, the members of their organization and help them find greater satisfaction in what they do.

But how? For example, by promoting dialogue within the organization, creating effective communication channels between all levels of the company and fostering an empathetic and attentive leadership that listens and assertively interprets the demands for individual satisfaction of the people linked to the company. According to the McKinsey study, 70% of employees surveyed indicated that their sense of purpose is largely defined by their work.

It is a fact to be considered. Especially since the gap between the satisfaction shown by top executives and middle and low-level employees in organizations is enormous: “while 85% of executives and top management said that they are fulfilling their purpose at work, only 15% of managers and front-line employees agreed,” says the report that has named this result as “the purpose hierarchy gap.”

This leads to the fact that, as the LLYC study points out, the definition of corporate purpose is not a very inclusive task; employees participated in only 27.8% of the cases analysed.

It is true that the organization does not have control over what motivates everyone, nor over the degree of satisfaction that the task they perform daily provides, but it does have control over the corporate purpose of the company. By providing the company’s raison d’être with a meaning that implies contributing positively to people’s lives, to improve society, companies can influence the perception and satisfaction of their employees, improving the underlying health of the organization and its culture, reinforcing inclusion and workers’ experience. All this will ultimately have positive results in the performance of the company, in the level of satisfaction of the various stakeholders and, therefore, in the income statement.

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