Purpose is powerful. A study published by Harvard Business Review found that, when companies had a clearly articulated purpose which was widely understood in the organisation, they had better growth as compared with companies which hadn’t developed or leveraged their purpose.
Specifically, 52% of purpose-driven companies experienced 10%-plus growth compared with 42% of non-purpose-driven companies. Purpose-driven companies benefitted from greater global expansion (66% vs 48%), more product launches (56% vs 33%) and greater success in major transformation efforts (52% vs 16%).
Purpose also delivers benefits in terms of the experience of work – or, to put it another way, the work culture. A study by Said Business School at the University of Oxford found that, when companies had a greater sense of purpose, their employees sick rates were lower, productivity was higher and retention was improved. And research by the University of Sussex showed that, when leaders demonstrated clear purpose — vision, commitment to stakeholders and strong morals — employees in their companies were happier and more productive.
In Japanese, the word ikigai describes a reason for being, or a reason to wake up in the morning. Our Brunel ikigai is ‘forging better futures by investing for a world worth living in’. It would be all too easy to see this as woke corporate fluff but the research clearly demonstrates that people and companies do their best work and inspire others when they know why they’re doing what they’re doing. That is certainly what we have found at Brunel – in our last employee survey, staff gave culture, values and RI as leading reasons for choosing to work for the company.
Businesses who can develop a strong purpose – and help people to see how they contribute to it – will reap the greatest rewards in terms of motivation and engagement, helping our people choose and clarify their investments of their time and effort. Purpose can help people and businesses make choices which ensure the greatest match between values and talents and contributions on the one hand, and the demands of stakeholders on the other.
Most organisations used to have a straightforward pitch, but this is slowly starting to change as they think more about sustainability and look towards embracing stakeholder capitalism. We’d previously describe what we do as a company, state why we’re better than their competitors and wrap things up with a call to action.
More and more, we are seeing companies try to define why they exist as an organisation and this might be the most important thing of all they could today do to ensure longevity. It is crucial that arriving at this definition is a collaborative process across staff – not a diktat from above. That is why, for our own recent values review process, our primary forum for defining our values was a staff workshop with all teams represented – but no managers present. It proved to be fruitful and we have since published the outcome in the form of a new statement of values.
As investors, we need to encourage companies starting to increase their focus on purpose because, ultimately, it will lead to better outcomes for our investors. This is why we are such strong advocates for companies placing a heavy emphasis on their purpose and sustainability.
Stakeholder capitalism is a powerful form of capitalism that unleashes mutually beneficial relationships to create long-term value. The benefit of building something together is worth the investment.