(c) Credit Suisse
I’m always sceptical about organisations – businesses, government departments, charities – who say ‘Our priority is to build (or too often ‘rebuild’) trust’. Trust comes when you get everything else right.
‘Purpose’ is the key to that process. It’s quite fun at networking events, over wine and canapés, to ask people ‘What is the purpose of your business?’ If you get the same answer twice, from two people at the same company, you’re allowed to shout ‘Bingo!’. It doesn’t happen too often.
A company’s Mission is WHAT it does. Its Purpose describes WHY it does it and its Values tell us HOW it does it. I maintain that a company that tries, succeeds: where the acronym TRIES lists the adjectival values of Transparent, Responsible, Inclusive, Ethical and Sustainable. Get those five values right and your purpose, and consequential trust, will be delivered (as long as it’s rational and achievable).
It has been suggested that the record of every company held at Companies House should include a statement of its purpose: why does this company exist? Good idea, in principle. If the reply is ‘to maximise profit at every conceivable opportunity’ then OK, that tells us a lot about its values and gives us a yardstick by which to judge it. In this day and age, post-crash, the balance of that judgment might not be wholly favourable, finance industries please note. There are five million active companies registered at Companies House, a third of which employ no-one, so retro-fitting the records even of three million is a mammoth task – but, going forward, the exercise has considerable intellectual merit.
In a report published a couple of years ago the Government concluded that Britain has 140,000 ‘mission-led’ businesses (by which I think they meant ‘purpose-led’). We need to divide that figure by two, as there are 70,000 social enterprises, CICs and co-operatives which are not just overtly purpose-led but purpose-built with explicit social and environmental goals in mind. That still leaves 70,000 private sector businesses whose purpose is to effect positive social or environmental change.
Purpose-led businesses know that they’re not going to change the world by themselves; but they’re not going to sit back and let it change for the worse around them, either. Their employees know this, too. They come to work knowing that some person’s life, some community or some environment will be protected or enhanced because they have experienced the product or service that the company is providing. At the very least, that efforts have been made to ensure that the (inevitable) negative impacts of production, on ecological and supply chain communities, have been minimised or mitigated. When employees believe that their work is a force for good they want to come to work, they want to be productive – and they don’t want to stay at home on those 50:50 days when they’re under the weather!
So productivity is the real winner here, a term that even traditional ‘profits-first’ capitalists should understand (so twentieth century!). But do they? Productivity has flatlined in Britain in the ten years since the crash, whilst dividends have risen and take home pay for most has fallen in real terms. Pay isn’t everything, as social enterprises can confirm: they often pay less than the equivalent in the private sector (especially at the top) and yet their employee engagement and retention figures are way higher. The difference is ‘purpose in practice’.
Pay is not, however, absent from the ‘purpose’ equation: there is much evidence that the anti-poverty measure, the Living Wage, set slightly above the legal minimum wage, sends a message of respect, inclusion (one of the values listed above) and common purpose. A company which does not ask the taxpayer to subsidise its employees out of poverty is fulfilling at least one element of social purpose.
One problem with a discussion of purpose, mission and values is that it touches just about everything, so where do we stop? Here. My final word is this: to reach the stage where your company has purpose so embedded in it that you no longer have to think about it is an achievement indeed. And that only comes from dynamic – and purposeful – leadership.