A purpose-led organization and its benefits

Leadership gurus affirm that the single most important responsibility of a leader is to define their organization’s “purpose”. And having done so, they must ensure that stakeholders understand that purpose and are empowered to act in ways that help achieve that purpose.

But what is “purpose”? It is essentially the raison d’être. Maximizing profits has for long been seen as the reason why businesses exist. However, in recent years this belief has begun to change, and “purpose” is now being defined in ways that go beyond profit maximization. This shift is the result of the growing realization that for any business, sustained growth and profitability depends on people- whether they are employees, customers, prospective customers or business partners.

Especially in the face of rapid change, a clear organizational purpose acts as a beacon to decision-making and as a rallying point. It also helps the organization make better decisions around whom to hire, how to retain talent, what products/services to offer, how to market/sell them etc. It also motivates people to do their best- and stretch. In turn, that drives higher levels of innovation, customer service and commitment to the organization.

How you, as a leader, create a purpose-led organization?

The theory, as always, is simple. As Prof. Dan Cable says in an HBR article (Source), leaders must trigger employees’ “seeking systems”. Let’s now look at some specific actions leaders can take to create and nurture a purpose-led organization.

The implementation of the theory must clearly begin with defining an organizational purpose that is both authentic and aligned to the business model. But the real task lies in personalizing this purpose to individuals and teams within the organization. Leaders must recognize that individuals are motivated when they have the freedom to express themselves. This means giving them more opportunities to do what they are good at, so they can shine. This means assigning people roles that leverage their strengths- in practice, this could well include facilitating transfers and role reassignments based on perceived or assessed strengths and not just qualifications or experience. It could also mean allowing employees the time, budgets and space to experiment with ideas. Of course, to the extent possible, all such experimentation must be aligned with the organization’s strategic priorities, so that the outcomes will help further the organization’s legitimate interests. The payoffs are potentially huge, though, as people working on what they like doing will almost always be better performers.

Research also shows that people tend to be more engaged with their work if they can see how their role/work contributes to larger organizational goals. To facilitate this, leaders must break down corporate strategy and departmental plans into smaller components and explain them to the relevant departments and teams. This allows people in individual departments to formulate their goals and KPIs in ways that are clearly aligned with the larger purpose. Many leaders and managers do not deconstruct and personalize the organization’s purpose and strategy; this results in employees feeling disconnected or like they are in a black box, not knowing the value of what they contribute.

Periodically (say at the end of each quarter), managers must show each department how it has made a difference. This may mean going beyond the standard performance dashboard or evaluation metrics- and this is what Purpose-driven leaders are willing to take the time and effort to do. For example, leaders at Novant Health encouraged employees to create their own job titles; this prompted people to highlight their unique contributions to their teams, and over time, caused a marked improvement in morale and performance.

Leaders must remember also that keeping the organization purpose-led is not a one-time exercise. As the business grows, new people join, and some people retire or otherwise separate from the organization. Regulations change, as do technologies. Collectively, these shape operating conditions. In response, company managements will take actions from time to time that may also impact employee morale and motivation. It is at such times that reaffirming the purpose and painting a clear picture helps. It may also need a new purpose to be defined. It would be a big bonus if As Peter Hall, President of Consumer Brands at New York-based Dean & DeLuca says, “The most motivating thing I think as a leader is to paint an exciting vision (for the team). And then secondarily, define team members’ part in the plan… then you’ve gone some way to fulfilling your leadership obligations and to motivating your executives.”

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