Purpose must be an integral part of your corporate strategy
Companies that prioritize a purpose aimed at stakeholder success have more successfully risen to the challenges of 2020. Successful companies are beginning to recognize that values can create value. During the COVID-19 pandemic, businesses have increased their focus on stakeholder health and safety, designed new products and services that address societal needs, and collaboratively engaged their communities as they transitioned from stabilizing, re-opening, and growing their businesses during the pandemic.
To learn more about how corporate purpose can guide companies and intensify employee engagement in philanthropy in a time of multiple crises, Harvard Business Review Analytic Services surveyed executives at 168 companies that place a high priority on corporate purpose and have integrated that purpose into their strategy. The survey defined corporate purpose as "the chief objective(s)" -- that is, the overarching, overriding goal -- "pursued by a business organization for the benefit of stakeholders, including shareholders, customers, employees, and the community(ies) that the organization serves."
"From the COVID-19 pandemic to interconnected crises of inequality, economic access, and opportunity, the value of corporate purpose has never been more apparent. While there is no playbook for how to manage through this unique experience, corporate purpose can serve as a guide and also a defining factor in how companies emerge once the dust settles. Purpose-driven organizations have proven to be resilient, leaning into strong relationships with employees and customers to inspire engagement and innovation," said Ebony Beckwith chief philanthropy officer, Salesforce CEO, Salesforce Foundation.
Ebony Beckwith
Here are the key highlights of the research:
- Eighty-four percent of respondents surveyed say their organization makes purpose an integral part of their corporate strategy
- Eighty percent identified increased employee engagement as a benefit of their corporate purpose initiative.
- Fifty-eight percent say the main reason their company prioritizes corporate purpose is "to ensure our business contributes positively to society at large."
Why Corporate purpose is a priority
The report notes that academic research reinforces the view that purpose-driven companies enjoy a competitive advantage. According to the research, "highly ethical companies focused on multiple stakeholders -- and not shareholders alone -- delivered share price growth that exceeded that of the Standard & Poor's 500- stock index by 100%."
The most-cited reason organizations prioritize corporate purpose is to ensure the business contributes to society. The top five reasons for the corporate purpose was: 1. contribute to society (58%), 2. increase employee engagement (55%), 3. strengthen brand identity (49%), 4. positive impact to revenue and profit (33%), and 5. strengthen ties with communities (33%).
The reason for purpose
Prioritizing purpose does, indeed, build engagement, according to the Harvard Business Review Analytic Services survey results. An overwhelming 80% of respondents identified increased employee engagement as a benefit of their corporate purpose initiatives. More than half (55%) named increased employee retention as a benefit of prioritizing corporate purpose, and 54% cited increased engagement with the communities in which they operate. Fifty-eight percent solicit employee suggestions for fundraising activities, and the same percentage of companies solicits employee suggestions for charitable beneficiaries. Nearly half (49%) offer employees paid time off for volunteering, and 43% match employees' charitable donations.
Expressing and enabling corporate purpose
According to the report, corporate purpose makes itself manifest through a wide range of day-to-day activities. More than eight in 10 companies surveyed (84%) make purpose an integral part of their corporate strategy. A similar percentage (82%) embed purpose in communications to stakeholders, including employees, investors, customers, government, and the general public. Sixty-eight percent of respondents say their company embeds it in corporate responsibility activities and 67% in employee performance goals. A much smaller percentage of respondents (41%) say their company's purpose is embedded in board-level review, and 23% say it is embedded in executive-level compensation. Those last two findings suggest that even companies that prioritize corporate purpose may not have fully integrated their purpose into their company's culture, processes, and systems.
The survey's findings confirm that digital technology plays an important role in encouraging employees' philanthropic activities. While 65% of survey respondents say their company relies on employee intranets -- internal communication and collaboration platforms -- to facilitate philanthropic efforts, a growing number of companies are supplementing those internal networks with online charitable-giving platforms that enable companies and their employees to publicize philanthropic topics, search for organizations that support their favorite causes, and coordinate giving programs.
The most-used technologies for charitable giving include employee intranets, collaboration tools, and payroll services.
How Purpose Informs Crisis Responses
Survey respondents were all but unanimous in their leading response to the COVID-19 crisis, with 89% reporting that they have increased their focus on employee health and safety. Nearly half (48%) have collaborated with government entities to manage the pandemic response and relief, and 46% have changed their product or service mix to include products or services in high demand during the pandemic, such as masks and hand sanitizer.
Organizations are increasing their focus on employee health and safety, among other things.
The survey also found that the movement for racial justice and equality has drawn a variety of energetic responses from purpose-driven companies. Some organizations are proactively reviewing their equality, inclusion, and diversity programs.
Aligning Purpose with Racial Justice
"Purpose has the power to unify employees, especially during a time of crisis. No matter where they are in the world or what their experience is like, employees can find commonality and a sense of grounding through their company's shared values. As industries continue to shift from shareholder to stakeholder capitalism and more companies align with the sustainable development goals, it becomes clear that those who champion purpose return the most value." -- Ebony Beckwith chief philanthropy officer, Salesforce CEO, Salesforce Foundation.
The report concludes that a strong commitment to corporate purpose gives employees a reason for going to work each day that extends beyond earning a paycheck. Business is the greatest platform for change and values do create value. A listening, empathetic, and giving culture is competitive differentiation. Because in a hyper-connected, knowledge-sharing economy, your culture is your brand.
To learn more about the Corporate Purpose in the Age of Crises research, you can visit here.