THE ENGAGING POWER OF ORGANIZATIONAL PURPOSE

By: Joost Houtman, Team Leader

“What the Heck is a Chief Purpose Officer?” asks FOXBusiness.com’s Serena Elavia in her
interview with PWC’s Chief Purpose Officer Shannon Schuyler.

Recently, I found myself asking the same question. At the 2017 HRD Summit in Amsterdam I had
the pleasure of being introduced to the concept of the Chief Purpose Officer (or “CPO”) by meeting
one. The fact that most of the presentations that I attended touched on “organizational purpose”
further increased my curiosity about the concept of “purpose.”

Mercer | Sirota aims to help organizations improve their performance, often by means of increased
employee engagement. I quickly wondered how organizational purpose relates to employee
engagement. Would a focus on organizational purpose offer our clients the chance to increase
employee engagement?

This Blog aims to provide an answer to that question. First, the relationship between purpose and
the more common mission and vision statement will be discussed. This comparison will help define
what ‘purpose’ adds to these concepts as drivers of employee engagement. The blog will conclude
with options for organizations aiming to increase employee engagement.

Mission, Vision and ‘Organizational Purpose’
A vision statement usually says what the organization wishes to be like at some point in the future.
The mission describes the ‘road’ to achieving the vision. It describes what business the
organization is in, what product or service is delivered and to which audience. Both mission and
vision tend to contain common business terminology, such as ‘growth’, ‘market share’, ‘market
leader’, ‘operational excellence’ and ‘highest quality’.

What does ‘Organizational Purpose’ add to this? Having studied multiple definitions, I find that they
are all slight variations on the way the company contributes to society. This is in contrast with the
vision and mission that reflect the perceived path to business success.

I believe the definition of purpose by Sheila Margolis (The Workplace Culture Institute) is a fine
example. She states the purpose of an organization is the answer to the question: “Why is the work
you do important?”. She also adds that “employees should find the purpose inspirational and
motivational. It is the cause that defines their contribution to society through work.”

Kenny (HBR, 2014) describes an organisation’s purpose as “This is what we’re doing for someone
else.” He further adds: “And it’s motivational, because it connects with the heart as well as the
head.”

A good example is a farm: it makes money by selling the produce it grows. Its vision might be “to
become the largest farming corporation in the country.” The accompanying mission could be “to
grow its market share by supplying produce at the lowest price in the market, enabled by far
reaching automation”. But its purpose is to provide the people in its community with food. The
money it earns in return is a by-product of this activity. It is not the reason for its utility to society.

So a vision and mission describe what an organisation aims to achieve or become, and how it will
realise that vision. Purpose answers the question “why?”. In the words of Hewlett-Packard’s cofounder
David Packard (HBR, 2016):

Purpose (which should last at least 100 years) should not be confused with specific goals or
business strategies (which should change many times in 100 years). Whereas you might achieve a
goal or complete a strategy, you cannot fulfill a purpose; it’s like a guiding star on the horizon—
forever pursued but never reached.”

How does ‘purpose’ relate to employee engagement?
If organizational purpose tells you ‘why’ your work is valuable to society, how might this effect
employee engagement? Mercer | Sirota research shows that engaged employees contribute the
full extent of their knowledge, skills and abilities to help an organization succeed (“motivation”). We
find that they identify with the company’s values, mission, and products, and establish a real
connection to the work they do, along with a sense of pride in doing it well (“inspiration”). And:
highly engaged employees think, feel, and act in ways that reflect greater levels of commitment to
the company.

From both Margolis’ and Kenny’s definitions we understand that an organization’s purpose should
inspire and motivate its employees. This can be achieved not by setting challenging business goals
and targets, or by personal development, but by defining and clarifying the organizational
contribution to society as a whole.

I agree with Margolis and Kenny that purpose can be a powerful motivator and energizer. ‘Being
inspired and motivated’ appears analogous to being fully engaged at work (as defined above). The
only difference is that neither Margolis nor Kenny explicitly includes the concept of commitment.
However, I see no reason why making a meaningful social contribution would not influence
commitment, in addition to inspiring and motivating individuals.

Since Mercer | Sirota research indicates that ‘achieving something meaningful’ is one of the main
pillars of employee engagement, I believe that the more employees are aware of the purpose of an
organization and believe in that purpose, the higher their engagement might be (all other things
being equal).

Opportunity: better performance at lower cost
The effect of organizational purpose on engagement may be a valuable one, if we consider the
effect of engagement on performance. We find that performance can be seen as a function of
Talent and Engagement. That means that, assuming that talent is present, higher engagement will
result in a better performance.

 

 

 

 

 

 

 

 

 

This effect (i.e. better performance) will be present in the short to medium term, just like Margolis
and Kenny argue, because motivated and inspired employees will perform better at their current
jobs and responsibilities. But could there also be a long term effect? As we’ve seen above, being
engaged is broader than merely being motivated and inspired. It also means being committed to
the organisation. And highly committed employees present long term stability for an organization
as they’re less likely to leave.

But even though purpose might be positioned above business goals and profit margins, can there
still be a bottom-line, business case for it? I believe there can be. Organizations worldwide spend
billions on increasing the engagement of their workers, for instance using expensive leadership
programs, career development plans and team building exercises. Could they reach the same
increase in engagement by leveraging the purpose of their organization? After all, the purpose is
most likely already there. No cost needs to be incurred to create one. All the company would have
to do is communicate it well internally, and make its achievements tangible. Reframing the
communication from the business aspect of the organization to its contribution might just do the
trick!

References:
http://www.foxbusiness.com/features/2016/06/08/what-heck-is-chief-purpose-officer.html

Purpose of an organization

https://hbr.org/2014/09/your-companys-purpose-is-not-its-vision-mission-or-values

https://hbr.org/sponsored/2016/02/the-difference-between-purpose-and-mission

 

One Comment

  1. Margit Huber-Reply
    August 9, 2017 at 11:18 am

    Great Article. I wonder whether we are we going to include a question on purpose in our surveys to learn more about this element of engagement?

    The topic of “Purpose” and social contribution also helps to connect the dots regarding Corporate Social Responsibility where the voice of the employee has not yet been as strongly considered as e.g. the ones of NGOs, Customers or Shareholders.

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