Whether it’s logging on at 9am or commuting across town, why do you go to work everyday? You might be motivated by a massive salary, or the prestige of having a powerful title next to your name on LinkedIn. But when the world faces challenging times, what makes people continue prioritising their job? A strong sense of purpose.
In our recent benchmarking research, we saw that ‘purpose’ is a problem area for the technology sector. To understand why that’s an issue, let’s take a look at what it really means.
Why does your organisation exist? Whether born from a founder’s fever dream, a money-making idea that took off, or you’re simply providing an essential service, your business was born for a reason. But its purpose is a little different: it’s a combination of what your company does, why it does it, and what it’s adding to the world.
The purpose of an organisation should be clearly defined – because, if it is, there can be huge benefits. It’ll improve your employee’s wellbeing and enjoyment of their work, boost your profits and performance, and make your customer base more loyal.
What it means for your organisation
Let’s get down to the bottom line: performance and purpose are closely linked. Organisations that consider their society-wide purpose do better financially, including “higher-than-average ten-year total shareholder return”. Several studies have shown this to be the case – with another finding that 85% of purpose-led organisations saw positive growth, compared to 42% without a focus on purpose experiencing losses, and the Stengel 50 research observing 400% more stock market returns for purpose-led companies.
But why? It comes down to a combination of what purpose means for your employees, and for your customers. The higher productivity that a sense of purpose brings could generate $9000+ extra per employee per year, and the lower turnover and higher loyalty could save over $6million of related costs annually. Similarly, when we look at companies like Unilever focusing some brands on sustainability, it’s clear that customers respond – as those are experiencing 50% more growth.
What it means for your employees
If your workforce knows the purpose of their work, it’s good for your organisations’ performance. But it’s good for them too. Its associated a multitude of physical and mental health benefits, including “living longer, lower risk of disease and better sleep” – and with wellbeing more of a focus than ever, it’s important to bear that in mind.
Purpose is the key to them enjoying and thriving at work too – linked to higher satisfaction, fulfilment, and even the likelihood of reaching a leadership position. It motivates and engages people, to the point that more than 9 out of 10 said they would sacrifice salary to have a stronger sense of purpose. It also means they work harder, and are 69% less likely to quit their job – which makes sense. If your role adds meaning to your life, why would you leave?
What it means for your customers
The benefits to your people and your performance are clear – and that’s closely linked to the impact of purpose on your customer base, too. Your clients increasingly put their purchasing power behind causes they believe in, or organisations that share their values. 63% would prefer to buy from businesses they connect with in that way, with 47% having stopped using services from organisations whose purpose they don’t perceive as positive.
In a world waking up to inequality, environmental issues, and the importance of wellbeing, it’s important that your organisation reflects the values and purpose your customers care about. Not just for your financial performance, but for the perception of your brand.
In our recent benchmarking research, we looked at 2000+ private businesses to understand their strengths and weaknesses in light of our Organisational Fitness framework. Split into sectors, we can identify the areas different industries need to focus – and this time, we’re looking at the technology industry.
Our data on the tech sector showed that ‘purpose’ was the lowest scoring area – with just 57% agreeing with the statement that “Our organisation sets goals that are important, meaningful and help keep me motivated.”. This is a problem, as we’ve also identified that ‘purpose’ is closely correlated to employee engagement. As we all know the impact of employee engagement on organisational success, this is a serious problem.
As an industry, tech continues to boom – but this comes alongside mounting criticism about everything from data privacy and security issues to significant diversity issues. Despite the sector’s continued success, these concerns deserve to be taken seriously. With purpose so important to employees, and a digital skills shortage ongoing, staying competitive means offering employees a purpose and meaning.
Some areas of tech have already recognised this – with many European companies recognising that purpose is a “powerful differentiator”, whether that means considering their societal impact or their effect on the environment. But employees need more convincing: while 87% recognise their organisation’s purpose, only 65% believe the company would consider it more important than a good financial opportunity. Having a clear purpose is key, but living by it is crucial.
Now you know the importance of having a clear purpose, one that touches every business decision you make, it’s time to act. Our platform identifies ‘purpose’ as a key aspect of Organisational Fitness – that is, your business’ resilience and performance. Knowing whether your employees recognise that purpose is crucial as, if not, you’ll know steps need to be taken.
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