Purpose and performance

by External26 Apr 2017
How important is purpose and performance in leadership development programs? Adam Canwell responds
  • What is the value of purpose for driving performance in organisations?
An organisation’s purpose has bottom-line implications and is not just some feel-good soft stuff. Our research shows that organisations that are purpose-led outperformed the S&P 500 index by up to 14 times more between 1998 and 2013.

Organisations that have a compelling purpose achieve this performance because they are better able to leverage the intrinsic motivation of their employees. When employees are personally motivated in this way, they give greater discretionary effort and have more energy for the work.

EY research shows that employees working for organisations with clearly articulated and meaningful purpose are 1.4 times more engaged and 1.7 times more satisfied. And it’s not only our employees who care about organisation purpose. Research shows 73% of global consumers would switch to brands with a clearly articulated purpose that resonates and inspires a call to action in them.
  • How can leaders bring organisation purpose to life? 
Leaders are accountable for crafting a compelling narrative that engages employees on an emotional level, helping them connect to the organisation’s purpose and thereby making their work personally meaningful. This is exemplified in the parable of the two bricklayers: Two people are working side by side, laying bricks at a similar speed. When asked what they are doing, the first says, “Laying bricks” and the second says, “Building a cathedral.”

For each of us, the purpose of our work is very personal and our leaders’ job is to create a climate where we can articulate our own purpose and connect with a higher order purpose that is bigger than us alone. In this volatile, uncertain, ambiguous and complex [VUCA] environment organisations have to adapt to survive and thrive. A clear purpose provides leaders and staff with a compelling North Star to guide them in making decisions and taking action.
  • Is purpose just another HR fad?
This idea of organisation purpose is not entirely new. In recent times, Simon Sinek has popularised the concept through his 2009 TED talk ‘How great leaders inspire action’, encouraging leaders to tap into the power of why.

The research around the role of purpose and its links to organisational performance stretches back decades. One seminal study was undertaken by Professor Litwin and Robert Stringer at the Harvard Business School in 1965.

They demonstrated the impact of a positive organisation climate on improved performance. Their research showed that the key dimension of organisation climate to get right is clarity and one half of the clarity puzzle is the mission and direction of the organisation. The mission of an organisation and the direction set by leaders is most potent when it is aligned to, and an expression of, the organisation’s high-order purpose.

Adam Canwell
Global leader leadership consulting practice
ERNST & YOUNG
 

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