Activating organizational purpose

Leaders can take four steps to build a purpose-driven organization that leads to better business outcomes.

Having an engaging organizational purpose—standing for something bigger than profits—has now become so central to the public dialogue that few corporate leadership teams question the need for one. Companies have been, and continue to be, on a journey to both understand and connect to a higher-order purpose in a way that adds value for all stakeholders. And both the COVID-19 pandemic and the recent increase in pressure to address longstanding racial and ethnic inequalities around the world have put all companies under the spotlight, highlighting the ones living their purpose and those that are not quite there. The actions companies take or don’t take now will be a significant factor in their ability to preserve the trust of their stakeholders going forward.

Our own research(1) on organizational acceleration shows that companies where employees feel that they have clarity about a company’s fundamental purpose score higher across all areas we were assessing and, ultimately, on performance. (2) And our Board of the Future report points to a significant rise of purpose on the European boardroom agenda. (3) While the directors we surveyed think that many traditional focus areas will remain unchanged in the next five years, most say that embedding a purpose-driven culture will jump on their agenda and that they will spend significantly more time on it in the boardroom. But what does it actually take for a greater purpose to deliver real value?

There is a big difference in impact between having an organizational purpose and activating it. Most companies produce internal and external statements of their purpose and vision and promote them extensively. The harder part for organizations is figuring out how to make their purpose more than just words on a poster. Activation of the purpose is the missing ingredient in allowing organizations to realize its value.

1.Colin Price and Sharon Toye, Accelerating Performance: How Organizations Can Mobilize, Execute, and Transform with Agility, Hoboken, NJ:Wiley & Sons, 2017.

2.Alice Breeden, Becky Hogan, and TA Mitchell, “Bringing your organization up to speed,” Heidrick & Struggles, September 12, 2019, heidrick.com.

3.Jamie Page, Board of the Future: Moving toward a more diverse, more in tune European board, Heidrick & Struggles, March 2, 2020, heidrick.com