Has corporate purpose lost its purpose?

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The writer is a visiting professor of Bayes Business School and the author of ‘Fair or Foul — the Lady Macbeth Guide to Ambition’

By mid-January some new year’s resolutions will already have been broken. But bigger and more important motivational issues remain. Have people returned to work with enthusiasm and commitment? Are colleagues looking for opportunities elsewhere?

Many have argued that if only businesses could be clearer about their purpose then employees would be encouraged, even inspired, to find meaning in their work. Companies have spent a lot of time and resource trying to describe their “purpose” internally and externally. But the return on that investment has been disappointing. It can be a concept that is hard to pin down. Perhaps purpose has lost its purpose.

Take Unilever — a company long associated with putting purpose, including corporate responsibility goals, at the heart of its strategy. In 2019, then chief executive Alan Jope declared: “Brands without a purpose will have no long-term future with Unilever.”

By 2023, the tide had turned: new CEO Hein Schumacher said corporate purpose was an “unwelcome distraction” for some brands and refocused strategy on growth, productivity and “performance culture”. Investor Terry Smith quipped that if Unilever had “to define the purpose of Hellmann’s mayonnaise” it had “lost the plot”.

Companies may be right to shy away from declaring a purpose beyond the bottom line. The evidence suggests that it is not proving an effective way to inspire employees. But if that is the case, what other approaches can leaders take to encourage staff to see meaning in the work they do? 

These questions are receiving attention from researchers at the Judge Business School and the Amsterdam-based Top Employers Institute. They have found that following a drive to articulate company-wide purpose, employee engagement may go up, but actual commitment does not. Neither “communicating success stories that bring purpose to life” nor “embedding purpose into leadership [and] management practices” increases staff retention.

The research is in its early days. But what seems to be emerging is that career development and empowerment — giving people resources and freedom to make decisions about how to carry out their roles — are more effective in boosting loyalty and reducing staff turnover than grander top-down messages.

It is a more personal sense of purpose that counts. Even “providing opportunities for employees to reflect on their own sense of purpose and connect this to the company’s purpose” is less effective than simply giving people a good job to do and encouraging them to get on with it, say the researchers. The basics still matter. 

In a presentation at last November’s Global Peter Drucker Forum in Vienna, Insead professor Gianpiero Petriglieri shared an insight about how leaders might help inspire a sense of purpose in their employees by focusing on “humanistic” qualities of the everyday.

He explained that he had been struck by a comment his teenage son had made while working on an internship at the Palace of Versailles. Asked what he saw in the environment that outsiders might miss, his son replied: “People lived here.” Not just royals, but courtesans and servants, and in the modern day scholars and workers.

As Petriglieri argued, we forget that in the workplace, “people live here” too. Organisations may have become more efficient and better aligned. These are the mechanical or transactional aspects of work. But if we want people to learn, to take risks, to innovate and be creative, then more “humanistic” aspects have to be taken seriously too. 

Today’s workforce at Versailles does not call it the “château” but the “maison” — a home. And in a home, Petriglieri said, we ask other questions: is it safe? Is it hospitable? Leaders need to be better “homemakers”. 

In her recent book Higher Ground — How Business Can Do the Right Thing in a Turbulent World, Alison Taylor, associate professor at New York’s Stern School, takes a level-headed view of company purpose — and also suggests that leaders should look a little closer to home.

“It’s no coincidence that the people most enthusiastic about purpose are branding consultants,” she writes. Those dealing with the day to day of motivating staff and meeting targets have a harder task. “You must convince the human beings you impact that you mean what you say.”

This does not mean abandoning purpose altogether. A company that shows it recognises its “overall goal should be positive” is still better equipped to inspire staff, even as it pursues the profit motive, says Taylor.

But “human beings naturally seek meaning and impact in our lives. We create and provide it. We don’t wait for it to appear from above, and we don’t necessarily need it from our job.”