It turns out in a growing number of industries, purpose has a purpose.
According to a new Korn Ferry study, consumer companies that focused their employees on the organization’s purpose boasted annual growth rates that were nearly triple the annual rate for the whole sector. And the benefits go beyond financial. The study also found that having an authentic purpose can help recruit and retain talent, win over customers, and have positive impacts on broader society.
The study, called “People on a mission,” examined a broad set of purpose-driven organizations, including interviews with 30 founders, CEOs, and senior executives at consumer companies with visible and authentic purposes, engaged employees, customer-oriented cultures, and strong financial results. “We have found that organizations that take the challenging steps to define their core purpose and values, and integrate these throughout their operations—beyond slogans or advertising gimmicks—see not only strong bottom-line results, they also find this approach transforms all aspects of their business,” said Elaine Dinos, principal of Korn Ferry’s Global Consumer Market practice. “When an organization has a clear purpose, it unleashes the power and drive of the entire workforce, harnessing and focusing that combined effort in one aligned direction.” Indeed, the study found that companies with the proper focus posted compounded annual growth rates of 9.85% compared to a 2.4% for the whole S&P 500 Consumer Sector.
Imbuing an organization with a core purpose can be hard work, requiring a deep and abiding commitment from the top, said Janet Feldman, a senior client partner in the firm’s CEO Succession practice. The commitment needs to be backed up by key best practices, including hiring people who connect with the organization’s purpose, transparency in leadership’s actions, and incentive plans based on an employee’s holistic contributions to the organization.
“Korn Ferry’s research, not only with this study but also with the firm’s work on the Superior Performance Model, is building a strong case about the critical role that purpose plays in today’s world—not only for companies but equally for workers who can align their own purpose and values with their organization’s,” said Rick Lash, a senior client partner and leadership expert. “This can be a powerful combination that realizes the motto that by doing good, people and enterprises also can do well.”