Contributor, Korn Ferry Institute
The Purpose Behind a Turnaround
Daniel Goleman is a senior consultant at Goleman Consulting Group, author of the best seller Emotional Intelligence, and host of the podcast First Person Plural: Emotional Intelligence and Beyond. He is a regular contributor to Korn Ferry.
There’s a paradox about purpose. On the one hand, we know purpose boosts profit and that people are wired to be motivated by what’s meaningful to them. Both facts make the case for embracing purpose and putting it at the core of strategy.
But while plenty of organizations have written an inspiring statement of purpose somewhere on their website, far fewer have figured out how to embed it into their organization. One survey found that while 82% of U.S. workers affirmed the importance of purpose, only 42% said their company’s stated “purpose” had any real impact.
Similar discrepancies have shown up elsewhere: in 2019, more than 180 American CEOs signed the Business Roundtable’s Statement of Purpose, rejecting the long-held idea that a corporation’s principal purpose is maximizing shareholder return. A year later, researchers from Harvard Law School’s Program on Corporate Governance found that many of the organizations that supported the BRT Statement weren’t actually doing much to follow through on their commitments.
The gap has inspired some skepticism throughout the business world. What does it take to realize a purpose? And whose responsibility is it to instill a sense of meaning across an organization?
Answers start to emerge when we quit looking at purpose as an add-on, and start seeing it as an organizational transformation. Traditionally, leaders have been trained and incentivized to focus on the bottom line. The shareholder-first mentality is fully embedded into our way of doing business. But it neglects any purpose beyond profit.
For purpose to take hold in a firm, leaders will need to become what Korn Ferry describes, in its CEOs for the Future study, as Enterprise Leaders. In the study, over 85% of CEOs agreed that the historical “line” between business and society is growing more and more permeable. Unlike the Executive Leader—who leads vertically, directs employees, and plans and drives outcomes for their own unit—the Enterprise Leader responds to the porous boundary by thinking and acting across the broader ecosystem, and by taking into account the societal and cultural impact of their strategic decisions.
According to Korn Ferry, fewer than 14% of executives fit into this category.
In order to develop more Enterprise Leaders, Korn Ferry has developed a model—a way of understanding how such leaders think and behave. At the core of the model are both PERFORM and TRANSFORM. In other words, Enterprise Leaders need to not only run the business (making the strategic and pragmatic decisions that will keep it afloat and help it achieve its mission), but also change it at the same time.
In their words, “it is not an either-or: perform now or build a sustainable vision for the future. For the Enterprise Leader, these must happen simultaneously.” To balance performance and transformation, Enterprise Leaders pay close attention to purpose, mindsets, capabilities and impact. Here, purpose is seen as “the belief that Enterprise Leaders have a responsibility to transcend self to apply and grow their gifts to more powerfully give to others, the enterprise, and beyond.”
When it comes to bridging the gaps in realizing an organization’s purpose, Enterprise Leaders are critical. According to Korn Ferry, organizations run by these leaders grow 6.7% faster than the average of other companies in terms of EBITDA. In delivering both social and business value—and in disrupting and reinventing across and beyond the ecosystem—Enterprise Leaders position their organizations for stronger growth. They know how to lead in a world marked by crisis, disruption and uncertainty, and they think about their own influence beyond the four walls of their organization. They “unite the entire ecosystem under a bold and inspiring purpose.”