The Economic Impact of Personal Purpose

This is the first installment in a series on Purpose from the Korn Ferry Institute.

For New York City bus driver Govan Brown, his job meant more than bringing people to their destination. He related to passengers like members of his “flock,” showing patience, good cheer, and curiosity, and giving exceptional service. During his career, Brown received 1,400 letters of commendation and even inspired an award.

Brown centered his purpose as a bus driver on how he connected with people. He went above and beyond the call of duty, even though the overall mission of the organization was to simply take riders from A to B. And it’s how Brown personalized his bus driver role that elevated customer loyalty and made him an exemplary employee.

Traditional talent management has focused on filling positions with the right skills that would meet the organization’s needs. It’s a practice that reinforces consistency and conformity, but hinders variation and individuality.

It’s a philosophy that contradicts the idea of allowing people to pursue their personal dreams—otherwise known as the management paradox. In the past, talent management professionals would say it’s impossible to please both the organization and individuals. But that’s no longer true in today’s business landscape.

Personal purpose can provide sustained energy that helps drive an organization’s success. In fact, when people like Brown are allowed to follow their personal purpose—and are supported for it—organizations will become more successful. According to Korn Ferry’s findings on the relationship between engagement and financial outcomes, a 1-point increase on purpose, using a 5-point scale, has been linked to a roughly 12%-16% added EBITDA margin. Or, in other words, a significant impact in operating probability.

But a company that provides an authentic and compelling purpose, as well as attractive values, can also shape the personal purpose and values of employees. The process of defining and refining purpose is a two-way street. 

Purpose is a combination of a person’s, team’s, or organization’s mission, values, and capabilities. As a whole, purpose gives power and resiliency to face uncertainty and handle challenges in a shifting economy environment. When employees have a purpose, they’re more engaged. When leaders have a purpose, they can be more engaging.

As we lead towards a new economy, organizations must start to focus on purpose if they want to leverage the best talent. This is especially true given that millennial and Gen Z talent continue to make up increasing portion of the workforce. And these generations put more value on purpose: They work for organizations that are growing, evolving, and improving, and that are flatter and more collaborative. They want to see leaders live their company’s purpose honestly and consistently, with their values instilled throughout the workplace.

Many of them long for a sense of connection with their organization’s purpose, but don’t have well-defined personal purposes. They’re likely to adopt an organization’s compelling purpose and values—if the leaders are seen as embodying those values and driving that purpose.

Purpose is critical to these generations. It’s also critical for sustainable and profitable growth.

Indeed, Korn Ferry’s findings on the relationship between organizational commitment and employee turnover show that a 1-point increase on purpose links to a nearly 10% drop in employee turnover.

The next generation of leaders has created a new set of workplace ideals—ones that can’t be served by beliefs and processes from 20 years ago. We are moving into an economy with accelerated change, and traditional strategies and go-to market approaches won’t work.

If organizations want to lead the workforce further, they need to focus on—and support—personal purpose, allowing people to personalize their roles to align with their values. A strong purpose will enhance intrinsic motivation and resilience. And a variety of purposes contributes to an aspect of diverse perspectives, serving as a resource for innovation and organizational agility.

After all, purpose means empowerment: When people are able to serve on their purpose, they bring their whole selves to work. And when they bring their whole selves to work, organizational performance will only excel.

Authors

  • Signe Spencer

    Senior Consultant

  • Jean-Marc Laouchez

    President, The Korn Ferry Institute

    Bio >
  • Guangrong Dai

    Senior Director of Research, Korn Ferry Institute