Putting a Price Tag on Purpose

Daniel Goleman, author of the bestseller “Emotional Intelligence,” is a regular contributor to Korn Ferry. His latest book, "Altered Traits: Science Reveals How Meditation Changes Your Mind, Brain, and Body," is available now. 

One argument made for the importance of purpose says that to have a purpose is a strong predictor of employee engagement. And, of course, engagement remains a top priority for leaders and HR professionals.

But what exactly are the savings on employee engagement? What is cost/benefit of purpose over the long term?

The Center for Accountability and Performance (CAP) found that the average cost to fill a high-turnover, low-paying job (less than $30,000 a year) is 16% of the salary; for midrange roles it’s 20%; and for executives it’s 213%. That’s $3,000 to replace a $10/hour retail employee and over $200,000 to replace the $100,000/year executive.

These numbers make us pause. Turnover costs more than the advertising, interviewing, onboarding, and training it takes to fill a role. And it can take up to two years for a new hire to hit peak productivity. Then there are the potential blows to the bottom line from a lack of retention’s ripple effects - shaky morale, delayed hiring, potential errors, and customer service lags.

Small wonder that purpose is so central to Korn Ferry’s Leadership Institute, which asks all of its leaders to zero in on what feels most meaningful to them. The results are eye-opening. On average, more than half of the Leadership Institute’s alumni stay with the same organization for an average tenure of 18 years. That’s more than three times the US national average.

For instance, one alum whose passion was to “more directly impact the lives and health of clients” avoided leaving his pharmaceutical company by transitioning to a client-facing role. Knowing what was meaningful to him allowed him to stick around and find his “core purpose within the same company.”

In ways small and large people reaffirm their engagement at work every day. Our commitment to our organization fluctuates from moment to moment, including small interactions that tell us how invested the organization is in our growth, how much we can learn, how valued and rewarded we are, and the degree to which we serve something more meaningful.

In the moments when we feel challenged and purposeful our brains likely produce dopamine, the chemical linked to motivation. While flexible work schedules and nice office perks might keep us happy in the short-term, it’s unlikely they have the same effect. True motivation and engagement are fostered through work itself.

This echoes something my friend and colleague Peter Senge wrote in his book The Fifth Discipline. He defines “building a shared vision” (the byproduct of which is purpose) as “a practice of unearthing shared pictures of the future that foster genuine commitment and enrollment rather than compliance." Put another way: you can’t feign engagement and you can’t bully people into sticking around. If you want people to authentically engage -- particularly talented Millennials, a group dominated by purpose-seekers but lacking in loyalty - you must enroll them with purpose. 

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Authors

  • Daniel Goleman

    Contributor, Korn Ferry Institute