Do You Have an Organizational Purpose? Is It Mere Propaganda?

In a recent blog about CEO challenges and opportunities in 2022, the first opportunity listed was the opportunity to “make a difference.” As stated in that blog, “Employees, customers, and investors want to associate with organizations that serve a larger purpose (emphasis added) than may be expressed in their mission statement. They want to be associated with organizations that live their values and have a commitment to societal responsibilities, environmental stewardship, and equity and inclusivity.”

In 2019, The Business Roundtable (BRT) issued a “Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders–customers, employees, suppliers, communities and shareholders.” It thus redefined the purpose of a corporation as participating in stakeholder capitalism, putting the interests of employees, customers, suppliers, and communities on par with shareholders. 

There was some subsequent criticism of the degree of follow-through on this commitment by some members of the BRT. In 2022, this commitment is taking on significant importance with a growing number of organizations in the BRT and beyond.

To show a commitment to a larger purpose, many organizations are now developing statements of purpose that accompany their mission, vision, and values. As with mission, vision, and values, purpose is meaningless unless translated into action. As with mission, vision, and values, purpose is detrimental to the engagement and loyalty of stakeholders, unless the purpose is incorporated into organizational strategy, goals, and metrics.

Incorporating Purpose

The topic of incorporating purpose into strategy (and action) was addressed by Graham Kenny in the May/June 2022 issue of Harvard Business Review. As reported in other studies, he points out that companies with a clear purpose and deployment of that purpose through actions do better than those without such a commitment. As an example, he discusses Woolworths, Australia’s largest supermarket chain. In 2017, Woolworths provided two very different statements of its corporate purpose. One spoke to “adding quality of life” for its customers and people. The other stated, ”We are focused on shareholder returns through the effective deployment of capital and ensuring we deliver on our Group targets.” Today, Woolworths' stated purpose no longer mentions shareholders;  it is “to create better experiences together for a better tomorrow.” This statement is a guide for Woolworths’ strategic planning, and the business now has a broad range of related metrics across its stakeholder groups of shareholders, customers, suppliers, employees, and the community.

At the Consumer Goods Forum in Dublin in June 2022, the consumer products division chief of L’Oreal reported on its sustainability goals, which are set out to 2030. As of today, 70% of the PET plastic that the division uses worldwide is recycled and 25 of its 44 manufacturing plants are carbon neutral. By 2030, the company intends to use recycled and reused water for all its industrial processes.

Baldrige Excellence Framework and Purpose

Societal contributions is one of the Baldrige core values. The Baldrige Excellence Framework® booklet description of the core value states,

• Item 1.2 of the Baldrige Criteria for Performance Excellence® (PDF) is entitled "Governance and Societal Responsibilities." It asks how societal well-being and benefit are incorporated into your strategy and daily operations.
• Item 2.1, "Strategy Development," asks how changes in your external environment are considered in your strategic planning.
• Item 5.2, "Workforce Engagement," specifically asks about workforce equity and inclusion for a diverse workforce. The Criteria also ask about how you track progress on achieving strategic plan objectives and the results for achieving those objectives.

Given the changing stakeholder demands and the greater commitment to more inclusive purposes, future revisions of the Baldrige Excellence Framework® might provide greater emphasis on societal well-being as part of remaining at the leading edge of validated leadership and performance practice.

Is a Purpose Statement Necessary?

I believe a purpose statement can provide great focus and be a powerful engagement vehicle for an organization’s stakeholders. That said, I think commitment to “making a difference” is what really matters. Instead of, or in addition to, a purpose statement an organization could include its purpose in its vision statement or make it a strategic pillar with associated strategic objectives, action plans, and metrics.

Real companies are doing real good! Each organization must craft its own path to its purpose and that purpose’s deployment through strategy, goals, and metrics. The value comes in what your organization actually does. So please consider your purpose today!
 

Baldrige Excellence Framework®

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