The costs of getting purpose wrong
The Economist recently carried out some interesting research amongst executives in across the globe (1417 of them, in 103 countries, a third of them in C-suite role). They discovered that 70% agreed that ‘operating with social purpose’ was important for their company and 48% believed that businesses operating with a purpose beyond profit actually end up gaining a ‘financially competitive advantage’ in their markets.
These results are not surprising given that 70% of the same respondents said that it was a factor them personally when they choose where to work. This impact rises significantly amongst women: 87% say it is a factor when choosing their next employer and 62% of women agree that companies operating with social purpose have a financial competitive advantage.
According to research carried out by Oxford Economics, the average cost of hiring a new employee in the UK is more the £30,000 – once you take into account the cost of lost productivity, staff time required for the hiring process, and advertising or recruitment costs. Add to this an increased focus on diversity and inclusion amongst investors and consumers and it is clear that companies need to be better at articulating their purpose if they want to attract and retain the best – and most gender-balanced – workforce, and maintain their bottom line. Businesses obviously aren’t unaware of this trend. As an example, another piece of recent research – this one from Centrica Business Solutions – found that 36% of businesses have changed their brand positioning to be more environmentally friendly over the past year.
A big question for brands that are moving towards a more purpose-driven model is when to start talking about what you are doing. 36% of Centrica’s respondents may have shifted their brand positioning – but only 13% fell into the best performing category on sustainability. There are strong arguments for starting to talk about changes to your approach early in the process. This helps employees, customers and investors to understand what you are doing and why. But for some organisations it is hard to sound credible until you are at least part way down the road of change. 78% of The Economist’s global executives believe that while many talk a good game they are failing to follow through with the long-term initiatives required to make their stated objectives a reality.
There is no easy answer but the best way to begin is with a full understanding of your existing reputation and audiences. Only then can you map out a credible path towards both achieving your purpose and gaining credit for it.