In the second of two articles, Brendon O’Connor shares his view on what really matters right now.
Last week I reflected on the importance of culture in building trust and reputation and how we have been thinking about this in our own firm. A critical component in building culture is also knowing why your organisation exists and more particularly, having your people know why their organisation exists.
Business is facing a time of profound change, with COVID-19 amplifying the challenges of climate change, inequality and social well-being.
Economic indicators like GDP, unemployment and inflation have appeared to be going well. But social indicators have moved in the wrong direction, as for example with housing affordability, mental health and inequality posing bigger challenges.
It has never been more important for your team to know why the business they work in exists. Economic and financial outcomes are vitally important, but increasingly not the key reason people commit to a business (including shareholders).
Is it acceptable to earn a profit while passing on a burden to others by polluting a river or exploiting employees? Most people would answer no.
Is the sole aim of business to make a legal profit? If you answered no to the first question, it is difficult to answer yes to the second.
Academics like Professor Colin Mayer, of the Saïd Business School at the University of Oxford, speaking at the Institute of Directors New Zealand Conference (May 2021) and business leaders like Mark Carney, former Governor of the banks of Canada and England (BBC Reith Lectures 2020) say the primacy of shareholder returns is an outdated construct that was only ever really prominent over the last 60 years.
Go all the way back to the godfather of economics, Adam Smith, and you see that until the mid-20th century, firms had a more connected place in society, a balanced view of stakeholder needs. Profit was a means to an end, not the end in itself.
If you are of a generation that struggles to accept this, think forward to the expectations of the generations now preparing to succeed you as leaders, colleagues, and customers. What will be important to them when they buy services, when they decide who to work with, when they make investment decisions?
It won’t just be what is in it for them financially. Organisations not attuned to this will lose ground in the contest for customers, talent and capital.
At SenateSHJ, developing clarity on our ‘why’ began with these questions:
- What do we love doing?
- What are we really, really good at?
- What do we contribute to society and our communities by doing our work?
- How do the answers above connect to the business of the business?
As specialists in communication, reputation and change, this made us look at our role in helping clients communicate, and how success in this is also very often essential to positive progress and change.
For me, purpose is a core belief or cause we gather around. It is about our contribution beyond our own objectives. It is precise, grounded and relatable. And it is good business.
Numerous study’s report that genuine organisational purpose can improve competitiveness and financial performance. The Gartenberg study (USA) included 500,000 people across 429 firms from 2006 to 2011 and found a positive impact on financial performance. This study stressed that the purpose must be communicated with clarity and consistency – which is where we come in.
*In mid-August SenateSHJ was named best mid-sized firm in PRovoke Media’s Best Agencies to Work For in Asia-Pacific 2021.