Let’s talk about corporate purpose - Why it matters to your reputation
What could possibly take 50% of the CEOs time today? Well, according to the worldwide management consulting firm, McKinsey & Company, that’s “finding what purpose is”.
But purpose is way more than just an imaginative search. Last year, 181 CEOs of some of the world’s largest organizations including Amazon, Apple, Coca Cola, Johnson & Johnson, PepsiCo, and Walmart, just to name a few, signed a new Statement on the Purpose of a Corporation. With this, they committed to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities, and shareholders.
Why is purpose so important today? Research shows that a strong company purpose – that is a company’s core mission that results in a positive impact on the world -, can lower the cost of capital, increase the employees’ engagement at work, de-risk transitions, reduce operational costs, and boost additional growth by 10-20%.
Hence, it comes with no surprise that more and more organizations are embracing sustainable business strategies anchored to their purpose as the number one means to ensure long-term business success.
If anything, 2020 has further cemented stakeholders’ expectations for corporations to use their influence to help building a more sustainable future, and today small and large organizations are therefore homing in on purpose to strengthen their reputation too.
Yet, with this comes the latest addition to the list of shortsighted publicity exercises that are the perfect recipe for reputational damage: purpose-washing.
To avoid it, purpose cannot stop at a nicely written mission statement. Before communicating it publicly, reputation managers must ensure to have the purpose fully embedded in their organization’s DNA, its decision-making processes, and its strategy.
Measurable commitments, both short and long term, must be outlined and linked to ESG – environmental, social, governance – goals. These latter, alongside the company’s reputation, must also be continuously monitored and checked against competitors, while an honest dialogue with key stakeholders should be kept wide open.
Purpose can go a long way towards identifying the areas corporates should focus on and invest in. By understanding what really matters to their stakeholders, and where their organizations can have the biggest impact, today reputation managers can play a crucial role in bringing about positive change through an authentic purpose-led narrative.