Today’s workforce want more from their employers than a paycheck alone, much of which is the desire to engage in gratifying work defined by a clear company purpose that connects their efforts to the impact they have on both the business and its clients. Having a sense of purpose creates a company culture that focuses on the big picture rather than the 9 to 5, and can increase employee productivity, motivation, and overall satisfaction as they understand how their work helps others.
The Need for Company Purpose
Economists found an issue in the rudimentary employee-employer relationship, which they coined the “principal-agent problem.” Employers play the role of “principal” while employees are the “agents;” together they’ve entered into a contract that states that the agent will work for the principal in return for an agreed upon amount. Simple enough, however, the principal overlooks the contract’s underlying problem in that the agent has only agreed to give as much effort as is required to receive his or her paycheck.
Since any additional effort goes unrewarded, the agent sees no reason to outperform expectations. This can be overcome with contractual incentives and control systems, but that brings rise to other issues, like the feeling of being micromanaged. A better way to get the most out of employees is through company purpose — those that feel they’re making a positive impact are more willing to give freely of their talents.
Benefits of Company Purpose
In addition to boosting employee morale, company purpose can positively impact growth. A study of 500,000 people in 429 different firms helmed by business professors Claudine Gartenberg, Andrea Prat, and George Serafeim suggests that company purpose can increase financial performance.
With that in mind, it’s important to understand how your organization can define and incorporate its purpose (if it hasn’t already).
Defining Company Purpose
Defining your company purpose should start from the very beginning: Why was your business founded? What service(s) does it provide? Where would you like for it to be in five years? These are some of the questions to consider and that can help form a sense of purpose.
Think of reasons why you exist outside of the bottom line, and connect those to a greater good by conceptualizing how your business benefits others. Starbucks provides a great example of purpose; their mission is “To inspire and nurture the human spirit — one person, one cup and one neighborhood at a time.”
Incorporating Company Purpose
With your purpose defined, it’s time to pass it on to your employees and encourage adoption and advocacy. Let them know the role your business plays in enhancing the lives of others and the value of their efforts in the form of a company vision statement. Customer success stories can further provide a sense of purpose to your employees by giving real examples of how they’re having an impact.
If your company is suffering from an existential crisis, take a step back and find its purpose. Understanding the role your business plays in the world can invigorate both you and your employees to work harder toward achieving its goals.
Axis41, A Merkle Company, was founded on the belief that growth and profitability of an organization depends on the ability to create lasting and meaningful relationships with its customers. This focus on meaningful relationships has brought meaning to our work, and it shows throughout the organization. Need a little help bringing your company’s purpose to life? Contact us today to get started.