Do employees care about purpose? And does this translate into monetary value?

Earlier this year I was approached to pitch for a $300k-400k piece of work to design a customer-led strategy for an organisation whose values didn’t align with my beliefs and EY’s purpose "Building a better working world".

What they were asking for wasn’t illegal or improper. But what the company stood for just didn’t sit well with me. I politely declined.

Three months later, the manager who had invited me to bid for the work called to say she’d quit and joined a different industry. Our interaction had got her thinking. She ultimately opted for an organisation with a different set of values whose purpose was more aligned with her own.

We know employee attrition rates are lower in purpose-led organisations though this isn’t necessarily the case at first. Initially, attrition rates can actually rise as employees who feel uncomfortable with the new focus self-select out.

Unilever is a great example of this. At the beginning of its purpose-led transformation in 2010 to build sustainable brands, Unilever CEO Paul Polman weeded out the naysayers by asking employees to discover their personal purpose. Some found this process so illuminating, they quit their jobs and went on to live their purpose elsewhere, where it was better served. What this achieved for Paul was a more highly focused workforce that believed their personal purpose could be fulfilled working at Unilever. Employee engagement rates soared.

Today Unilever maintains high engagement scores and low attrition rates. People are paid competitively but stay because they feel strongly about what they are doing and what they believe in.

All this takes time. You don’t just flick on a switch and suddenly you’ve got your employees and external stakeholders on board as advocates for your business. It’s not something you buy and install – it’s a way of working, a philosophy that’s enduring.

At our recent EY FutureRealised event, our Purpose keynote, Lisa MacCallum, Founder of Inspired Companies, summarised it beautifully by stating "building purpose-led companies requires a new type of Chief Executive, one who is focused on the C.E.O actually in charge - Customers, Employees and Outsiders. If you don’t have your customers, employees and outsiders on board today, you have a truly uphill journey ahead of you. But it’s worth the effort. Once they’re onboard your employees, customers and outsiders become your greatest champions. You don’t have to defend yourself – they do it for you".

Compare the way the market treated United Airlines after it dragged a passenger from a plane due to overbooking, to the way customers viewed Southwest Airlines when one of its passengers died after being nearly sucked out of a plane. United’s fallout snowballed into a $1 billion drop in market value and a damaged brand amid a barrage of negative tweets. Conversely, Southwest Airlines – a purpose-led airline – received millions of supportive tweets. Its advocacy and customer base were so strong that its share price remained largely unchanged. This base can become more powerful than the company itself. 

In the same way, customers and other “outsiders" (including singer Bono offering to write a song) collectively rallied around Unilever to successfully ward off a hostile takeover by Kraft Heinz.

As a concept, purpose-led companies are not new. They’ve been around since the 1900s. From the day Walt Disney founded Disney in 1923 his purpose to Create Happiness was clear and remains the bedrock of the company today.

There has been a sharp change in consumer preference towards businesses that are authentic and walk their talk. Millennial's and Generation Z, in particular, will go out of their way to buy brands that stand for something, and are true and authentic. And for the organisation, this pays off.

Take, for example, online-only toilet paper supplier, Who Gives a Crap, who donates 50% of its profits towards building toilets in third world countries. The company has experienced phenomenal growth with over $1.8M now donated to building toilets for those in need. Last year they won the Canstar Blue award for the highest customer satisfaction for toilet paper, knocking market leaders Kleenex, Sorbent and Quilton out of the top spots. No flash marketing campaigns – just word of mouth.

Tomorrow: The power of purpose in action.