People Over Profits: Why Corporate Purpose Matters & How to Adopt a Stakeholder Mindset

Purpose is a topic I often discuss in my keynote speaking, and deliver training on to companies around the globe. In recent years, we’ve seen a shift in corporate thinking towards more meaningful stances and more human-driven priorities. Defining corporate purpose is no longer something that can be overlooked or written off with half-hearted or generic attempts.

So what does corporate purpose really mean, and how can you define yours?

 Why Purpose Matters

A business is not a living person, but people are at its core. Whether they are a publicly listed multinational or a small shop on the high street, businesses big and small all have stakeholders to serve.

Today’s customers are much more conscious about who they choose to do business with and what causes they value. As a result, we’re seeing a shift in the capitalistic mindset from profits to people.

Having a clear corporate purpose helps businesses navigate this space effectively and establish a stance. It acknowledges that the organisation has a responsibility to society and is willing to look beyond itself. It also tells internal and external stakeholders exactly what they can expect from you as an organisation.

I should clarify that purpose is not the same as values. In a great think piece for Inc, Mabbly founder Adam Fridman starts off so simply and hits the nail right on the head: “Purpose Inspires. Values Guide. Habits Define.” Your company’s purpose encompasses your “why” and establishes the direction the organisation would like to head in moving forward. Your values outline how you will prioritise and achieve your purpose, and guide decision-making and everyday activities. Purpose sets the destination, and values provide the map to get there.

How to Get Purpose Right

Hopefully by now you’re grasping just how important corporate purpose is for an organisation. Therefore, it’s crucial to get it right.

There’s a great TEDx Talk that Simon Sinek delivered ten years ago where he discusses how the world’s most influential leaders and brands inspire action by starting with “why” they do what they do. If you’ve not seen it before, I highly recommend watching it. Everything Simon says in that video brilliantly sums up how impactful purpose can be when it’s done properly.

So why are you in business? Why does your organisation exist? As a business, you’d be lying if you said profits weren’t a driver. It goes without saying. Obviously, you wouldn’t be trading if you weren’t looking to make money. But in this wave of new capitalism, businesses need to shift to a stakeholder perspective. Your corporate purpose needs to dive deeper. Why do you provide your customers with the products you sell or the services you offer? Why do you participate in certain initiatives, or support certain causes? Why do you care?

Once that’s all clearly defined, it’s time to prioritise. Now that you know “why” you do what you do and have established the ideal for the type of organisation you’d like to become, you need to actually practice what you preach. This article published by McKinsey explains: “A corporate purpose is a commitment from the company to its stakeholders; its legitimacy derives from how the company embeds it and is seen to ‘live’ it.”

Sure, saying you’d like to help close the gender pay gap and promote greater equality because your organisation believes all people should be treated and compensated fairly sounds great. However, if you’re saying that in your statement of purpose but continuing to pay your female employees less than their male counterparts, or your boardroom is not diverse, then you’ve completely failed. Purpose should be lived out every day in the activities of the company. No exceptions.

 Living Your Purpose

That same McKinsey article makes recommendations for embedding purpose into your organisation effectively. Essentially, this should happen in three key areas. I’ll take you through all three, and then provide a hypothetical example of what this might look like. 

The first area to embed purpose is within your ways of working. The ways you recruit, hire, incentivise, measure the successes of, and set goals for your employees should be guided by your purpose. How you treat your internal stakeholders really matters in a “people over profits” mindset, and the culture you create can make or break your attempts to achieve your overarching goals.

Next are your core business activities. Are the activities of your supply chain in line with your purpose? What about the partners you work with? How are you interacting with your customers? Activities at every level of your business from production to marketing should be executed with your purpose in mind.

Third and finally, purpose needs to become an integral part of the organisation’s strategy. Purpose should guide decision-making regarding everything from product portfolios and investments to partnerships and business priorities. Sometimes, trade-offs and sacrifices will need to be made, as senior management will likely face tough choices and need to decide what’s best in the short and long term.

Now let’s break down what this might look like with an example. Imagine a clothing company whose purpose is to make high-quality eco-friendly clothing more accessible. How might they embed this purpose into those three core areas? This purpose suggests a few essential values: quality, sustainability, and inclusivity. These values derived from the company’s purpose

This purpose and these values will impact the way the company hires and treats its employees. Their store staff may be made up of individuals of different races, gender identities, or body types who all have their own unique style instead of suiting a designated “look.” The company’s culture should be supportive, welcoming, and fair.

To suit its purpose, the company’s materials might be sustainably sourced whenever possible. They may introduce initiatives to conserve energy, reduce waste, and minimise environmental impact in all of their facilities. Perhaps they will choose to partner with firms who are also dedicated to sustainability. They certainly would not produce their clothing in facilities with poor working conditions and unfair labour standards. Their adverts and social posts would feature diverse individuals in line with the corporate value of inclusivity.

Finally, at the strategic level, this purpose should guide all decision-making. This particular company may choose to only use textiles produced from recycled materials, or to only use vegan leather for their shoes. They may choose to produce a wider range of sizes to cater to more customers. The company’s board may take a lower salary so that their people can be paid fairly and their prices remain reasonable.

Corporate purpose can no longer be ignored. It's not a throw-around slogan with no heart behind it, but instead a company’s commitment to its people and to society as a whole. When a company is able to drill down into its “why” and operate from there, everyone benefits in the long run. 

If you’re looking for guidance with identifying your organisation’s corporate purpose and embedding it into your practices, get in touch! You can view an overview of our consulting services here.