The conductor stands in a full concert hall with his orchestra in front of him. Every single violinist, bass player, and all others are looking at him, waiting for his guidance. But as he looks down on the stand, his baton is not there. Soon the violinists are getting too loud, and the bass players hardly can be heard. Without his baton, the conductor struggles to align everyone, and the audience grows unhappy.
A lot of business leaders must feel something like this when they try to run a company nowadays. In the past, they have focused on one or two KPIs, mainly profit margin, which could be compared to conducting a soloist. But because all kinds of stakeholders (audience) now are asking for additional, non-financial KPIs like the company’s impact on the environment and society, business leaders need to align all activities and all employees of the company to one overall purpose. So, they end up conducting an orchestra without having sufficient tools (or a magic baton) available to really run their whole organization with purpose.
What is purpose?
For some, “purpose” is about doing good. Companies want to have a positive impact on society, on the economy, and on the environment. But being truly purpose-driven requires leaders to ensure all employees understand the company’s strategy and understand how their individual jobs contribute to the organization’s goals and its purpose. In an orchestra, the conductor gives each musician guidance on their role and how they will contribute to the beauty of the overall performance. Employees need the same – a roadmap to help them understand how their work helps achieve the company’s purpose. But to provide employees such a roadmap, leaders need sufficient tools to track and align all purpose-led activities of the company.
Why purpose matters
The data is clear – purpose does matter to the audience: 89% of clients surveyed believe a purpose-driven company delivers the highest quality products and services. Another study shows that 75% of companies with a clear sense of purpose are the new leaders in customer retention, with 75% retention rate.
But purpose also matters when looking at the orchestra itself: Purpose-led companies tend to have employee engagement levels that are 1.4 times higher, and those employees are three times more likely to stay than employees whose companies are not purpose-driven. A study covered in The Harvard Business Review goes beyond that, showing that employees who are inspired by leadership focused on the company’s purpose demonstrate more than 1.5 times higher productivity levels than those employees who are only engaged. So it is no surprise that purpose-led companies outperformed the S&P 500 by 10 times between 1996 and 2014.
Data is the conductor’s baton for leaders
The available data from these studies and others, like the yearly Fit for Purpose Index, make it clear that purpose-driven business is increasingly important. The question now is: What data and tools will leaders need to really run their businesses with purpose?
This article originally appeared on Digitalist Magazine, in the Improving Lives section. See here.