The Return in HR from Purpose-Focused Organizations

By Nikos Mourkogiannis

During my 30-plus years of consulting with major organizations, I have met with many human resources executives. They welcome the impact that attention to Purpose within their corporation has on the work they do within it. I am told how Purpose makes the issue of recruitment and also retention of top performers a more manageable task. They thank me for how it facilitates the empowerment of managers and the employees who report to them. There are companies that suffered from disengagement and a change in corporate culture clarification of Purpose brought about a significant level of engagement and increased productivity.

Given the impact that Purpose has on the workforce, many HR executives also find themselves members of the strategic leadership team, something that they have wanted for many years.

Recognition of Purpose’s importance helps organizations acquire, deploy, develop, and retain its workforce in an environment of intense competition for talented employees, and also recognize the contribution that HR can have on companies’ bottom lines.

What Is Purpose?

To understand the impact that this thing called Purpose has on human capital, you need first to understand what it is. And to best understand Purpose, it is important to appreciate what it isn’t.

For instance, Purpose isn’t another word for mission. Nor is it an alternative approach to strategic planning although it has been found to clarify the process of planning and close the strategy-execution gap that many organizations suffer from.

Purpose is the goal of the organization; that is, it is the reason why a particular group of talented people come together doing particular things. By that, I am not referring to product manufacture or service offerings. Those are the things that the company does to satisfy shareholders and customers. I am looking at the bigger picture, answers to questions like the following: Is the organization here to discover new inventions? To increase people’s happiness? To create quality? To control the direction of our industry? Or for some other reason?

Purpose may change over time with industrial trends and with new leaders, but once delineated Purpose can be a call for action that leaders can use to stimulate staff to act consistently and decisively. It can trigger innovative thinking and a sense of teamwork. In economic downturns, it has the power to bring an organization together and focus all effort in a single direction. While having a Purpose is important to all companies, it is invaluable to those that suffer from complacency or financial shortcomings, enabling top management to rally the organization’s staff around and clarify the company’s vision and overcome lack of trust from previous years of unfulfilled promises and staff cuts.

From an HR perspective, it has been found to increase employee loyalty and reduce turnover, build employee trust and raise levels of engagement and job performance, and support empowerment and learning opportunities for managers and their direct reports.

When a company has a Purpose and that Purpose is shared, employees become more committed and loyal. They work hard to make the plans set to achieve that Purpose a reality, thereby closing a serious gap between strategies and execution that existed in past years.

A strategy-execution gap is serious business. According to one study, nearly half of the leaders surveyed (49%) admitted to a gap between strategy and execution. Worse, that same study found that 64% of the leaders interviewed lacked confidence that the gap could be closed. I believe that purpose can help close that gap. I contend that a key reason for the gap is confusion, and a clearly communicated Purpose can put an end to the confusion. Purpose can serve to motivate and direct staff to make the strategies happen and put an end to the strategy-execution gap. Purpose achieves successful strategic execution by making clear to all in the organization where it is going and then, via strategies built around that goal, aligning resources deliberately and consciously to get there.

In essence, there are three key factors important to a company’s success:

1. Determination of Purpose or corporate vision: why you are in business

2. Strategic plans: how you are going to achieve that purpose

3. Corporate behaviors: how are you going to operate (corporate values and policies and procedures, including people management) to achieve strategic plans and thereby achieve Purpose

Ideally, HR executives should be a part of all three steps. They should be members of the top management team that determines the company’s Purpose, analyzing its past and brainstorming opportunities in the future, as well as considering the problems of the present. They should meet with other members of the top team to better understand corporate moral ideas and values, move on to a study of the company’s history, then be a part of the discussion with team leaders about their view of a Purpose, then together take a creative leap to the Purpose, and finally tests that Purpose through metrics and models. Finally, they should participate in corporate strategic planning to ensure that the final corporate strategies will deliver both the Purpose—that is, its goal or the shared recognition of the reason why the company exists—and profits.

My study of companies has identified four Purposes or reasons for people to work together:

Discovery. This type of Purpose involves a love of the new and innovative, and it animates many technological businesses. This doesn’t mean that the organization is constantly changing course. Rather, once the organization has chosen a course and embarked on it, ideally it should commit itself to the pursuit of that course.

Excellence. This Purpose focuses on providing the best possible product or service. Excellence built the great cathedrals of Europe and today’s most successful professional and creative businesses. Apple, BMW, and Warren Buffett’s firm Berkshire Hathaway have all built their identity around the artistry of their endeavors. Organizations that are built around continuing improvement teams also fall into this category.

Altruism. This is the driving force of any organization that exists primarily to help others, like many political parties or most charities. Nordstrom, Hewlett-Packard, and even Wal-Mart have established appeal around the idea that they are, first and foremost, making their customers happy.

LensCrafts is a successful retail eyeglass distributor, but LensCrafters’ employees will tell you that “they help people see better, one hour at a time.” Actually, that’s the company’s Purpose: to offer the gift of better sight. Those who work for the company are taught to fulfill that Purpose.

More recently, as the organization expanded its Purpose to focus not only on helping people see better but helping customers look their best—a Purpose expanded based on customer wants—the organization looked beyond new marketing campaigns and ads. The organization provided training for associates to equip them to achieve that purpose of altruism.

Heroism. This firm sets the standards for everyone else to follow. Heroism resulted in the Roman Empire, Wimbledon champions Serena and Venus Williams, and many spectacular growth companies. Microsoft, ExxonMobil (and its predecessor Standard Oil), and GE have dominated their markets and industries by focusing on their capacity to win every competition.

Consider another example: Southwest Airlines. Asked their company’s business, the organization’s leaders would not describe themselves as being in the airline business. That would be something that narrows the relationship between their organization and their customers as a commercial transaction. It wouldn’t allow either the top management or the workforce to consider the all-important role of the campaigns excellent standards—which is an important factor in the case of Southwest Airlines.

Jim Parker, former CEO of Southwest Airlines, recently wrote a book about his time in the position. Entitled Do the Right Thing, it notes how the company always wanted to remember why (think Purpose) it flew airplanes and that it was its customers who rewarded the organization for the high level of customer service. At the same time that Parker writes about the many physical things that Southwest Airlines did, he attributes the airlines success to its “soul.”

As Parker mentions in his book, the key to Southwest Airlines is its people. “They are dedicated. They are spirited. They understand the purpose of the company and believe in it. They make flying fun for our customers, and they have fun themselves.”

In an interview in MWorld, a publication of the American Management Association, , Douglas Conant, president and chief executive officer of Campbell Soup Company, talked about his company’s Purpose. “It’s hard to get people to think beyond the myriad tasks they are responsible for on a daily basis,” he said. “We know that we are an economic enterprise, and we exist to create value for shareowners. But to do that, we can’t simply focus on the marketplace. We can’t expect to be sustainably good in the marketplace if we don’t have a superior employment experience in the workplace.” This thinking prompted Conant and his top team to create the Campbell Success Model. It reads: “Maximize shareowner value by both delivering superior business performance (Win in the Marketplace”) and delivering superior employment experience (Win in the Workplace).”

Conant continued, “When you translate strategies into reality, it’s all about execution. But execution depends on a sound corporate culture. This is why creating a high performance culture was mission-critical in reinvigorating Campbell…,” said Conant referring to the state of the company when he joined it six years before. The 160-year-old organization had grown complacent and its whole consumer proposition was suffering.

Significant change was needed, and Conant told the reporters that the establishment of a higher purpose and the winning of the understanding of the organization’s employees enabled him to undertake the significant heroic transformation of the business. Conant said, “Employees had heard a lot of rhetoric about how the company had to do better, but nothing had happened over the last four years except the person to the left and, maybe, to the right of them, had lost their jobs.”

The company’s transformation didn’t occur overnight, but today success can be measured not only on the P&L sheets but also in the behaviors designed to engage employees. For instance, to measure success in attracting and retaining multicultural talent, Campbell has created a diversity scorecard that helps it benchmark its annual program, just as an ongoing engagement survey from the first days Conant came to the organization measures employee engagement and commitment to the organization.

From one of the lowest engagement scores among the Fortune 1000 firms surveyed by the Gallup Organization, Campbell now can boast of having ever-increasing engagement numbers and levels of employee trust and productivity. In 2003, Campbell’s overall employment engagement as measured by Gallup was 2:1, meaning for every two actively engaged employees there was one actively disengaged employee. In 2007, that number has risen to 9:1. Among its top managements, Campbell’s 2007 engagement scores are 35:1, up from 8:1 in 2003. For this and other reasons, Campbell was recently awarded the Gallup Great Workplace Award, which recognizes the most engaged and productive companies in the world.

Another organization with a clearly delineated Purpose anchored in Excellence is Becton and Dickinson Company. The medical technology organization’s Purpose is “to help all people live healthy lives.” Toward that, as described in its annual report, the company has set four Core Values:

1. We treat each other with respect

2. We do what is right

3. We always seek to improve

4. We accept personal responsibility

Edward Ludwig, the company’s CEO and chairman, has said, “We believe our performance should be measured based on what our shareholders think about us, what our customers think about us, and finally what our employees think about us. We are constantly looking for feedback to make sure we stay on the right track.”

A review of the many companies that have taken that extra step to define its Purpose shows employee engagement; that is, employees’ willingness to put discretionary effort into their work in the form of extra time, creative thinking, and energy. Empowered by strategic alignment, these employees are not doing this level of work because they have to do it but because they want to do it. And their internal motivation is contagious to others and creates a culture of innovation and accountability.

HR executives and managers are asked to determine learning opportunities for managers and their direct reports as the companies with a clear sense of their Purpose benefit from their work performance. The learning may take the form of participation in public seminars, on-the-job training, or corporate universities that provide training targeted to the strategies geared to the companies’ Purpose. HR Departments find themselves responsible for seeing that their company’s people are able to grow with their company.

Mentoring programs seem to be another product of the positive work culture in companies that have a sense of Purpose. Baby Boomers help Generation Xers and Ys address job and career needs while Baby Boomers get a great sense of satisfaction derived from sharing their job experience. Problems associated with multigenerational workforces are less of a problem in many companies that have looked at their past, present, and future in light of that Purpose. Likewise, global diversity is less of a problem.

Most organizations invest a great deal of time and money hiring and training young employees only to find that they move on after a year or two. A good salary, the likelihood of bonuses and pay increases, promotions, and long-term job security are all used to entice employees to join and stay. But these aren’t always found to be enticing. Actually, a company with Purpose finds itself able to attract, motivate, and maintain these younger workers as needed. One reason is that it often involves learning opportunities for the Generation Ys’ personal growth.

And some Purposes are so motivational that new hires find themselves jazzed up, eager to accomplish the goal set. They are eager to work hard to make the Purpose a reality for shareholders, customers, and themselves.

To be published in HR Management today in 2008

The Return in HR from Purpose-Focused Organizations

john_byrne

2008-06-23

Businessweek