The power of purpose: What is organisational purpose, and how can it benefit your company?

Purpose - what exactly is it, and why is it so important? Being driven by purpose gives meaning not only to individuals but also to businesses. It is understood that a strong culture and clear purpose make a business appealing to customers, employees, and investors.

What is purpose?

Purpose fundamentally involves identifying why your organisation exists and effectively communicating that message. Purpose-led companies stand for something greater than profit and hold themselves accountable. 

Identifying and clearly articulating your company's broader mission can unlock a range of benefits that go beyond financial success. A well-defined purpose can inspire and engage employees, create stronger customer loyalty, and build trust with stakeholders. It also helps create a lasting positive impact on society, setting your company apart and allowing it to thrive by contributing to something greater than profit alone.

Drives innovation & growth

Purpose is not just a feel-good idea; it is a driver of accelerated growth. When a company’s actions are aligned with a deeper purpose, it’s more likely to connect with its target audience and achieve significant growth. A study by Harvard Business Review found that companies with a clearly articulated and widely understood purpose experienced stronger growth than those without one. Specifically, 52 per cent of purpose-driven companies saw growth exceeding 10 per cent, compared to just 42 per cent of companies lacking a clear purpose. 

Additionally, purpose-driven organisations achieved greater global expansion (66 per cent versus 48 per cent), were significantly more successful in significant transformation initiatives (52 per cent versus 16 per cent) and launched more products (56 per cent versus 33 per cent). This demonstrates that a well-defined purpose not only fosters growth but also drives innovation and adaptability across the business.

Improves health & resilience

Purpose begins with people, and its significance extends across many aspects of life. For instance, a study published in Psychosomatic Medicine revealed that individuals with a stronger sense of purpose experience a lower incidence of cardiovascular disease and reduced mortality rates. 

Similarly, research from the University of Pennsylvania showed that people with a clear sense of purpose were less likely to feel lonely and were more inclined to make healthier lifestyle choices, particularly during the COVID-19 pandemic. These findings highlight how a greater sense of purpose can improve mental well-being, physical health, and resilience.

‍Boosts employee experience & performance

High-performing teams thrive on a clear sense of purpose. When your team understands and believes in your business's larger mission, they become more motivated, productive, and inspired. A study revealed that employees at purpose-driven companies found their work to be more meaningful, creating deeper engagement and satisfaction.

Additionally, research from the University of Sussex showed that when leaders clearly communicated a sense of purpose - through a strong vision, commitment to stakeholders, and solid ethical values - their teams reported higher levels of happiness and productivity. 

Attracts talent

Passion, fulfilment, and commitment are intrinsic qualities that set purpose-driven companies apart, making them highly attractive to both current and prospective employees, according to research by CMI -  The What, The Why And The How of Purpose: A Guide for Leaders. Interviewees agreed that top candidates are drawn to organisations with a broader societal impact, especially when comparing offers from companies of similar size and compensation. The 2017 Deloitte Millennial Survey found that young people seek to address major global challenges through their work.

Builds strong customer and stakeholder relationships

According to insights from the CMI study, companies that provide a purposeful and trustworthy experience are more likely to attract engaged customers and lucrative partnership opportunities with other purpose-driven organisations. Interviewees in the study emphasised that a clear purpose communicates to all stakeholders the company’s commitment to addressing pressing global challenges, such as climate change. 

This alignment fosters greater customer loyalty, increased spending, and heightened brand awareness, as supported by Havas’s Meaningful Brands report. The CMI study also indicated that strong customer-company connections lead to additional opportunities, including cross-category sales and higher renewal rates.

How does a business become more purpose-led?

A fundamental element in achieving a successful purpose-led transformation is the identification of an organisational purpose that is not only inspiring, practical, and authentic organisational purpose. This initial step is crucial for turning purpose-led ambitions into reality and driving meaningful change. 

Two essential principles should be considered to ensure that an organisation’s purpose is effectively established. 

1. First, the purpose statement should be co-created, meaning that leaders must actively engage with their teams throughout the development process. By incorporating diverse perspectives, they can craft a purpose that resonates deeply and reflects the values of the entire organisation.
2. Second, it is vital to integrate purpose with strategy. A business model that places purpose at its core will facilitate actions aligned with that purpose, ensuring that the organisation's efforts are cohesive and impactful. By adhering to these principles, organisations can build a strong foundation for sustainable, purpose-driven transformation