Fun fact: the most profitable are generally not the most ‘profit focused’. Why? Because they prioritise purpose over financial gain.
‘Purpose’ has become somewhat of a buzz word over the past few years. Understandable really, as the world shifts in the way we view companies and how they handle sustainability and treat their employees. Thirty years ago, though, it was a different story.
No one would have known what the purpose over profit paradox is, let alone care.
Companies were out to increase the bottom line at all costs. Sustainability, occupational health and safety, and employee wellbeing were not at the fore – in fact, these were secondary to profit margins for many companies.
Fast forward to 2019 and the tables have turned.
What is the ‘purpose over profit’ paradox?
Here’s the thing: if a company focuses purely on the profit, they won’t be very profitable. Money isn’t a ‘cause’; it doesn’t speak to customers, it doesn’t inspire. For consumers, they want to support a company that does more than just sell goods or services. They want to know that their money is supporting a cause.
Sure, it seems strange that the most successful companies aren’t actually putting their bottom dollar line first. But when you really think about it, it makes complete sense.
Nike is an excellent example. Twenty years ago, the company’s brand was tarnished by reports of unethical labour practices. Consumers voted with their feet and boycotted the brand. Not only did the CEO at the time admit to the woeful labour practices, but he took steps to address the issues. From that point on, the CEO made a point of showing that Nike would be transparent and proactive in ensuring that their factories were safe and had redressed unethical labour practices. After years of effort, the declining sales turned around and the company controls 62% of footwear brands in the US.
In Australia, the rise of social enterprises such as the Thankyou company and Who Gives a Crap are prime examples. Consumers support these companies because they champion a cause, and they shout loudly from the rooftops about how they’re doing it. Thankyou commits 100% of profits to end global poverty. Who Gives a Crap donates 50% of profits to help build toilets for those in need and all products are made with environmentally-friendly materials.
And when it comes to working, well, millennials are prioritising more than just their income. They do not want to work for the sake of working, rather they want to feel included, valued and as though they are part of a purpose-fueled organisation which is able to articulate its mission and vision beyond the bottom line. In fact, 77% of millennials have a strong affinity for the charitable sector, proving just how much this generation wants to give back.
So how do you implement a purpose-fueled culture?
1. Bring your vision to the fore
Your vision is your value proposition – what does your organisation offer to employees and customers, and how does your value proposition resonate with your target audience?
Make sure that everyone understands this vision and that it is clearly articulated to your stakeholders and staff alike.
In Australia, Professor Dexter Dunphy has illustrated that highly engaged employees tend to work in organisations which are values-driven and place emphasis on corporate social responsibility. Millennials, who now make up over 30% of the total workforce, want more than just a regular salary. They want roles with purpose, they want to work for organisations which make purposeful decisions with their profits. Deloitte’s survey of millennials in 2016 found that 81% believe “the success of a business should be measured in terms of more than just its financial performance.”
2. Develop a robust corporate social responsibility plan
Engage both your staff and stakeholders in developing a plan that reflects the organisational values and demonstrates the desire to positively impact the workplace and local community.
This not only engages staff in the process, but it also reinforces the fact that the organisation is geared toward social impact, not only the bottom line.
Volunteering days can be a wonderful way to encourage let staff to make a positive contribution to the community. Offer staff the opportunity to volunteer at a local charity or even to donate blood. There is nothing like giving back to increase morale and increase employee engagement.
3. Invest in your people
Remember, employees want to feel like they are working for a company that cares.
When you invest in your employees’ development, you attract and keep all the best candidates, and build a strong work culture. As a result, employees feel valued and are more likely to embrace new and innovative ways of doing things.
For example, at State Schools’ Relief we have implemented staff professional development sessions for everyone together as well as individual work plans where staff can indicate particular areas for development throughout the year. The staff sessions also act as team-bonding exercises.
4. Give your purpose a shout-out
Connect with your clients and customers on social media and tell them about the good work that you are doing. Natalie Nahai, noted in her Give as You Live report that meaningful content is part of the innovation that needs to happen in organisations seeking to engage with their customers.
Post stories of your people and the great things you are doing across your social media channels, so that the message is communicated clearly.
It’s more than just ‘doing the right thing’
Purpose over profit is about more than simply ‘doing the right thing’. Of course, ensuring your company is caring for employees, prioritising environmental and social impact, and standing for a cause is an excellent way to conduct business. But a business is a business, and it still has to make money. Put financial gain first though, and you’ll falter. Show the word how you’re prioritising purpose, and the customers will come knocking.
Sue Karzis is the first female Chief Executive Officer of State Schools Relief, a Victorian based not for profit organisation that supports the needs of financially disadvantaged school students by providing them with new school uniforms, footwear and educational resources during times of vulnerability. Since her appointment, Sue has propelled the charity to record numbers of impact, assisting over 56,000 financially disadvantaged Victorian school children in 2018 alone and has set the goal of positively impacting 70,000 underprivileged Victorian school children in 2019.