Aligning Purpose with Business Outcomes: The Core of Purposeful Leadership
In the last ten years, corporate purpose has become a key focus in economic and social discussions. In France, the Pacte Law and the establishment of mission-driven companies have brought this issue to the spotlight. However, as Rodolphe Durand, Professor of Corporate Strategy at HEC Paris and holder of the Joly Family Chair in Purposeful Leadership, notes, “On average, 80% of employees do not know their company’s purpose and cannot express it.”
Professor Durand recently conducted a Masterclass on the different facets of corporate purpose and its influence on organizational performance. Let’s delve into the idea of purpose and how to integrate it at every level of the company to enhance performance.
Corporate Purpose: A Universal Concept with Diverse Formulation Approaches
Corporate purpose outlines a company’s essential mission that extends beyond profit-making. It expresses the organization’s role in society and its non-financial goals. Rodolphe Durand states, “Corporate purpose can be understood as the ‘why’—the fundamental reason for an organization’s existence that goes beyond financial results.” Although the definition may appear straightforward, defining a purpose can be difficult for businesses, particularly because the methods and their effectiveness differ. Rodolphe identifies four approaches to crafting a company’s purpose, with some being more successful than others.
The Most Human, Internal Approach: This method focuses on engaging teams directly to co-create the company’s purpose. It often involves workshops and seminars without relying on external technological tools. “I recall a specialized distributor operating in 17 countries that included all 17 in the process of defining their purpose,” says Durand.
The Technological Approach: In this method, the company collects keywords and feedback during workshops, which are then analyzed using Natural Language Processing (NLP) tools. These tools help uncover recurring themes in stakeholder comments.
Consultancy Firms: Consultants gather relevant data by surveying customers, suppliers, and analyzing social media to gain insights into how the company is perceived.
Communication Agencies: This approach, which Rodolphe Durand critiques, involves collaborating with an agency and a select group of executive committee members (ComEx). The downside? It may lead to a disconnect between the official narrative and the everyday experiences of employees.
According to Professor Durand, “To adopt a purpose-driven approach, you need to assess your social environment, whether organically or through technological means, with or without external assistance.”
Like formulating corporate purpose, its implementation can also be complex. This complexity arises because the process can vary in commitment levels across different organizational hierarchies. Research from both academia and practitioners shows that the perception of corporate purpose tends to diminish as you move further down the organizational structure.
Top managers are able to articulate the purpose and its different aspects, creating rhetorical and narrative connections to performance.
“He confirms that misalignments are estimated to lead to a 30% reduction in performance benefits.”
“More importantly, if you assert an ambitious goal without supporting it with action, it may provoke negative reactions and even sabotage, particularly from middle managers dealing with conflicting pressures.”
Impact on Economic Performance
The relationship between corporate purpose and economic performance isn’t always clear-cut. “Research indicates that, on average, a purpose-driven business does not significantly impact economic performance,” says Durand. But why is that?
“While many purpose-driven companies achieve strong performance, there are just as many that use purpose as a rhetorical device without truly integrating it into their practices and consequently do not outperform.”
Several factors account for these findings, including the diversity of implementation practices and differing levels of employee engagement.
Nonetheless, having a clear purpose can enhance engagement, value alignment, cohesion, and employee satisfaction, all of which can contribute—both directly and indirectly—to a company’s overall success. Under the right conditions, the financial and non-financial impacts can be magnified. Ultimately, the effectiveness of purpose hinges on how well it is integrated, embodied, and harmonized throughout the organization. To achieve this, companies can adopt Purposeful Leadership, which focuses on a purpose-driven leadership model that fosters collective action and creates a competitive edge.
Purposeful Leadership: Aligning Purpose and Performance
Rodolphe Durand has focused his research on Purposeful Leadership for years. His Purposeful-Based Leadership method centers on aligning corporate purpose with business performance, particularly by shifting from strategy to impact. When discussing how to effectively align purpose with performance, Durand highlights the importance of value embodiment, autonomy, feedback culture, and recognition. He also points out that a specific approach is needed, grounded in seven key levers:
Coordination: The first lever to collectively accomplish missions that will shape the company’s and society’s future.
Legitimacy, Autonomy, and Resources: These performance enhancers empower teams to take ownership of challenges, make informed decisions, and explore innovative solutions.
Innovation and Trust: These elements promote openness to diverse perspectives, encourage bold thinking, and facilitate action while remaining responsive to customer needs.
You (the individual): Central to the model, each employee is encouraged to take risks and commit to ongoing learning.
Rodolphe Durand shares this methodology with board members, CEOs, HR directors, and leadership development executives who are looking to boost organizational performance.
To delve deeper into Purposeful Leadership, explore the program “Aligning Corporate Purpose with Performance,” led by Rodolphe Durand. You’ll learn how to transform each lever of impact into actionable steps and create a customized action plan for your company.
Join us on November 7th for two days of training aimed at “making purpose tangible and inspirational,” featuring Hubert Joly, former CEO of Best Buy, and Antoine Frérot, Chairman and CEO of Veolia.