Media Article Link: https://fortune.com/2021/03/09/leadership-corporate-purpose-three-pitfallssolutions/
Introduction
In this critical reflection the author explores the concepts and recommendations raised in the chosen
media article, delving into supporting literature. Core to this reflection is the concept of Corporate
Purpose. A simple definition of purpose given by Gartenberg et al. is “its reason for being”.1
A more relevant definition for the purpose of this reflection, is given by Henderson and Steen as the
firm’s meaning and impact beyond financial performance.2 Often an organization’s purpose along
with its values will be conveyed through a mission statement and values statement.10
In this reflection, the author explains why Corporate Purpose is important in the context of strong
organizational cultures, how it affects employee motivation, and Corporate Purpose in the face of
changing nature of the workplace and providing his own recommendations for embedding an
effective Corporate Purpose.
Media Article
The media article provides broad recommendations for addressing key issues associated with
implementing a Corporate Purpose, while operating in face of today’s societies and their increasingly
heightened expectations of companies.
The article identifies three key issues with Corporate Purposes, these are “Shallow” purpose
statements that show a clear a gap between the statement and business decisions, a lack of
employee buy-in, and poor stakeholder engagement. Essentially the article portrays the failings of a
poor corporate purpose contributing to an organization with a diverse set of beliefs regarding its
purpose across all stakeholders, in other words a weak culture.3
Discussion
An organization’s purpose is synonymous with its values and vision, both are foundational to a
strong corporate culture. In an organization whose central purpose aligns with its long-term
commitments, vision and its employees’ own values are seen as transformational cultures, one
where its people are willing to go beyond their own self-interest for the good of the organization.7
Corporate cultures described as one where a set of beliefs values that are firmly and widely held
throughout an organization are seen as strong cultures and are generally seen as more reliable
performers.4 The importance of corporate culture is illustrated by the findings of Tellis et al. in which
corporate culture was found to be a key driver in “radical innovation”, a strong predictor of financial
performance.5
Too often however, a disconnect exists with executive led purpose statements of an organization
and its actions. This is none better illustrated by the weakening shared values of employees and
resulting misconduct of AMP.6 An organization’s purpose is only as useful if integrated into business
decision making and performance within this context is tracked as set out in the media article.
The author recommends engaging with employees right at beginning of the purpose creation
process, and link targets to purpose, empowering the organization to report on their own
performance relative to its purpose, effectively reflecting its ability to perform against stakeholder
expectations.8 This creates a sense of corporate accountability as there is now a clear set of
consequences for different outcomes.9
A Corporate Purpose with a lack of buy-in as described by the article as being owned only by the
executive team, is the antithesis of a strong culture. To overcome this, the media article suggests
that Corporate Purpose be made ‘personal’, linking employee’s daily work to broader purpose and
societal goals, doing so results in increased employee engagement, and potentially also motivation
and performance. Employee engagement is generally associated with organizational purpose,
commitment, and focused effort13 and has been found to have a strong relationship with employee
performance.14
The link to engagement from Corporate Purpose is a sentiment supported by Tuin et al.11 The link to
motivation however evades us. An indirect link via engagement is perhaps more relevant, the
intrinsic rewards and psychological needs provided by employee engagement such as a sense of
involvement and purpose can drive employee motivation.15 The implications suggest that
organizations must focus on Corporate Purpose through the lens of individual employee
engagement due to individualistic nature of motivation.17
The author recommends that organizations prioritize employee engagement at an individual level
when disseminating its purpose statement and throughout the business life cycle, to positively affect
employee motivation. The outcome simply put, are organizations with highly engaged employees,
leading to lower turnover and higher performance.16
The article recommends that during the purpose building process, an organization also engage with
the relevant external stakeholders from suppliers to customers. With the goal of uncovering
weaknesses and generating new ideas. The goal is to sustain relationships that create financially,
socially, and environmentally high performing organizations.18
Although firms now are incorporating into their mission statement and purpose, beyond “their
reason for being” and are ‘walking the talk’, there is little evidence of organizations including specific
stakeholder groups.19 Organizations with mission statements including components targeted at its
customers could benefit by way of positively affecting loyalty and satisfaction.20 The author
recommends that organizations not only engage with all stakeholders but to at minimum include
customer focused components into its mission statement and purpose.
Conclusion
The article sets out a broad and skin-deep framework of recommendations for disseminating an
effective corporate purpose across an organization and stakeholders from employees to leadership
and from suppliers to customers.
The author provides additional insight through focused recommendations including tracking
performance with clear consequences in line with purpose to create accountability, contributing to
the creation of a strong organizational culture, focusing on employee engagement to spur
motivation and performance, and at minimum including components of customer centricity into the
mission statement to maintain customer loyalty and increase customer satisfaction.
Although the article touches on contemporary issues brought on by events of 2020, it fails to provide
meaningful insight. A critical contemporary issue is the phenomenon of remote working. Although
this has been experienced in the past and seen as an antecedent failure due to a lack of innovation
and growth, this is now experienced on a global scale due to the pandemic. The author suggests
overcoming preconceived issues relating to innovation and growth by purpose tying back to earlier
recommendations, and to create an atmosphere of trust.21
Footnotes
1. Gartenberg, Prat and Serafeim, “Corporate Purpose and Financial Performance”, Page 10.
2. Henderson, Rebecca, and Steen, “Why do firms have “Purpose”? The Firm’s as a Carrier of
Identity and Reputation, Page 327.
3. Sørensen, Jesper B, “The strength of corporate culture and the reliability of firm
performance.", page 19.
4. Sørensen, Page 1.
5. Tellis, Prabhu, and Chandy, “Radical Innovation Across Nations: The Preeminence of
Corporate Culture”, Page 15-16.
6. Kennely, J., Monica, “The shifting corporate culture in the financial services industry:
Explaining the emergence of the ‘culture of greed’ in an Australian Financial Services
Company”, Page 19.
7. Bass, Avolio, “Transformational leadership and organizational culture.”, Pages 116-118.
8. Francesco, Tencati, “Sustainability and stakeholder management: the need for new
corporate performance evaluation and reporting systems.”, Page 1.
9. Munif, “Corporate accountability in the context of sustainability – a conceptual framework”,
Pages 248 – 250.
10. Wilson, “The agenda for redefining corporate purpose: five key executive actions”, Page 23.
11. Tuin et al., “A Corporate Purpose as Antecedent to Employee Motivation and Work
Engagement”, Page 1.
12. Litte, Little, “Employee Engagement: Conceptual Issues”, pages 112-114.
13. Macey, Schneider, “The Meaning of Employee Engagement”, Page 4.
14. J, “Determinants of employee engagement and their impact on employee performance”,
Page 320.
15. Bhuvanaiah, Raya, “Mechanism of Improved Performance: Intrinsic Motivation and
Employee Engagement”, pages 94-95.
16. Sorenson, “How employee engagement drives growth.”, Page 2.
17. Sunil, “A review of employee motivation theories and their implications for employee
retention within organizations”, page 53.
18. Sloan, “Redefining Stakeholder Engagement From Control to Collaboration”, Page 26.
19. Bartkus, Glassman, “Do Firms practice what they preach? The relationship between mission
statements and Stakeholder Management”, Page 214.
20. David, David, David. “Mission Statement Theory and Practice: A Content Analysis and New
Direction”, Page 107.
21. Steele, “The end of flexible working? Has Yahoo!’s Marissa Mayer sounded the death knell
for remote working?”, Page 17
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