Purposeful or purpose-washing?

In today’s economy, where stakeholders and communities often have as much or even more influence than shareholders, people are demanding companies drive positive social change – and not just profits. Corporate purpose is an organization’s strategic North Star. It defines the “why” of our work and orients every action, from strategy and operations, to people and culture, evaluation, and communication around a set of deeply held principles. And it drives sustainable business results.

Why, then, are so many missing the mark when it comes to defining and communicating purpose? Or, at worst, creating unnecessary (and avoidable) reputational and market risk?

When Starbucks launched Race Together, its high-profile campaign on race relations a few years ago, it drew quick and pointed criticism on social media, receiving 2.5 billion impressions in less than 48 hours, much of it negative. Not only did Starbucks come under fire for its white, billionaire CEO leading a sensitive conversation on race, but many also pointed to the fact that the company itself still had much work to do on its diversity strategy. It’s worth noting that the company gained some respect for at least acknowledging the issue – and working toward concrete action.

With the spotlight on corporate purpose, the pressure on organizations to deliver is high. As Blackrock CEO Larry Fink wrote in his 2019 letter to CEOs, in our polarized and complex world, “Companies that fulfill their purpose and responsibilities to stakeholders reap the rewards over the long-term. Companies that ignore them stumble and fail.”

And in 2020, we saw many stumble. A global pandemic and fight for social justice heightened demands for companies to put transparency, values and employee engagement at the forefront. But it also left many organizations scrambling to keep up with the meteoric pace of change.

Purpose. Not platitudes.

In a rush to stand for something, some organizations have risked putting the purpose ‘story’ ahead of the purpose plan and actions, which, according to the global consulting firm, McKinsey, should be embedded into a corporation’s operations.

What happens when an organization can’t credibly deliver on its purpose? Look no further than the NFL, which in 2020 was condemned for its collective amnesia and hypocrisy when it issued a statement of condolence to the families of George Floyd, Breonna Taylor, and Ahmaud Arbery – three African Americans killed in acts of police brutality. This came from the same organization that attempted to silence Colin Kaepernick, who, while quarterback of the San Francisco 49ers in 2016, took a knee during the national anthem to bring attention to police brutality and racial injustice.

The NFL only started to be taken more seriously when its commissioner posted a personal video acknowledging the league’s missteps, what he had learned personally, and that he vowed to do better. But even it stopped short of mentioning Kaepernick.

The public knows “purpose-washing” when they see it. Organizations risk reputational failure if they don’t align what they say with what they do.

In a recent client workshop, we discussed the broader business implications of using rainbow flags on marketing materials or making commitments to anti-Black racism without tangible and measurable action rooted in purpose. They risk seeing competitors emerge and steal share by leading with values and serving unmet needs.

Daylight Bank, a new entrant serving LGBTQ+ Millennials in the US, is an excellent example: “For Daylight, it’s more than just slapping a rainbow on a card. It’s about personal wins, set and met goals, and the success of the community around us.” And the news media are taking notice.

Activating purpose with storytelling. UPS #thanksfordelivering

Argyle’s client, UPS, recently underwent an intense process to define its purpose. What stood out was the passionate commitment of the 528,000 people globally that power the company to serve their customers and communities every day. UPS’s purpose statement, Moving the World Forward by Delivering What Matters, not only communicates what they do but why they do it.

That’s why in the early days of the pandemic, when so many touching and creative thank you stories from customers to their drivers began to pop up on social media, UPS’ decision to share them with employees and the community was a natural and powerful one. From sidewalk chalk art and handwritten thank-you notes to gift baskets, #Thanksfordelivering shows a company that gets purpose right. (And if you’re ready for a tearjerker, watch the video below)

Purpose outperforms

Purpose isn’t simply driven by altruism either; it’s good business. As Harvard Business Review reports, purpose-driven companies routinely outperform their rivals. They attract and retain engaged employees – and engender customer loyalty. And they are more able to shift from reacting to every burning controversy to responding to issues and taking action based on core principles and an understanding of what our most important stakeholders expect from us.

In addition to inspiring connection through storytelling, animating purpose through communication is imperative as we emerge from this painful pandemic.

“…leaders must examine the context in which they operate: the broader social environment. They will consider how their organizations anticipate and respond to the “big four” conversations in society today: public health; economic recovery; racial justice; and climate change. On these topics, silence isn’t golden. Communication matters, and action matters even more.”

– Daniel Tisch, Argyle CEO, How to recover fast from the pandemic

In Argyle’s survey of communicators in the summer of 2020, respondents told us that communication would matter more in the economic recovery. Employees, customers and stakeholders expect organizations to invest more in communicating with them – and communicators believe organizations will make those investments.

Defining and then activating purpose is a journey, and it doesn’t happen overnight. But it is a crucial step in reputation and risk management and sets the foundation for a strong Environment, Social and Governance framework.

About the Author

Roanne Argyle

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