What's the point of purpose?
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In the second half of the eighteenth century and following a century of mass industrialisation, it was a boom time in many towns and cities in the United Kingdom. The British Empire encompassed almost a quarter of the world's population. The profits from its exploding commodity trade flowed through London's exchanges, concentrating vast wealth in the hands of leading businessmen and financiers. New buildings sprung up to house the increasing numbers of workers, while huge buildings and ornate sculptures were built to commemorate the great and the good - or the rich, at least.
Yet, half a century before the discovery of penicillin and at a time when medical textbooks still advised treating asthma by inhaling smoke and using cocaine to treat alcoholism, the health of the country's inhabitants wasn't as robust as the market for statues. Urban areas were filthy, and the average life expectancy hovered around 45. Many never made it that far, and infant mortality, in particular, was shockingly high, with only half of babies surviving past their first birthday.
Against this backdrop, two brothers, William and James Lever, established in 1885 a new organisation whose purpose was clear – making hygiene commonplace for all. Ultimately, Unilever, as the company would later become known, contributed towards the rapid improvement in hygiene standards in the UK, and the rest of the world, by mass-producing soap.
One hundred and fourteen years after Unilever was founded, their modern leadership faced an entirely different challenge in their now entirely sterile headquarters. Not one requiring fundamental societal change, but something that did threaten the existence of the business. With revenues having fallen by 30% - representing the not insignificant amount of $17 billion, new Chief Executive - Paul Polman knew that something radical was once again required to reverse a business in decline. So he referred back to their founding story, asking why the company existed in the first place? Could a reminder of that be the secret to its turnaround?
How to create a purpose-driven strategy, not 'purpose-washing'
My guest on the podcast this week, Geoff McDonald, was directly involved in those conversations. In his role as Global Vice President of Human Resources, he and the rest of the leadership team, began a process of reinjecting purpose into an organisation of 190,000 people. Their goal was to make sustainable living commonplace in the world.
We're all used to hearing leaders talking about purpose, and let's be honest, it often sounds trite. For many, it appears an obvious marketing exercise designed to appeal to a new generation of employees and investors, emphasising environmental and societal matters. In Unilever's case, though, they recognised it represented both a guiding principle and a pragmatic decision because, as their data showed, businesses with clear, bold goals consistently outperform their competitors.
Unilever determined that their priority had to be making intelligent decisions for the long-term, not to hit the numbers on the next earnings call. By emphasising the need to operate for the benefit of all their stakeholders – employees, partners and society as a whole – and creating sustainable business practices, their focus shifted to longer-term objectives, which engendered "an expansionary mindset versus shrinking mindset."
Why did it work?
Unilever's leadership knew that just coming up with a well-intentioned and pithy phrase wasn't enough, and they needed to translate it into clearly articulated goals. Sound familiar?
They did this by promising to strive for objectives like:
- Improving the health and well-being of a billion people in the world
- Reducing the company's environmental footprint by half
- Making sure all their raw materials came from sustainable sources
- Enhancing the lives of millions of smallholder farmers.
Creating a sense of pride and ambition directly impacted the organisation's performance. Internal metrics like employment engagement scores have improved and Unilever has become a more attractive place to work for existing and future employees. Critically, the company’s value has doubled since 2009, justifying Polman’s long-term outlook.
We're experiencing a moment of great upheaval in the workforce. According to BCG, there's a 30% attrition rate within certain categories, and some businesses have experienced more than 100% employee turnover since March 2020. The question many leaders are asking is, "how do we keep our best people?"
Aside from individual-focused solutions like incentivising loyalty and ensuring people have the opportunity to make the best use of their skills, collective approaches make a difference. Creating moments of social connection and building relationships with colleagues has a significant impact on culture. Elevating a shared purpose has an outsized effect on people's willingness to stick around.
As the BCG team wrote in Harvard Business Review last week:
"Purpose is the timeless reason that your organisation exists. It's the reason people join and choose to stay. Our analysis shows that in turbulent times a belief in what an organisation is trying to achieve is even more important than in quieter periods. Prove to employees that there's more to your organisation than the bottom line. And don't just talk purpose; use it to shape what you do and how you do it."
In some cases, you may not even know how you're going to achieve your objectives, and this was a feature of Unilever’s strategy. They understood that communicating the importance of a collective effort from all stakeholders helps develop a shared purpose. It was a case of, “we can’t do it without you.”
Whether it's alleviating the world's poor hygiene, making sustainable living commonplace, or more pragmatically, trying to keep your best people, putting purpose at the centre of your strategy works. The secret is balancing ambition and inspiration with consistency, and an unwavering determination to improve long-term business performance.
Thanks for reading and have a lovely weekend,
Ollie
✓
Any Other Business:
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Following research at the University of Cambridge, Neuroscience News share the insights that “for the brain, context is the key to new theory of movement and memory”
More advice about the importance of focusing on retention at the moment from People Management.
An interesting story from The Guardian, in which they report that “London stockbroker FinnCap will effectively give its employees unlimited holiday from next year with a requirement to take at least four weeks off, in an effort to prevent staff burnout.”
More of this, please: Chobani Is Going Public. Its ‘Anti-CEO’ Founder Won’t Be The Only Employee Who Could See A Big Payday from Forbes.
Need some more tips for working remotely, or perhaps just looking for Christmas present ideas? Read this article in which various 'digital’ share their top tech kits in Digiday.
And finally, long-term readers will know I love a map. Add a bit of topography to it, like in, and life really can’t get much better.
