Consumers and employees expect more from companies than ever before. The 2019 Porter Novelli/Cone Purpose Biometrics Study found that 76 percent of Americans believe it is no longer acceptable for companies solely to make money; they also expect them to positively impact society. The majority of employees (71 percent) are even willing to take a pay cut to work for a company that has a mission they believe in and shared values, according to a workplace culture survey conducted by LinkedIn.
An effective way for organizations to ensure they deliver an impact beyond profit is to align with a purpose or mission. Purpose and mission, while different from each other in practice, both define why an organization exists and guide how organizations make decisions.
It’s clear that consumers and employees expect more from companies, but it’s not always clear how aligning to a purpose or mission impacts business. Here are four concrete ways — grounded in recent research — that purpose and mission impact real business outcomes:
1. Sales growth
Until recently, there was little research done about the impact of purpose or mission on an organization’s sales growth. The proof is stacking up, however, as more organizations integrate purpose and mission into their operations.
B Corp certification, for example, assesses the overall positive impact of a for-profit company by ensuring certified companies meet the highest standards of verified social and environmental performance, public transparency and legal accountability. B Corp certification holds organizations accountable for working toward a purpose or mission. Recent research found that B Corps have higher sales growth and above-average brand ranking compared to other brands in their categories.
The Kantar Purpose Study 2020 found similar results. The study assessed companies over a period of 12 years to determine how having a perceived positive impact alters brand growth. Brands with high perceived positive impact were found to have a brand growth value of 175 percent compared to 86 percent for brands with perceived medium positive impact and 70 percent for low positive impact. The Kantar Purpose Study demonstrates that companies aligned to a mission or purpose can increase their perceived impact, and consequently, their brand growth.
Consumers also aren’t hiding the fact that they’ll bring their money to organizations with values that align with their own. In the 2017 Cone Communications CSR Study, eighty-seven percent said they would purchase a product because a company advocated for an issue they cared about. Seventy-six percent will refuse to buy a company’s product or service if it supports an issue contrary to their own beliefs. Consider Patagonia, an outdoor clothing brand that receives praise for its purpose-driven efforts. The company’s revenue has quadrupled since its CEO, Rose Marcario, led the effort to intensify the company’s activism in pursuit of its environmental purpose. Its customers want to purchase from organizations that stand for something they believe in.
When organizations exist for something more significant than profit, stakeholders notice and reward them with more business, leading to higher sales growth.
2. Brand loyalty and trust
It pays to earn loyalty and trust from customers. Harvard Business Review reports that it is five to 25 times more expensive to acquire a new customer than to retain an existing one. Purpose or mission is an effective way for organizations to increase brand loyalty and trust.
CGS recently conducted a study to evaluate the top reasons repeat customers return to a brand. The second-highest reason customers bring their business back is because of the organization’s sustainable/ethical business practices. The fourth-highest reason is its brand mission. The 2019 Porter Novelli/Cone Purpose Biometrics Study also found that when companies lead with purpose, 89 percent of consumers are more likely to trust the company, and 83 percent are more likely to be loyal. Customers notice when companies stand for something beyond profit alone — and reward them with their purchasing dollars.
3. Employee engagement
PWC recently found that when organizations effectively communicate their mission or purpose, employees are more than two times as motivated and passionate. Employees want their employer to define, activate and publicly communicate the value they deliver to the world or their stakeholders. Gallup furthered these findings with a study that showed employees are three-and-a-half times more likely to be engaged when they see how their work connects to the organization’s goals. Motivated employees are engaged. Engaged employees impact critical business metrics.
Gallup also found that organizations in the top quartile of employee engagement have 41 percent lower absenteeism, 21 percent higher profitability and 40 percent fewer quality incidents. Purpose- and mission-driven organizations can motivate employees by tying their day-to-day work to the impact it delivers to the world or the organization’s stakeholders.
4. Recruitment and retention
Purpose also matters twice as much to employees compared to traditional motivators like compensation and career advancement. It’s also one of the strongest drivers of retention for millennial employees, which is now the largest generation in the U.S. labor force. Employees want to work for organizations that are doing good for the world or their stakeholders. They are increasingly seeking meaningful work. Organizations that shape their workplace culture around their mission or purpose can more effectively motivate employees, which keeps them happier and retains them longer.
Organizations will often see employee happiness reflected in their eNPS score, which is a one-question survey that asks employees how likely they are to recommend the organization as a workplace. Employees are more likely to give strong eNPS ratings when they understand their organization’s purpose or mission and the role they play in it.
Organizations that align with a purpose or mission impact better business results. However, the case for purpose or mission alignment is not solely about meeting the expectations of consumers and employees. It’s also about positioning an organization to maximize its growth, profitability, product and service quality, and workplace culture.
About Nicki Gibbs, EVP, Strategy
Nicki is a positively brilliant strategist with a knack for inspiring clients and teams to think and act in powerful ways. Her favorite question is “What if?” Her ability to imagine what’s possible creates contagious enthusiasm that moves businesses forward. Nicki also is a ProSci-certified change management leader with deep experience applying research-based methods to drive measurable business results.