Businesses are being called to realise that profits alone will no longer be enough to meet the needs of their customers, society, the environment or their workforce.
The purpose before profit movement is being increasingly embraced by companies that believe in making a positive contribution.
Purpose before profit underscores the idea that companies should be guided by more than just making money. They should strive to see that their policies, practices, inputs and outputs are beneficial to all stakeholders and are not just driven by what is best for shareholders.
A company’s purpose isn’t just about the product or service it provides. Instead, it is why a company exists and what benefits it delivers to the world. A clear purpose helps to steer the company through challenging times, guides decisions with both internal and external stakeholders and it gives direction in making trade-offs.
It isn’t a static thing, a purpose can evolve to reflect the changing times and the needs of a company’s stakeholders. For instance, Unilever changed its purpose from ‘Making cleanliness commonplace’ to ‘Making sustainable living commonplace’.
Businesses large and small are realising that putting purpose first can actually lead to profits as well as other benefits.
Defining your purpose and pursuing it can help put you above your competition
It can be a challenge to stand out and attract customers in a competitive business space. Businesses can have the same product, the same systems and target the same consumers. It is great to solve the customers’ pain points, but your competitors will likely be doing that as well.
However, not all of them will be able to say that they, for instance, support the local bird sanctuary. Beyond doing your part for the environment, this association will open you up to a new audience, and maybe even win you some referrals.
Today there are numerous umbrella associations for organisations that are placing purpose over profit, in particular where the environment is concerned. Furthermore, being a member proves that when companies say they are eco-friendly, they are not just paying lip service but that it is actually reflected in their practices.
Happier, more engaged employees
Millennial employees thrive when they feel that their work has a positive impact on the world. However doing good isn’t just a desire held by that generation.
Employees are more engaged, feel more fulfilled and can even be happier at work when they know that the company they work for supports a specific cause and has equitable practices. They are not just happy to see the company do good, they are happy to participate as well.
As an example, CVS Health carries out a program in which their employees provide free screenings to disadvantaged patients. This community effort gives their staff a chance to give back in a meaningful way. As a side effect, it also endears the brand to customers.
Putting purpose before profit is also a great way to attract new talent. With Gen Z in particular, a strong purpose can be a deal breaker. Some studies show that they are the first generation to prioritise purpose over salary.
It is also a driver for retention of workers. When employees feel more deeply entrenched in the values and purpose of the company, they are likely to stay at their jobs longer.
Satisfied and loyal customers
This proud association to businesses that adhere to purpose before profit extends to customers as well. According to research, having a strong purpose helps companies win loyal customers.
In fact, 3 out of 4 customers will switch to a competitor brand because they know them to be more conscious in their practices-even if they have to pay a higher price. They are more likely to recommend that brand to friends and as marketeers know, word of mouth is still one of the strongest ways to advertise.
It should be noted that in addition, customers, especially younger generations find that having a purpose is just as important as having a good product and as having digital.
Purpose helps to future proof your business
Having a strong purpose is one way to insulate your company against future shocks. Take for instance the choice to go green. It is a purpose that ensures that the company survives to serve future consumers while protecting the earth and the environment.
Companies that a driven by a purpose to be green have several ways to implement this. It can be in their choice of suppliers-opting for those who are eco-friendly, in choosing raw materials that are environmentally friendly, putting recycling at the forefront, opting to go paperless and like companies such as Apple, Amazon and Facebook, a commitment to using renewable energy.
Profit follows purpose
Companies with purpose have higher employee morale, they attract top talent and thus have improved productivity. Their customer satisfaction could be higher as well. All these combined will put them on the right track for financial success. That is not all, a 20 year study proved that ethical businesses that are focused on all stakeholders actually deliver higher returns.
And if you are looking for funding or investors, a purpose before profit stand can make a business more attractive. Funders will want to see that their investment will be used responsibly and generate returns. As the study before proved, pursuing a purpose is good for business.
Purpose before profit is a growing movement because companies have come to realise that their responsibility lies with more than just their shareholders. It lies with their employees, their customers, suppliers and the environments they operate in.
Companies have also seen that having purpose helps their bottom line. When purpose leads the way, the impact can be seen across all measures of growth and performance.