By Todd Pruzan, Harvard Business Review
As stakeholders increasingly expect companies to engage with societal issues, corporate purpose has become a strategic imperative that creates widespread benefits across organizations.
But a new Deloitte report called “C-suite Insights: How Purpose Delivers Value in Every Function and for the Enterprise” reveals that while a broad range of companies recognize the value of purpose, they often struggle to implement it, with “purpose” activities missing and leaders frequently siloed away from core business operations.
John Mennel, a purpose strategy leader in Deloitte Consulting’s Monitor Deloitte Practice, is one of the authors of the report. John, thank you so much for speaking with us today.
John Mennel, Deloitte
Thanks, Todd.
Todd Pruzan, HBR
John, what is purpose, and why should C-suite leaders care about it?
John Mennel, Deloitte
Great question. We define purpose as an organization’s reason for being and [the] positive impacts its core business delivers for all its stakeholders and for society. An organization’s purpose differentiates it and makes it more valuable in the long term.
And that’s the main reason why all leaders should care about it. And in addition to defining the overall purpose, we advise clients to really focus on the systems, processes, and incentives that allow it to deliver on its purpose consistently every day, because that consistency of delivering our promises is really the key.
Todd Pruzan, HBR
Is there a particular C-suite leader who should be responsible for purpose?
John Mennel, Deloitte
Not really. Each member of the C-suite has an important and different role to play in defining and activating purpose. The CEO obviously is critical and plays a role, both as a champion and an integrator, and connects the purpose to a company’s strategy.
Many companies, including Deloitte, also have a chief purpose or sustainability officer who can help facilitate function-specific goal setting, enable collaboration and alignment to enhance overall outcomes. But really every leader, from the CFO, to the CIO, to the CMO, to the CHRO has their own role to play.
Todd Pruzan, HBR
What business value does purpose deliver to a company?
John Mennel, Deloitte
That’s interesting. Research shows that purpose drives value across a broad range of stakeholders, so everything from talent to operations to supply chain to brand to cost of capital and investment. And activating purpose is part and parcel these days of being a well-managed company and showing up as well managed.
Our research, the recent Deloitte research, indicates that talent is currently the biggest driver of value by far, with 79% of the people we surveyed—C-suite executives—agreeing that purpose supports talent recruitment, engagement, and retention. And the business case for purpose can often be made solely on the talent play.
Todd Pruzan, HBR
OK, so how and to what extent do C-suite leaders hold themselves accountable for purpose priorities?
John Mennel, Deloitte
There is significant opportunity to strengthen accountability and improve in that area. Our research shows, for example, that although most surveyed C-suite leaders, 70% of the total, indicate that the role is highly connected—impacted by their company’s purpose priorities—only about a third say their compensation is tied to their performance against those purpose goals. So the truth is, there’s a really long way to go in accountability still.
Todd Pruzan, HBR
What steps can C-suite leaders take to effectively demonstrate purpose?
John Mennel, Deloitte
We recommend five things to start. The first is to articulate the why for the company. So how does your core business create value for your stakeholders and for society?
The second is to embed purpose in the organizational culture. So in the actual culture, in the org chart, and in the processes and systems that I talked about before.
The third is to establish the business case for purpose in each function and to measure against it with quantitative KPIs. The fourth is to tie executive performance and compensation to purpose outcomes.
And the fifth is to elevate the purpose or sustainability function within the organization. And that’s often done by creating a chief purpose or sustainability officer reporting to the CEO.
Todd Pruzan, HBR
Great. Well, John, this has been a great conversation. Thank you so much for joining us today.
John Mennel, Deloitte
Thank you, Todd.
