There’s no two ways about it: Businesses that invest in corporate purpose outperform the competition. Growth, revenue and profits — companies see significant gains on all of these fronts when there is buy-in at all levels of the organization. That means everyone from the boardroom to the frontline is “all in” when it comes to the company’s higher purpose.
The numbers don’t lie. The world’s 50 fastest-growing brands, which built the deepest relationships with customers and achieved the greatest financial growth over a decade, experienced 400 percent more returns on the stock market than the S&P 500, according to a study titled GROW: How Ideals Power Growth and Profit at the World’s Greatest Companies. These brands, called the Stengel 50, include companies such as Coca-Cola, Emirates, Starbucks, Google, Zappos and Louis Vuitton.
The secret to their success? Each brand had an ideal, or purpose, that focused on improving lives in some way. “We define ideal as the higher-order benefit a brand or a business gives to the world,” said Jim Stengel, former global marketing officer of P&G and author of GROW, who partnered with consulting firm Millward Brown Optimor in the study of 50,000 brands.
Those leaders who centered their businesses on a shared purpose, had a growth rate three times greater than competitors in their category, the study showed. “We found that this ideal is both a source of inspiration externally among customers, as well as a compass for internal decision making,” said Benoit Garbe, vice president at Millward Brown. “An ideal influences all facets of the business from HR and Marketing to R&D and Finance.”
Everybody needs purpose and meaning in their lives, Deborah Koyama, Mondelez International’s chief marketing officer for Europe, said in a McKinsey report. And this is especially true of employees.
A clearly defined purpose helps motivate staffers to go to work every day. Their confidence in the corporate purpose, as well as the company itself, is one of the key drivers of growth. “We have a new purpose at Mondelez, which is to empower people to snack right. People really relate to that. Our employees are excited about it and I think that’s critical, as we’re trying to really go after growth. We have so many hard data and facts showing that purpose drives growth,” Koyama said.
Employee engagement matters, too. Having a clearly defined, compelling and communicated purpose also impacts employee engagement. Why does that matter? Because, employee engagement directly impacts growth. Your bottom line depends heavily on how much you invest in employee engagement initiatives. Consider these facts:
- Businesses with the highest levels of employee engagement are 22% more profitable than those with low levels of engagement, according to Gallup.
- Organizations with above-average employee engagement exceed the financial performance of their peers by 73%, according to data by the University of Pennsylvania’s Wharton School.
- Companies with high and sustainable levels of engagement typically have operating margins up to three times higher than companies with low or unsustainable levels of engagement, according to a study by Willis Towers Watson.
As CEO, corporate purpose begins with you. Lip service won’t cut it — it’s all or nothing. When you commit time and resources to the greater good, as well as employee engagement programs, you position your company to achieve peak performance and better bottom line results.
This article first appeared in CEO Communicator, the digital magazine for business leaders who aspire to achieve excellence in communications. To learn more about CEO Communicator and subscribe to the magazine, visit ceocommunicator.com.
