As employers scramble to close the door on the Great Resignation, many are taking great pains to keep workers from leaving while continuing to attract top talent—from boosting compensation and rolling out generous benefits packages to revamping for remote and hybrid options. Some are also looking deeper inward, prompting a renewed focus on the concept of “purpose.”
While scores of recent research point to the idea of using purpose as a talent attraction and retention tool in today’s labor market, simply viewing purpose from this lens could be a misstep for HR, said Stacia Garr, co-founder and principal analyst at RedThread Research, during her keynote address at Thursday’s HR Tech Virtual, which continues through Friday (click here to register).
“Purpose really matters in our society today, and if we allow purpose simply to be the latest fad for the Great Resignation, then I think we have missed an incredibly important opportunity,” Garr said.
Employers were already moving toward recognizing the power of organizational purpose before the pandemic, she said. In the last several years, research increasingly has been showing that global communities trust their employers more than any other entity—including government, NGOs and the media, Garr said. And, employees expect their business leaders to take a stand on important societal issues—even if it’s an issue that doesn’t directly relate to the business or affect the workforce.
Organizations, then, that align their business models with a strong organizational purpose—which Garr defined as a clear statement that inspires people to deliver value to all stakeholders, from employees to customers to the community—can certainly make gains when it comes to talent attraction and retention, but they’re also laying the groundwork for long-term, sustainable success.
See also: How to embrace purpose as the path to innovation, profitability
Just a decade ago, Garr noted, the concepts of profit and purpose seemed to be antithetical in the business world; NGOs and charities were relegated to doing the “purpose” work without turning a profit, while traditional businesses were expected to simply pursue profit for the sake of profit—with some gray area in between for those companies attempting to straddle the line.
With that approach, purpose was considered an organizational expense; however, in the last few years, thinking is starting to shift toward “profits with purpose,” Garr said. Employers are recognizing that they can reduce costs associated with hiring and retention by having a strong purpose, as well as save money when it comes to things like resource reduction and investing in alternative supply chains.
Ultimately, the goal should be for organizations to embrace “profits via purpose”—in which they “use a purpose lens” to create new lines of business and innovate their current business.
“Many folks are way back at the cost [approach], but this—this is the future,” Garr said.
A number of leading-edge organizations have already modeled how it can be done.
PepsiCo, for example, instated its “performance with purpose” principles in 2006, with a focus on measuring performance by its impact on all stakeholders. “Doing better by doing better,” former CEO Indra Nooyi once said in an interview. And, the investment paid off in significantly stronger financial performance, Garr said.
That was also an outcome realized by consulting firm EY, which changed its guiding principle in 2013 from “Quality in everything we do” to “Power equation=purpose + vision + long-term value.” As such, purpose has been threaded throughout all business operations, and the organization has adopted a “nested purpose” approach—offering workshops for employees to help them understand their individual purpose and then extending that idea to see how it fits with the purpose of their team, function and the overall organization.
Related: Why cultivate purpose? ‘We all want to do good things in the world’
“EY truly is baking [purpose] into all the aspects of the way they’re running their business,” Garr said, noting the firm is demonstrating the notion that purpose has to be more than a written statement—it must be brought to life.
“If an organization just puts lip service to it, it’s not going to do anybody any good,” she said.
Garr also pointed to retailer Home Depot, which puts purpose into action through its “inverted pyramid” structure—which approaches its ecosystem of stakeholders by centering customers at the top followed by associates, with the CEO at the bottom. In a recent interview, CEO Craig Menear said that approach—along with an aligned culture—made it “much easier” to make some difficult decisions during the pandemic that put some constituents, like customers and front-line associates, ahead of others like shareholders.
Home Depot illustrates the power that purpose can have when leaders are on board, Garr said.
“If leaders don’t understand what purpose is and why it matters,” she noted, “we’re not going to drive any change.”
Registered users can watch the full session here.
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