POSTED: August 09 2018
Five reasons why having a business purpose pays off

Five reasons why having a business purpose pays off

Reputation boosts, employee demand and company performance are the factors driving businesses to prioritise organisational purpose. A new CMI report outlines what having a purpose can do for managers.

The Chartered Management Institute (CMI)’s latest report The What, The Why And The How Of Purpose: A Guide For Leaders has shone the light on the transformational impact an organisational purpose can have on firms – from small start-ups to large multinationals.

Through interviews with leaders of blue-chip companies the CMI’s report reveals the concept’s key ingredients, and that purpose is unique compared to other ethical business drivers such as CSR and mission statements.

But why is purpose so important for managers? The CMI’s research outlines five of the best reasons:


Executives identify organisational purpose as essential to building stronger, more trustworthy relationships with the public. Purpose-driven companies embed purpose into every facet of their operations, meaning that each action and decision includes serious consideration of how they can benefit wider society, the report found.

With consumers, media and regulators wary of cynical one-off apologetic gestures, purposeful long-term action reflects an authenticity and accountability that enhances reputation and helps avoid future corporate scandals. Unilever and M&S, for example, have received widespread positive coverage for their purpose-built social and environment objectives, which focus on boosting wellbeing, sustainability and conservation.


Passion, fulfilment and commitment are among the intrinsic qualities that distinguish purpose-driven companies from competitors. This makes them an appeal to existing and future employees, the CMI research shows.

Interviewees largely agree with research that shows that today’s top applicants are drawn to companies with a wider impact on society, especially when comparing offers from similar-sized companies with similar renumeration packages.

Millennials, set to form 50% of the global workforce by 2020, are particularly keen to join purposeful organisations, with the 2017 Deloitte Millennial Survey showing young people want to exert more influence on the world’s biggest problems via the workplace.

After joining a company, the CMI study shows that a well-structured organisational purpose can keep employees happy, committed and career-motivated. This is further supported by LinkedIn’s Work Satisfaction Survey, which discovered that 44% of professionals think work that has a positive impact contributes to how happy they are.


Companies delivering a purposeful and trustworthy experience attract more engaged customers, as well as lucrative opportunities to partner with other purpose-driven organisations, executives told the CMI study.

Interviewees said a purpose shows all stakeholders the contribution that a company is making to solve the global problems we face, such as climate change.

This encourages greater customer loyalty, spending and brand awareness, as backed by global advertising agency Havas’s Meaningful Brands’ report. The CMI study showed that customer-company links created other opportunities, such as cross-category sales and higher renewal rates.

Governments, charities and other businesses are also more likely to approach a purpose-driven company, aligned with the same philanthropic goals, to cooperate on projects. Tech giant Microsoft and automotive leader Toyota formed a strategic alliance to fabricate a software platform dedicated to managing the information systems for electric vehicles in 2011. The joint venture was based on their purpose to help people better manager their energy consumption and enable a more sustainable society.


With research showing the negative impact of the ‘always on’ culture in organisations leading to the onset of stress and depression, the latest CMI study shows organisational purpose to be a useful way of aiding the mental health of employees. Self-transcendence and meaning are found to increase psychological wellbeing and even decrease depression in middle-aged adults.

According to CMI’s research, the average manager puts in an extra 7.5 hours a week, equating to 44 more working days a year, with one in 10 reporting taking sick leave for stress and mental health issues. “I mean, people are being burnt out right now. The preponderance of depression and anxiety in organisations is getting more noticeable. We are not looking after the wellbeing of our people who work for companies today. Mental ill health is costing economies billions,” said Geoff McDonald, former global vice president of human resources at Unilever.


All interviewees believed that organisational purpose leads to improved business performance, whether short- or long-term. This is a result of the cumulative benefits of a positive reputation, strong customer relationships, retaining top talent and healthier employees.

Ann Francke, chief executive of the Chartered Management Institute, explained: “The bottom line is that purpose-driven, people-centric, values-driven companies outperform. Not just because they do better sustainably over time, but also because they avoid the risk. They avoid the Volkswagen and the Tesco problems, and they avoid the backlash that wipes 30% off their share prices.”


Read The What, The Why And The How Of Purpose: A Guide For Leaders, here.