When it comes to business performance, purpose in the workplace matters – but only if it comes with clarity.
Purpose over profit.
It’s a phrase that’s become the rallying cry of so many businesses in recent years, as consumers demand better of the brands they buy from, and employees and job seekers demand better of their workplaces.
This has especially been the case since the pandemic started. Two-plus years of uncertainty, anxiety, fear, and isolation have put purpose and company culture even more top of mind. People want to buy from, and work with, companies that reflect their personal values.
And brands are certainly responding – companies like Patagonia, Lego, and Ben & Jerry’s have marketed themselves as synonymous with corporate responsibility. But the question remains: Does purpose at work really lead to better business results?
Answer: It depends.
The data behind purpose at work
To find out, Harvard Business School (HBS) used Great Place to Work®’s extensive database on employee engagement, to determine if all the resources companies put towards purpose are, in fact, driving better business results.
HBS used Great Place to Work’s sample of 429 U.S. companies, and more than 450,000 employee survey responses, to create a measure of corporate purpose. Employees were asked to agree or disagree with statements such as:
- “I find my work is meaningful.”
- “I feel good about the ways my company gives back to the community.”
- “I’m proud to tell others I work here.”
These employee surveys did not go into the type of purpose the company was pursuing (i.e., environmental, social justice, etc.), but merely whether the goal resonated with employees.
What they found might surprise those on the purpose bandwagon: A sense of purpose at work alone isn’t correlated with firm financial performance.
What is correlated, and is the key to unlocking purpose’s potential, is clarity.
The clarity factor
From the initial data set, HBS performed a factor analysis and identified two types of companies with purpose:
- High purpose-camaraderie organizations. These included high scores on statements such as “We are all in this together.”
- High purpose-clarity organizations. These included highs scores on statements such as “Management makes its expectations clear.”
When it came to better business performance, only one group stood out: high purpose-clarity.
In fact, the study found that when employees experienced a sense of purpose at work and believed their leaders set a clear direction and expectations (purpose + clarity), those companies outperformed the stock market, achieving returns 6.9% higher than the market.
Middle management makes the difference
The research also revealed that it wasn’t top executives playing the largest role here, but rather middle managers and professional workers. When those two groups experienced purpose and clarity, companies’ financial performance jumped even higher.
The report explains, “This last finding underscores the absolute importance of fostering an effective middle manager layer within firms: managers who buy into the vision of the company and can make daily decisions that guide the firm in the right direction.”
Purpose at work: making it matter
Purpose does matter. Employees want to believe they’re making a difference in some way and will work harder when they believe in the purpose of the company.
But a company’s purpose needs to be carefully implemented to ensure that middle managers within the organization are clear on it. They need to be fully bought-in and on board.
Otherwise, financial results won’t be impacted, and time will be wasted coming up with words that just don’t matter.
For the full story, read the HBR report.
You can measure purpose at work
Are your employees experiencing a sense of clarity and purpose at work? Get Certified™ with Great Place to Work and, through our research-backed Trust Index™ employee survey, learn how your company culture stacks up and how you can create more purpose. Learn more.