Corporate Purpose is the why of a company’s existence – why does the company exist and what is its unique contribution. Purpose is different to Vision (what we will become) and mission (how we’ll get there) and is the most fundamental of the corporate statements.
The Purpose of a company does not necessarily need to have an environmental or social responsibility element, but it needs to be something that deeply reflects why the company actually exists and what problem it is helping to solve. While not all companies are seeking to change the world with their purpose, the positive effect of well managed values driven enterprises with highly motivated and satisfied team members working in a great environment is a contribution in and of itself.
Companies with purpose tend to have greater shareholder returns and sales than their peers; attract and retain better staff and have more sticky and satisfied customers. A number of studies confirm that purpose driven organizations show better business performance in clear and measurable ways. An important caveat is that corporate purpose must not only be defined, but clearly communicated through the organization and made active on a credible and persistent basis for improved business performance to manifest.
Purpose is not just for large listed companies. Entrepreneurial companies and privately held SMEs are seeing the benefit of adopting a clear corporate purpose as a point of differentiation, team loyalty and improved returns. Increasingly, investors are also looking for Purpose driven companies, and it can be an advantage in
capital raising.
