Imagine, for a moment, someone sitting down 50 years from now to write a book on the history of modern capitalism. That writer will no doubt devote at least a few chapters to the rise of stakeholder capitalism and how the pandemic has transformed the nature of work, and especially the extent corporations have replaced government as the primary and trusted driver of social change.
Whether grudgingly or voluntarily, corporations have taken responsibility, making statements of their purpose, and seemingly claiming in every sentence that they are “mission-driven”. The “great resignation” is another reason why statements of purpose are so popular. As the pandemic hit, and so many employees were working from home and weighing their mortality rates, a lot of people decided that they wanted more of a “so-called work of reason” job. . And so, to help with retention and recruitment, companies have used purpose statements to speak to a need, rather than just a paycheck.
But the real effect was that many CEOs began to sound like politicians, using lofty language that was vague and difficult to define. And herein lies the problem, or certainly the challenge: in order to maintain credibility and credibility, leaders need to shift the conversation from fuzzy purpose to more specific and clear statements. about their company’s impact on society.
Many CEOs begin to sound like politicians, using lofty language that is vague and difficult to define. And that is the problem.
It’s not just a matter of semantics, for there is a world of difference between purpose and impact. It is very difficult to challenge a purpose. If a company says that their reason for being in some form or fashion is to try to make the world a better place, how can you pressure test that claim? If that company is providing goods or services for which customers are willing to pay and hire people and pay suppliers, then that company is in fact doing something of perceived value. As long as it’s not doing anything criminal or unethical, it’s working “to advance human interests,” borrowing language from an organization’s mission statement.
But if you are claiming that you are making an impact, then you need proof. And that’s what makes such a powerful statement.
Yes, in some jurisdictions it is mandatory for companies to back up their statements. For example, in the EU, some large companies require non-financial performance reporting on issues such as the environment and diversity. The US SEC has also proposed a series of new standards to force companies to back up their environmental, social and governance (ESG) statements.
But other forces can accelerate the displacement. Employees are asking companies to explain their statements and back up their words with actions. One-on-one meetings can begin to look like interrogations, as employees increasingly feel that they have a say and a vote in setting company policy. If you say that listening to your employees is important to the organization, what resources are you allocating to prove it?
And that’s why companies will have to measure progress against their claims. Standards issues to be discussed (“We’re working on it. We’re not where we want to be, but we’re getting there. That’s important to us.”) Won’t be cut quit today.
Goals and targets must not be separated from the actual work of the company. They should be more directly aligned with the organization’s strategy, so that purpose and strategy feel more integrated. What are the specific results the company is aiming for? What impact will the company have on all key stakeholders in doing so? What kind of culture is needed to win over competitors in that marketplace?
The strategy, purpose, and value of discussions — what Kevin Sharer, former CEO of Amgen, calls “social architecture”- used to feel like separate exercises, but now they need to work in a concert. “If you don’t have a solid, well-accepted social structure and can operate on the most important decisions you make, that’s leadership’s fault,” said Sharer, co-author of the study. book, say. CEO test.
It’s time to go back to what companies do when they’re at their best — accountability for measurable performance. If corporations and CEOs want to be at the top of trust rankings, upgrading their purpose statements to focus on impact will be an important step.