The Week in Ethics: Why Purpose Matters to Leaders

Leaders who unite their teams around a purpose beyond creating profit redefine what is possible. They show a road map for how collectively each person can have a positive impact on customers, an industry, community, and society. The lens these leaders hold up allows individuals to see how they can make a difference, a key element in employee engagement.

We don’t hear a lot about companies that are focused on a bigger purpose because they are far less likely to derail and become headlines in scandals or crises. They are grounded by company values which creates a common language and sense of “we,” which is a ballast in the constant change of our unpredictable world. Unilever and its Sustainable Living Plan is an illustration of purpose in action that is part of a business strategy. It sets out a plan that expects the company to double in size while also decreasing its environmental footprint and increasing the company’s positive social impact.

Business can no longer afford to be a bystander,” according to Unilever’s CEO Paul Polman, “content to sit on the sidelines doing the minimum necessary to acquire its ‘license to operate.'” Polman is also one of the founding leaders of the B Team, a global initiative calling for a new kind of leadership — more inclusive and driven by a moral compass. The B Team seeks to redefine obligations to stakeholders — replacing maximizing profit with a focus on people, planet and profit.

The “business as usual” short-term profit lens has spewed out all kinds of red flags morphing into the recent financial meltdown among other problems. Last fall, a Washington Post column “How the cult of shareholder value wrecked American business” addressed the “self-reinforcing cycle in which corporate horizons have become shorter and shorter” with reduced CEO tenures and patience for the long-term, as well as the decreased average time stocks are held (now less than six months).

The irony, columnist Steven Pearlstein wrote, is that the focus on maximizing shareholder value hasn’t actually done that much for shareholders.  “My guess,” he said, “is that it will be a new generation of employees that finally frees the American corporation from the ­shareholder-value straightjacket. Young people — particularly those with skills that are in high demand — today are drawn to work that not only pays well but also has meaning and social value.”

The push for purpose has many advocates in addition to Gen Y employees. The impact social entrepreneurs are having on creating positive social change as well as global giants like Unilever demonstrate that innovation, financial gain and societal benefit can fuel each other. Research also supports that purpose is as great a motivator as profit as Daniel Pink pointed out in Drive.

Purpose matters.

Inspired leaders know, says Simon Sinek, that “people don’t buy what you do, they buy why you do it.”

The Week in Ethics

Gael O’Brien, January 23, 2014

Gael O’Brien is The Ethics Coach columnist for Entrepreneur Magazine. She is also a columnist for Business Ethics Magazine; her December 2013 column is “Why Do Good People Do Bad Things? The Role of Spiritual Intelligence.”

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7 Comments on “The Week in Ethics: Why Purpose Matters to Leaders”

  1. Shannon Says:

    Excellent reminder of what is truly important for success!

    • Gael O'Brien Says:

      Thanks for this thought. I agree. It does matter to see examples of companies committed to a bigger purpose that impacts society positively. It raises the bar. The goal here isn’t to be perfect — as that is unlikely — but to have a purpose that makes a positive difference and include society as a stakeholder.

  2. Katja Says:

    I really enjoyed this Gael. I wish I could share it on Facebook. Thank you. Very inspirational.

  3. Ross Cerny Says:

    I’m switching to Lifebuoy. Righteous corporations earn my support.

    • Gael O'Brien Says:

      Thanks for your comment. The hope is that companies who are committed to addressing a purpose bigger than profit will use that purpose as a filter to look for potential unintentional consequences of products/actions and address red flags quickly. Companies, like people, won’t have a 100% track record, but I agree with you that when we see intentions to make a positive difference lined up with actions, these companies are more compelling to support.


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