Why ‘Profit-With-a-Purpose’ is Becoming the New Norm
30th July 2019
Digital transformation, millennials, generation X, generation Z, industry 4.0……With so many buzzwords floating around modern business, it is easy to miss out on a major trend that is having a significant impact on present performance and helping to shape future organisational performance – ‘profit-with-a-purpose’.
Contrary to popular belief, ‘profit-with-a-purpose’ does not mean lowering profits and it is more than simply about sustainability. The term encapsulates the full value that an organisation can bring to the world, including profit. These are purposes that are driving positive societal change. This could include renewable energy businesses where there are exciting developments being made in the efficiency of solar panels; innovation-led consumer businesses that are shaping how we live our lives; but also service-led businesses that provide crucial front-line services from waste management to security and cleaning businesses.
Profit-with-a-purpose is one of the major influences shaping the employee value proposition.
But why should leadership care?
Mercer’s recent Global Talent Trends research suggests that employees are seeking a greater purpose from their organisations and the message is too frequently geared towards profit. Delivering a sense of purpose, as well as profit, is reflected in better employee engagement, productivity and performance. Consequently, the retention rate of high performing employees is higher amongst engaged workforces, which is saving organisations substantial sums in recruitment fees.
Beyond the impact on workforce, sustainability and ‘purposefulness’ are becoming crucial in securing further investment. UK Private Equity firm Foresight Group is the latest finance and investment firm to launch a fund focused on sustainability within infrastructure. Their fund will invest only within organisations that deliver a ‘net social or environmental benefit’ and comply with the 10 principles of the UN Global Compact for business. This follows on from L&G’s ‘Future World’ series of funds which cover climate change and gender in leadership. This trend is expected to continue and if organisations wish to seek funding for future expansion, they will need to reflect greater social value.
For those Leaders who still want to hear about the numbers, ‘profit-with-a-purpose’ can benefit the bottom line. McKinsey’s recent research suggests that there are over $1trillion in savings to be made from more sustainable materials management, which has a direct impact on profitability. Through better collaboration across industries, organisations can capture much more value throughout the supply chain and maximise the material management opportunities with a significant impact on profitability.
What should Leadership be doing?
Any cultural change initiative won’t succeed without the buy-in from the leadership team. To ensure the top table is bought in, the incentivisation for leadership should be re-evaluated to incorporate new metrics that deliver value beyond profit. These factors could include employee engagement, staff development, the use of local supply chain and the impact on the local environments. Equally, leadership could emphasise key behaviours, such as curiosity and collaboration – both of which support employee engagement and innovation, which are crucial to delivering social value. These behaviours should be incorporated into any key leadership hiring processes to support the change process.
Organisations have the ability and opportunity to strengthen their balance sheets and future-proof themselves by embracing ‘profit-with-a-purpose’.
George Dobbins is a Director for the executive search firm Beaumont Bailey, supporting privately-owned businesses recruit leadership talent across the UK and Europe within the infrastructure, real-estate, industrial and manufacturing industries.