Manage HR Magazine | Monday, June 06, 2022
High-purpose companies, according to new research from IMSA Search Global Partners, show greater revenue growth, higher operating profitability, and better return on capital than those focused only on maximizing profits.
FREMONT, CA: Many corporate leaders believed that by the time 2022 rolled around, we would have put the epidemic behind us and be well on our way to a post-COVID future. The reality is that COVID and new variants of the virus will remain with us for the foreseeable future, especially with the recent rise of the Omicron variant with caseloads continuing to rise worldwide.
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Corporate purpose and PR exercise are two different things. According to IMSA, it is a competitive advantage. According to research conducted by Chief Executives for Corporate Purpose (CECP), companies with a clearly defined and articulated purpose – high purpose companies – have 14 percent higher revenue growth, 8 percent higher operating profitability, and 6 percent better return on capital than companies solely focused on profit maximization. And the gap is widening. According to the IMSA analysis, purpose plays a role in purchase decisions. In a TED Talk, a purpose expert, researcher, and best-selling author remarked people usually do not buy WHAT you do, but they believe WHY you do it. Purpose directs a company's focus toward social responsibility, which drives customers, who in turn contribute to the creation of value.
According to the Conference Board, almost a quarter of S&P Global 1200 businesses have a statement of corporate purpose (SCP), which is described as "a public commitment to understanding and responding to the needs of diverse stakeholders well beyond the boardroom." According to the IMSA research, in this era of stakeholder capitalism, company leaders view their primary responsibility as providing long-term value for customers, suppliers, employees, and the communities in which they do business. Shareholder value is profit-driven, and the need for meaning is the source of value for these other stakeholders.
The SCP is an essential part of the company identity story. According to the IMSA research, purpose questions why a company exists or does what it does, in addition to vision – a company's main long-term aim, mission – what a firm does, and values – how a company accomplishes its work.
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