Why Businesses with Purpose Grow Faster
Times are uncertain. We’re surrounded by turmoil and feel unsettled by events beyond our control. People have always searched for meaning in their lives but now, with increasing chaos in the world and a marked decline in religion, this search has become more urgent. And companies need to recognise this in their employees.
In my work as a business coach, I come across this all the time. The traditional drive towards profit and always wanting more has become hollow. People are yearning for a higher sense of purpose – of shared values and meaning in their working existence. They want to make their lives count for something.
Now, more than ever, it’s essential to work out why you’re doing what you’re doing. As Simon Sinek put it in his influential TED talk, ‘How great leaders inspire action’, you need to ‘Find Your Why’. What is your unique cause or belief? And what does this truly mean for your business and staff?
Get this right and it could be the key to scaling up your company. Here’s why.
Purpose drives engagement
The latest Gallup stats revealed that only 11% of employees in UK are actively engaged and 21% actively disengaged. That’s terrible! No wonder we have such a productivity problem. My belief is you should treat your staff like customers. It may sound obvious but happy staff, happy customers and profit are the three cornerstones of a successful business.
This isn’t a myth. In “The Value Profit Chain: Treat Employees Like Customers and Customers Like Employees”, the authors share the fruits of twenty-eight years of research. They show how this framework has constantly achieved outstanding profit and growth at 200 organisations. Contentment in staff should be rooted in a sense that you’re in it together. You have a common bond that motivates you to get up in the morning and do good work.
In my early days as MD at Rackspace, we felt we were on a purpose led adventure driven by circumstances beyond our control. I joined just before 9/11 in 2001. If the attacks hadn’t happened, the business would have been sold the next day. But the stock market didn’t open and the deal didn’t get done. With only three months’ cash left, we defined our purpose as one of ‘Fanatical Support’. We recognised that our competitors were rarely, if ever, exceeding customers’ service expectations.
So there we were – a different business that was all about service. Free, 24/7, unlimited telephone support. We’d make it easy to get hold of us and guarantee to pick up calls within 3 rings or less. We also guaranteed 100% network up-time. This was unheard of.
We felt like we were on a revolutionary mission and had a shared sense of accomplishment when we not only survived but thrived. We’d faced this together and come out stronger. We were proud.
If companies can define their purpose and link it to the individual purpose of their staff, it’s a powerful thing. Take John Lewis. Their partner model is visible and makes sense to staff. Everyone feels like they’re doing their bit and has a genuine sense of ownership. It’s even written into their constitution that their purpose is to ‘maximise the happiness of staff’. That aim should be at the heart of every organisation but it seldom is.
Personal happiness has always been the thing that drives me. I like to have an impact on the lives of the people I work with. When I was running businesses, the financials were always healthy. But the thing that made me feel good was seeing individual people blossom, learn more, earn more, do more than they’d ever thought possible when we hired them. We’d employ people with potential and the right attitude and then give them a workplace where they thrived. I knew they would go home happy and this would ripple out into their wider life – a happy husband/wife, happy kids, happy community… happy world!
Now, I get the same kick from helping business owners do this. And it starts with defining their purpose. Everything else flows out from this. Isn’t it better if your staff love coming to work? I know that better engagement can unlock 40% discretionary effort – staff will give you more. But if you approach this cynically, it’s not going to happen. You need to be thinking ‘How do we create a great place to work?’. And part of that is saying, ‘How do we make work meaningful’? What mission are we on?
Purpose drives retention
Again, this might seem obvious, but if your staff believe they’re doing meaningful work that fulfils them, they’re less likely to jump ship. I’ve just interviewed Simon Biltcliffe, the founder of print services specialist Webmart for my Melting Pot podcast. His story is a brilliant example. The business was set up because he saw that print was being sold really badly. Customers could buy exactly the same thing but spend 200% more for no added value. It was his purpose to bring transparency into B2B print buying.
But his purpose was also to create a family-like culture to deliver this. Staff share a third of all profits in the business. He’s capped the number of employees at 50 and writes each of them birthday and Christmas cards as well as notes on payslips to say thank you every month. Last year, all employees got bonuses equivalent to their annual salary as it’d been such a good year. As a result, Webmart has fabulously high levels of longevity in his employees.
Conversely, organisations with no clarity around purpose can quickly become dysfunctional, leading to disillusionment amongst staff and high rates of churn. I experienced this early on in my career when I worked at M&S. At the time, it was a pretty unhappy place to work. I’ll never forget a poster on the wall that said, ‘Doing a good job around here is like pissing yourself in a dark suit. You’ll get a warm feeling but no-one else will notice’.
There was a big clash in purpose between management, who were driven by cutting costs to increase profit, and the stores who were driven by customer service. It felt like something was rotten at the core of the business. Needless to say, I didn’t stick it out for long. I wanted to work for smaller, purpose-led businesses and have done so ever since.
Purpose drives decision-making
Once you have a really clear idea of what’s driving your company, it can act as a guide, steering you through decisions and keeping you on course. One of my clients, Artemis – a digital marketing agency – decided early on that their purpose is to be ‘Champions of Small Businesses’. When their sales teams bring in leads, they ask the question, ‘Does this new client fit with our overall purpose?’ If they’re a big corporate, even though the account may be lucrative, they decide not to take them on. Their purpose has become self-fulfilling.
At Rackspace, we took ‘Fanatical Support’ through everything, asking ourselves, ‘Are we being fanatical enough?’ If we identified areas that fell short, we addressed them. Staff told us our maternity package wasn’t fanatical. We changed it to make it fairer for the female graduates we’d just hired. We took our purpose and applied it more broadly, internally as well as externally.
Similarly, your purpose can help you hire people who share your values. It drove our recruitment at both Rackspace and IT Lab. We deliberately looked for people who loved to serve others. And this led us to recruit from different industries – hospitality, retail, security – rather than just the IT sector.
Structural decisions become simpler when you have a clear purpose. At IT Lab, our obsession with service led us to restructure into multi-disciplinary pods designed around the needs of our customers. This helped to take our net promoter score from -5 when I joined to 55 by the time I left. A massive turnaround.
Purpose drives customer loyalty
Your customers are human too! If everything your company does is focused in some way on a broader good, it will mean customers will care about you more deeply. At Rackspace, we believed so wholeheartedly in our purpose that we’d happily fix problems that were outside our terms and conditions. For example, when websites were hacked we’d put people on it, night and day, to get it fixed. Even though our t’s and c’s said that security and backup was the responsibility of clients. We felt, if we delivered great service, the word would spread and customers would spend more. And they did.
A purpose led, values-driven approach is not for everyone. Some organisations have such ingrained behaviour patterns that they can’t or won’t change.
But it’s within the control of all companies to really define what they’re about. As a Business Coach, I urge clients to give this proper consideration. Re-imagine, capture, create or pull from history what the true purpose of your business is. Then, with this solid foundation, we can move through the rest of my programme, seeing profits rise, staff become happier and businesses grow to realise their full potential.
Written by business growth coach Dom Monkhouse. Find out more about his work here.
The Value Profit Chain: Treat Employees Like Customers and Customers Like Employees by Hasket, Sasser and Schlesinger
Simon Sinek Tedx ‘How Great Leaders Inspire Action’