Leading with Purpose
It’s estimated that there are over 165,000 charities in the UK with a staff exceeding 850,000 and a combined income of around £45Bn[i]. Charities with incomes above £10m make up less than 1%. Grassroots voluntary organisations make up the majority of charities with the majority – 54% - receiving about £10,000 a year[ii]. Yet trust in the charity sector sits around the 51% mark[iii]. Better than many but not good enough.
Search Google for the single word “leadership’ and over 2 Billion results are made available. LinkedIn throws up over 300,000 ‘Thought Leaders’ and even more ‘Gurus’ – a mere 474,602 individuals. Never has so much advice on leadership been made so freely available, to so many, so quickly. It’s estimated that US companies alone spend about $14 Billion a year on leadership development.
Yet it doesn’t seem to be making much difference to how Organisations are led and managed. Nor is it resulting in deeper levels of trust in companies. Some of the figures on levels of employee satisfaction and engagement tell their own story about a breakdown in levels of trust within organisations.
Some examples. The widely respected Edelman Trust Barometer reports that in the UK only 36% of the British public have trust in government. Business fares slightly better with 43% having trust. A Charities Aid Foundation survey put trust in charities at 51%. Diving deeper into the workplace itself a Gallop survey discovered only 13% of employees were actively engaged with their organisation and 24% were actively disengaged.
So there is an emerging dichotomy and it’s harming the organisations and individuals who work within them. Professor Jeffrey Pfeffer of Stanford University calls this out in his book Leadership BS. Essentially he argues that the Leadership industry confuses ‘what ought to be with what is’ with the actual reality for most – poor or indifferently led workplaces and organisations.
One emerging line of thinking on how organisations managed to get to this point is the adoption of the Nobel prize winner and economist Milton Friedman mantra ‘that businesses' sole purpose is to generate profit for shareholders’. From there we have a direct line to Gordon Gecko opining in the film Wall Street that ‘Greed is good’. And from there we also witness an extraordinary rise in the amount CEO’s are paid compared to the salary of a typical worker in their company. In 1978 the ratio was about 30-1. It’s now about the 280-1 mark. There are examples of the ratio exceeding 1000 – 1. Increasing shareholder value is more often than not the reason given to justify the disparity. Is it any wonder therefore that we are witnessing widescale dissatisfaction within the workplace and the attendant ills and consequences of badly run organisations.
From a behavioural viewpoint most people do not get out of bed in the morning with the single purpose of increasing shareholder value or profits. Neither do they go to work to fulfil a ‘vision’ that has been articulated by a distant CEO. Lucy Kellaway of the Financial Times performed a wonderful service in identifying and calling out ‘corporate claptrap’. It was Lucy who identified swimwear company Speedo rechristening the swimming cap a ‘hair management system’ and the Starbucks CEO, Howard Shultz, announcing that ‘Starbuck Roasteries were ‘delivering an immersive, ultra-premium, coffee forward experience’. There were many more identified in her annual ‘Guff Awards’.
Whilst it’s likely that an annual ‘Guff Award’ will have many contenders for many years to come there is a quiet revolution underway to bring back the idea of ‘Purpose’. Simon Sinek popularised the idea of asking ‘Why’ a company exists. It should know ‘What’ it does, it should know ‘How’ it does it but it often struggles to identify “Why” it does what it does – its Purpose. Some of the ideas are actually taken from military thinking where you are constantly required to ask yourself a series of questions one of which is ‘What have I been asked to do? And Why? The Why gets to the Purpose of what you are being asked to do. Understanding Purpose - and agreeing with it – is a much more likely reason to get out of bed than the one so commonly provided – increasing shareholder value.
One small example from a recent McKinsey report that will be of particular interest to a charity and its fundraising efforts. A Professor Adam Grant conducted a series of experiments with university fund raisers. Anyone connected with fundraising knows that it’s not easy. Your efforts can result in a lot of rejection and pay can be dependent on obtaining the sought after pledges. Grant conducted two experiments. In one he arranged ‘for fund-raisers to hear a senior executive and a board member of a university speak about the significance of education in society and the importance of the fund-raisers’ work to scholarship recipients. Nothing came of these supposedly motivational speeches. Productivity “didn’t improve at all”.
In the other experiment he arranged for the fundraisers to meet a student who had received a scholarship and for the individual to explain the positive impact this had on their life. The consequence is that the fundraisers were able to identify the impact their work had first hand. In the two months after both experiments those who had met the student raised nearly 300% more than they had in the previous two months. The point being of course that the purpose of their calls had become much more meaningful and relevant. It was worth getting out of bed for.
There is a lesson to be learnt here for charities – large or small – in being fairly ruthless in linking the end product of its charitable work with those who serve within its organisation. A charity’s purpose tends to be much clearer - its why it exists – but the outcomes it seeks must be continually linked to that unifying purpose.
Purpose lies alongside company culture. Each company has its own culture. Sometimes it’s wonderful – and hence a great place to work, more often it’s indifferent and sometimes it’s utterly toxic. The latter two are more likely to be focused on the single purpose of creating value for shareholders. Peter Drucker the management guru and thought leader (he does deserve to be recognised as such) is quoted as saying that “Culture eats Strategy for Breakfast”. In essence those companies with strong culture know “Why’ they do what they do. They understand their Purpose.
Identifying the Purpose behind an organisation is not about identifying a seemingly heroic, unobtainable vision. Employees will simply not buy into that. Identifying a Purpose that all employees can buy into is what it’s about. Of course, addressing disengagement by employees (and many other ills of the workplace) is not simply resolved by suddenly finding Purpose. Much else needs to accompany identifying a clarity of Purpose. However without it that task will be all the harder. The consequence? The likelihood of continuing to feature in the ‘Guff Awards’. Or even worse – long term reputational damage with a dissatisfied employee base and being called out for Leadership BS.