Why Purpose-Driven Companies Have a Competitive Advantage

October 30, 2019
Elevators, HVAC
4 min read

Do you feel a sense of meaning or purpose in your work? The need for purpose is one of the defining characteristics of human beings. Yet, only about 30% of the U.S. workforce reports being actively involved, enthusiastic and committed to their jobs. Employees want to feel a sense of purpose at work and know how their contribution makes a difference. As Nicholas Pearce, author of The Purpose Path: A Guide to Pursuing Your Authentic Life’s Work and professor at Kellogg School of Managementsays, “It is engaging in the radical act of connecting our souls with our roles.” There is a movement happening where employees want a job that gives them a sense of purpose and customers want to buy from companies whose brands are based on values that they identify with. Today, purpose-driven companies have a competitive advantage.

What is purpose?

Purpose is simply the reason why you do what you do. A clear purpose goes beyond products or services, and instead describes what impact or change the company can make in the largest context possible. A company’s purpose should motivate what companies do every day because the “why” should drive the “what”. For many companies, their focus has been on maximizing profit, which is not a compelling purpose or a convincing “why.” Without a doubt, making profit is important, but it not the reason why an organization exists.

An organization’s purpose is like an individual’s thumbprint or DNA. It is what differentiates it from other companies. What distinguishes one company from another should be their “why.” So, there’s an increasing importance on purpose because there are a lot of people who are making employment decisions not based solely on profit potential, or even salary potential, but on purpose alignment.

The why that drives the what

Having a higher purpose (“the why that drives the what”), beyond profit maximization, is different than having a mission statement, and is separate from corporate responsibility or explicitly socially impactful actions. Pearce points out that workers often feel that community service activities are more for optics, and thus, these initiatives do little to combat purposelessness.

In fact, company purpose requires profound organizational reflection. Finding the reason for a firm’s existence is challenging and Pearce proposes these questions to help find and understand purpose:

  1. Who would care if we ceased to exist?
  2. Are our best or highest values dictating our company’s actions?
  3. Do we feel authentic in our workplace?
  4. Is this work I “cannot not do”?

LinkedIn conducted the most extensive global study on the role of purpose in the workforce. Their findings revealed that purpose-oriented employees have higher levels of engagement and fulfillment with their work and outperform their peers in every indicator, including expected tenure and leadership competencies like self-advocacy and comfort with senior leadership. These results were reinforced by another recent study which found that employees who find work meaningful are 69% less likely to quit their jobs within the next six months and have job tenures that are 7.4 months longer on average than employees who find work lacking in meaning.

Purpose-driven employees are also a company’s most influential brand ambassadors. Consumers are influenced to buy a brand, product or service by the words, actions, values and beliefs of a company’s employees—not just the CEO or marketing spokesperson. There is no more authentic way to promote an organization than through employees who are truly aligned with a company’s mission.

Purpose leads to profit

Companies that are thriving and growing understand that purpose is important in order to remain competitive. These companies recognize that purpose not only inspires employees and attracts customers but also improves the bottom line.

Clearly defining your company’s purpose can truly drive your company forward. Purpose helps set long-term business strategy, creates a bigger competitive advantage and differentiation in the marketplace, inspires innovation, increases brand trust and loyalty, and ultimately, helps the company stand the test of time. 

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