Development of the first tool for measuring companies’ corporate purpose
Corporate Excellence - Centre for Reputation Leadership, the University of Navarre, UIC Barcelona, NCH&Partners and DPMC recently presented the Purpose Strength Model, a new model for assessing, diagnosing and promoting the generation of a shared purpose in organisations. The book Purpose-Driven Organizations: Management Ideas for a Better World, by UIC Barcelona lecturers Carlos Rey and Miguel Bastons, was also presented at the event. It is the first reference manual on building companies driven by a unique and differentiating purpose.
Defining a purpose that links business objectives to a positive social, ethical and environmental impact is one of the major challenges that organisations face, as reflected in the results of the Approaching the Future 2019: Tendencias en Reputación y Gestión de Intangibles[Approaching the Future 2019: Trends in Reputation and Management of Intangibles]report drawn up by Corporate Excellence and CANVAS Estrategias Sostenibles based on a survey of more than 200 managers of large companies.
The need to gauge the internalisation of the purpose and to identify the levers for promoting it at organisations led Corporate Excellence – Centre for Reputation Leadership, the Tecnun School of Engineering at the University of Navarre, UIC Barcelona’s Chair in Management by Missions and Corporate Governance and DPMC to undertake an R&D and innovation project in the field. The results enabled the creation of a tool for measuring the degree of implementation of the corporate purpose at organisations called the Purpose Strength Model, which was presented on Tuesday, 25 June, in Madrid.
The results of the Approaching the Future 2019 report show that 56% of the surveyed executives are already working on initiatives to implement and activate their company’s corporate purpose through values and corporate culture. Furthermore, 92% of that group say that they have defined it, understanding that it is no longer based exclusively on business, but rather includes social, ethical and environmental values as well. However, according to Ángel Alloza, CEO of Corporate Excellence – Centre for Reputation Leadership, “To date, there were no tools for assessing the strength and internalisation of the purpose at the organisational level. The Purpose Strength Model is intended to address that need.”
To measure the degree to which workers have internalised the corporate purpose, the variables that accelerate or decelerate that internalisation, and how it impacts a company’s efficiency, the research project Measuring the Purpose Strength was launched.
In this initial phase, a survey was conducted of 1,500 employees and 350 managers from 20 companies across 4 countries that have implemented a purpose-driven management system. “The first analyses show that identification with the corporate purpose can increase employees’ organisational commitment up to 70%. Additionally, we identified companies that have increased their profit by up to 30% by developing a purpose-driven organisational model. However, we are still in the early stages and must be cautious. The more empirical evidence we obtain, the better we will understand the effects of purpose”, said Álvaro Lleó, a lecturer at the Tecnun School of Engineering and the project’s academic director.
“The current environment of constant change, uncertainty and distrust makes companies increasingly aware of differentiation based on a shared corporate purpose”, explained Carlos Rey, director of the Chair in Management by Missions and Corporate Governance at UIC Barcelona.
“Companies’ sustainability is conditional on managers clearly defining the organisation’s reason for being and on how well they can transfer it to their everyday activities. We need human companies, companies with a clear sense of contribution to society”, said Nuria Chinchilla, a professor at IESE Business School, founder of the International Centre for Work and Family and holder of the Carmina Roca y Rafael Pich-Aguilera Women and Leadership Chair.
New reference manual for building companies with a purpose
The event also included the presentation of the book Purpose-Driven Organizations: Management Ideas for a Better World. The book is a reference manual for building companies driven by a shared and differentiating purpose. Through the contributions of 18 experts in the field, the book, edited by Professor Carlos Rey, director of the Chair in Management by Missions and Corporate Governance at UIC Barcelona, and published by Palgrave Macmillan, with the support of the Corporate Excellence Library and the consulting firm DPMC, offers a roadmap for defining and activating corporate purpose.
“One of the key things setting this work apart is that it will be available with open access. This is our big contribution to business management”, explained the president of Corporate Excellence – Centre for Reputation Leadership and director general of the LaCaixa Banking Foundation, Jaume Giró. He continued, “Today, you cannot build trust, reputation and commitment with stakeholders if you do not have a coherent and authentic purpose.”
Linking purpose to profitability and profit generation is a priority for companies that has also been driven by investors, as witnessed by the annual letter to CEOs from Larry Fink, CEO of BlackRock (one of the world’s largest investment funds), on the need to align profitability and purpose.