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Corporate Purpose; What it is and why organisations should articulate theirs

  • Hasan Ahmed
  • Aug 21
  • 4 min read

Updated: Aug 26

Value generation for stakeholders and not only shareholders is inherent in corporate purpose
Value generation for stakeholders and not only shareholders is inherent in corporate purpose

Ever wondered what makes some companies feel soulless despite being financially strong, while others evoke a deeper, enduring connection? The latter likely pursue a purpose that aims to create value for multiple stakeholders beyond merely shareholder value creation. The past decade has spurred conversations and research around corporate purpose, with many companies attempting to define, articulate and implement their purpose in practice. Employees and even external stakeholders are argued to relate to such a corporate purpose at a personal level, boosting productivity and engagement.


What is corporate purpose?

Corporate purpose has been defined differently by various authors, but may be summarised as the essence of an organisation’s existence beyond profit maximisation to create value for its multiple stakeholders and the planet. It's different from the vision, which articulates what the organisation wishes to become or achieve, and the mission of the company, which emphasises how the organisation will achieve its vision.


What is its relevance?

Over the years, rapid industrialisation and capitalism have brought about many benefits to society, but also significant harm in terms of income inequality, environmental degradation, etc. This has necessitated a review of the purpose of businesses to also include their social responsibilities, besides financial pursuits. Discussions around purpose in companies have become prominent in the business environment with an increased focus on the need to create value for multiple stakeholders, as against only shareholders. Corporations are seen as social agents with the responsibility to generate value not just for the shareholders but for other stakeholders in society. After all, millennials and Gen Zs increasingly search for purpose-driven companies to be associated with. Many have reported the absence of such a purpose as one of the reasons behind the phenomenon of 'quiet-quitting' and the 'great resignation' in the wake of the pandemic.


Is there a business case for corporate purpose?

While purpose-washing by organisations, where purpose statements are for adorning walls but are not implemented or adhered to in the organisation, is a genuine challenge, organisations that pursue their purpose with authenticity have been shown to create lasting benefits to companies.


Recent research has established that a well-implemented purpose is authentic, guides decision-making, demonstrates contribution to society and is inspiring to employees. Such an embedded purpose provides superior long-term financial returns to the company when compared with others. This provides a strong business case about how purpose-driven companies are valued.


Corporate purpose is also deeply enabling at the individual level and has been identified with a range of positive outcomes for employees, such as:-

  • Higher employee engagement - Through its inspirational properties, it facilitates a deeper engagement among employees

  • Improved well-being - By aiming to create value for multiple stakeholders, including employees, it promotes meaning and practices that enable well-being.

  • Increased individual performance - It promotes intrinsic motivation towards work goals by meeting our basic needs of having some control over our actions, creating impact around us and building relatedness with others

  • Promotes transformational leadership behaviours - Through an authentic shared objective, it provides clarity and guidance to leaders to declutter assumptions and make goals inspiring and learning personally meaningful for employees

  • Facilitates a learning climate and innovation - Balancing the needs of multiple stakeholders promotes experimentation and a climate of learning, creativity and innovation.


How can organisations apply these findings to promote wellbeing and productivity?

Below are a few steps to consider around identifying and implementing a clear corporate purpose in organisations

  1. Look inwards to identify your corporate purpose - engage leaders and key stakeholders on the 'why' of the company's existence.

  2. Articulate this purpose in a sentence - it should be simple and easy to recall, while you can have a more detailed explanation to decode what it means for providing clarity

  3. Ensure that it's not seen as "purpose washing" - it should be authentic and guide the organisation in its decision-making. It should be observable in the actions of the company

  4. Integrate with your organisation's processes and systems - for instance, is your R&D goal aligned with the purpose of the company?

  5. Track metrics to measure progress - have metrics that track your progress towards your purpose. Integrate these as part of the business review meetings


Corporate purpose provides a unified shared objective that aligns different generational cohorts by appealing to the intrinsic motivation of employees, thereby addressing a significant issue faced by organisations in managing the expectations of different generations at work today.


“He who has a why to live can bear almost any how” - Friedrich Nietzsche. In organisational contexts, corporate purpose provides such a ‘why’ to employees that makes them resilient towards their performance goals. With more organisations adopting such an approach, we can make rapid progress towards achieving the 17 SDG goals identified by the United Nations

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