Though not a new concept, the notion of organisational purpose has gained more interest and airtime in recent years. As organisations rethink and reimaging their direction, it’s essential that purpose isn’t lost. In a study conducted by Harvard Business Review (HBR), it was revealed that intrinsic motivation is one of the most important motivators for employees, and those businesses that establish a strong purpose enjoy higher growth rates and higher levels of success in transformation and innovation initiatives.

However, data seems to show a discrepancy between how important many leaders believe purpose to be, and how many actually build this into the foundations of their organisations. For example, 79 percent of business leaders surveyed by PwC believe that an organisation’s purpose is central to business success. Despite this, 68 percent shared that purpose is not used as a guidepost in the leadership decision-making processes within their organisation.

Identifying this gap between action versus words when it comes to organisational purpose presents an opportunity for leaders to approach purpose with greater commitment, and optimise the output, efficiency and sustainability of their company.

Furthermore, with the disruption caused by the pandemic, many organisations may have needed to alter their strategy and business model to remain viable during this time. All of this could have diluted the strength of their purpose, or else changed it all together.

If you feel as though you may need to refocus, redefine or recommunicate your organisation’s purpose to your employees, here are some reasons why it is so important to do so, and what you stand to gain as a result.

But firstly, what is organisational purpose?

The aforementioned HBR study defines organisational purpose as “an aspirational reason for being, which inspires and provides a call to action for an organisation and its partners and stakeholders and provides benefit to local and global society.” In other words, organisational purpose can be explained as the ‘why’ of an organisation, and not simply the ‘what’: why does the organisation exist in the first place?

At a basic level, purpose can express what an organisation aspires to be and do, and can set an organisation apart from its competitors. But at a more advanced level, it becomes a conscious expression of how an organisation intends to evolve and transform itself. A truly purpose-driven company would use purpose as its guiding force for decision-making, guiding business leaders in deciding which opportunities to pursue and how to pursue them. In the same way, it determines which directions and initiatives these leaders decide not to go forward with.

While focusing on a company’s profitability and financial stability is indeed crucial for sustainability and growth, leaders who neglect to establish strong purpose risk underutilising employees, potentially alienating customers and sacrificing the potential success and influence of their business.

Purpose improves employee engagement, productivity and innovation

So often, employees are thought of as simply “working to live” (as the old adage goes), becoming progressively disengaged and disenchanted with their work and employer. But this doesn’t have to be the case. It has been shown that employees who not only understand their organisation’s purpose but also integrate this into their activities at work, are more engaged, inspired and motivated in the work they perform.

According to a study, those organisations who prioritised establishing an organisational purpose and communicating this to their workforce, had successfully completed a major initiative in the past three years, including expanding geographically, changing their business model and/or operations, completing a merger, and launching a new product.

Further to this, those employers who participate in and uphold the purpose of their employer are also more satisfied in their role and less likely to leave as a result. This is particularly true of Millennials, who are 5.3 times more likely to stay working with an organisation if they feel a strong connection to their company’s purpose. This improves retention, ultimately saving companies time and financial investment when it comes to re-hiring, onboarding and training.

What leaders should remember, is that employees see purpose as a way to bring meaning to their work. Communicating a clear purpose, therefore, is an opportunity to drive greater business value while harnessing employee engagement.