New and exciting times require new ways of managing organizations. Purposeful behavior presents such a new way by merging the holistic thinking found in stakeholder theory with the power of purpose in organization performance. Purposeful behavior is based on the premise that:
- Every organization must harness the power and resources of its stakeholders (its stakeholder world) to survive and thrive.
- Purpose provides the most effective pathway for doing that.
This style of management contains practices that will enable organizations to:
- Discover what their purpose is and make it meaningful and important to their stakeholders
- Incorporate purpose into their strategic thinking and actions
- Design a culture that supports achieving their purpose
There are five reasons why organizations should embrace this style of management
First, it’s a powerful way of managing the conflicting interests of different stakeholder groups; whether employees and customers or suppliers and the local communities they impact.
Wegmans, for example, a successful retail grocery chain in the Northeast, was able to satisfy the needs of its customers and employees by having a purpose committed “to serving its customers and employees in every community it operates”.
Second, purposeful behavior enables clarity of action. When strategic decisions must be aligned with purpose, organizations don’t’ make the mistake of relying on their business model for direction.
For example, All City Management Services Inc., also known as the crossing guard company and whose purpose is “keeping children safe,” had considered offering security guard services in order to provide more working hours for their part-time employees.
Realizing that general security services did not necessarily involve children’s safety, the company looked elsewhere to address this issue. It is easy for successful companies to go off course since they are constantly bombarded with opportunities. Filtering these opportunities through a purpose test can avoid this problem.
Third, purposeful behavior supports an empowering culture because every employee has a greater understanding of the organization’s ultimate goal. Frieda’s Specialty Produce , whose purpose is to “change the way America eats fruits and vegetables,” empowered its marketing team to create novel food demonstration videos on YouTube, since it was clear to the team what their role was in achieving its purpose.
Four, purposeful behavior also facilitates innovative thinking in stakeholder development. Pelican Parts, an e-tailer in the auto parts business whose purpose is to “empower and fulfill the needs of auto enthusiasts,” was brainstorming ways to grow its business.
After considering improvements to its current approach and brand expansion, the company re-examined its stakeholders and in particular auto enthusiasts. They soon realized that DIY enthusiasts (their target market) only represented a fraction of the auto enthusiast market and that there was great potential in building relationships with enthusiasts who preferred to bring their cars to a repair shop.
Fifth, purposeful behavior also creates a sense of urgency and a high level of employee engagement in an organization. When you have a purpose that will change the world, it becomes your mission. Employees that operate inside of a sense of purpose are far more engaged in their work than those that are not.
Gallup studies have shown that public companies with more highly engaged workforces out perform their competition by close to 150 percent in earnings per share. Dale Carnegie participated in a study that showed that employees who were highly engaged in their work exhibited greater enthusiasm, empowerment, inspiration and confidence. Purposeful behavior provides employees access to all of these traits.
When you lead your stakeholders with a common purpose that is meaningful and important to them all, miracles happen.
Paul Ratoff, author of “Thriving in a Stakeholder World: Purpose as the New Competitive Advantage” (www.ratoffconsulting.com), is a certified management consultant and president of Strategy Development Group Inc. He also is founder of the Foundation for Purposeful Organizations. He has been a successful business consultant in Southern California for 35 years.