The impact of being a purpose-led business
Using business as a force for good isn’t just a West Michigan practice. It’s a movement that’s happening across the country and around the world.
Companies everywhere are retooling their mission and vision statements and updating their business plans to reflect values that put people and the environment first.
Being a purpose-led business is good for business. A recent report found that British B Corp brands, which are companies that use business as a force for good and meet rigorous standards of social and environmental performance, accountability and transparency, are growing 28 times faster than Great Britain’s national average. It’s clear that a business’ values can have a positive impact on the bottom line.
Key stakeholders — including employees, customers and investors — also are taking notice of purpose-led businesses. Stakeholders want to see practical demonstrations of how a business is putting its mission into practice each day.
Here’s a look at what employees, customers and investors want to see and hear from purpose-led companies.
Many employers know how difficult it is to attract and retain talent. With Michigan’s unemployment rate now under 4 percent, employers are struggling to fill many open positions.
One way employers can stand out to prospective employees is by demonstrating a company culture that’s valued-based and provides opportunities for employees to be part of a positive impact. Job seekers pay attention to a company’s impact in the community and want to work for an organization that aligns with their personal values. In fact, a 2015 Deloitte Millennial Survey found that two out of three millennials stated their employer’s purpose is the reason why they chose to stay there. A Universum report also found that job seekers consider qualities including company culture, relationships and the company’s brand.
Today’s customer is savvier than ever and they expect companies to be active in helping their community. One study found that 87 percent of younger customers say they would prefer to purchase products that have a positive social or environmental impact.
Most customers now expect companies to make a bigger impact that goes beyond earning a profit or creating jobs. Increasingly, businesses will need to show customers a variety of ways their business makes a positive impact by telling stories, sharing information in newsletters or highlighting different social and environmental projects on social media. It’s going to take more than making one charitable donation at the end of the year to show customers that a business cares about their community and the environment. By demonstrating how these values permeate the company culture from top to bottom, a business can build stronger brand loyalty and trust.
We often characterize investors as distant and only caring about the quarterly profit report. Investors in purpose-led businesses know that making a positive social and environmental impact also can be good for the bottom line. According to a March 2018 report published by Yale Center for Business and the Environment, B Corps had a greater revenue growth rate than other public companies during the Great Recession (from 2006-2011).
Another benefit of being a purpose-led business is that it tells investors a company is committed to transparency. For example, B Corps are required to publish information and data about their governance and social and environmental impact. This practice provides clear evidence to investors whether a company is making a true impact over time.
Being a purpose-led business is more than hanging a set of values on the wall or writing them in an employee handbook; it’s about living them out each day throughout an entire business. As you continue to plan for the future and think about where your business will be five, 10 or 15 years from now, remember to think about the impact you want to make on your community and the environment and what employees, customers and investors want to see from you.