Australian business leaders are well aware of the economic data. They see Australia's record-run of positive economic growth, but they also see stagnating wages, a coming flood of technological disruption and a painfully disengaged workforce. Growth has remained positive, but sectors like retail and media are struggling.
With such economic uncertainty, it is more important than ever that organisational leaders engage their staff and their customers with a coherent organisational purpose.
Enterprises that embed effective people and planet strategies will not only engage their staff more but also be able to face the challenges of new technology, outsourcing and societal changes. Better yet, with staff and customers engaged, the foundation is set for growth.
Having worked in start-ups, large businesses, and passion led not-for-profit environments, I have distilled the three pillars to lift staff engagement, create evangelical fans, and maximise growth.
The profit measure is the commonly held yardstick for organisational success. However, while profit is a critical pillar, it is a lagging indicator. We need a new approach to understand how the business is performing in all areas.
Purpose, People, Planet together with Profit, are vital to measuring what I have termed Organisational Wellbeing in the 21st century.
In this article, and in a series to come, I'll share insights on integrating these Purpose, People, and Planet strategies into your operations, and your mindset. Being a strategic finance practitioner, I will demonstrate the financial benefit of what is typically thought of as the ‘fluffy stuff’.
Purpose -The Why?
All enterprises start with an idea. The founder(s) apply passion and purpose, to cultivate this into a business. Through their energy and decision-making, they define the culture of their organisation. Some will do this with intention, but others will realise this much later. This sense of Purpose (culture), enables the enterprise to grow, to scale and to thrive, attracting the right staff and the customers.
Those that fail to define a sense of purpose will struggle to retain their founding essence when they face competition or try to expand.
Two examples that I like referring to are Virgin and Apple.
Richard Branson, at Virgin, wanted to reinvent how business was done. This was his purpose. He did this by disrupting the establishment in a fun and cheeky way, and at every stage providing ever greater levels of value to the customer. These values embody the Virgin brand to this day.
I worked for Virgin Mobile, and I saw first-hand some business opportunities that were not given the go-ahead because they were found to be outside the values of the Virgin brand. Despite the potential financial gains, the decision came down to purpose.
In other words, the culture and the values of the brand were elevated above the temporary fiscal outcome.
Today, Virgin brand has expanded to over 60 products and over 50 million customers. Many large corporations are happy to pay licensee fees simply to be associated with the brand.
When I say to people that I have worked at Virgin, more often than not they smile and ask whether I have met Branson. The brand appeal is everything. The answer is yes!
Steve Jobs, at Apple, wanted “to make a contribution to the world by making tools for the mind that advance human kind”. Apple has achieved this across sectors from desktop computers, to MP3 players, mobile phones, music streaming and now to banking. When we think of Apple, the products are about oneness, simplicity and ease of use. All their products communicate with each other, they share the same ethos; and it is this unity that separates them from their competition.
Have you walked into an Apple store and asked for help? The staff service almost feels surreal, but it is not. The staff believe and embody the brand. They are the evangelists.
Every enterprise has a purpose. If it did not, it would not exist. When the true purpose is identified, this can be cultivated and shared throughout the organisation and beyond. A Ted Talk by Simon Sinek well articulates the importance of asking 'why' and how it appeals to our ‘reptilian’ brain. I was fortunate enough to meet Simon and a trainer, Peter Docker, when they were in Sydney. The event was a sell-out with thousands of business leaders.
It is clear that leaders are now seeing the importance of the 'why' to differentiate their enterprise and to succeed in an increasingly commoditised and competitive environment.
In Sydney, we are seeing further growth of purpose led change with major events focusing on this pillar. Muneesh Wadhwa and Peter Smith at Humanity in Business are holding a Purposeful CEO Summit for the corporate leaders. On the other spectrum, Sally Hill at Wildwon is holding a Purpose Summit as a 'place for purpose-driven businesses'. I've known Muneesh and Sally for nearly a decade. Our collective mission is crystal clear; to bring about the change in the business world.
When I work with business leaders, through coaching and facilitation, I start with the 'why'. It is a vital concept, and yet it is neglected, as the challenges of day-to-day operations to envelop the leaders' attention.
Using executive coaching tools and Simon Sineks’s approach, the ‘why’ can be distilled easily. This sets the foundation for engagement and growth.
People - Human capital
As modern capitalism has developed, since the industrial revolution, business has valued financial capital above all else. Today, the financial capital is the most abundant it has ever been. A report from Bain and Company Macro Trends suggests the financial capital available is nearly ten times world GDP.
If funding is not the most important aspect to a business today, what is?
World Economic Forum report on Human Capital from 2015 states “Talent, not capital, will be the key factor linking innovation, competitiveness and growth in the 21st century, and we must each understand the global talent value chain.”
To attract quality talent the staff engagement needs to be high. According to Gallup polling in Australia shows only 24% of the Australian workforce is engaged. This leaves 60% of workers not engaged and the remaining 16% thoroughly disengaged. The result means only a quarter of the workforce are completely engaged and supporting their business.
Consider your organisation? Imagine the productivity gains of increasing the engagement of your workforce even slightly.
So how do you build engagement?
I have identified three areas to focus on:
- Increase Intrinsic Motivation
- Staff Wellness
- Greater Social Harmony
Increase Intrinsic Motivation
Every great leader knows how to balance intrinsic and extrinsic approaches to motivate and engage staff.
We all know of extrinsic motivators like title, salary, financial rewards and recognition in the organisation.
Intrinsic, or internal, motivators are largely intangible. These included motivators like feeling satisfied with the work, feeling heard, feeling capable, doing something because of the challenge and fun of it, or participating in a group because you find it enjoyable. Intrinsic motivation occurs when the values and achievements are fully and fairly recognised in the individual.
The two approaches are quite distinct.
Most organisations hire staff based on competence. Where does that leave the intrinsic motivators that come with a sense of purpose and values alignment?
Unfortunately, this linkage is all-too-often forgotten. To embed engagement into every organisation, the purpose must come first. Once the purpose is clear, an organisation can align its vision and values into everything it does, including hiring.
In practical terms, hiring staff on competence alone can be circumvented with a manager who exhibits the organisation's ideal values. Should the manager leave, this then leaves an organisation exposed.
While financial rewards are important, employees are far more engaged when their contribution is valued, and they have a voice within the organisation. Branson was famous for asking each person in the organisation what they thought needed improving. By acknowledging each person, he showed leadership by emphasising how each person matters.
I have found the biggest secret to intrinsic motivation is communication from top to bottom, bottom to the top, and sideways. Consider a situation where a company needs to outsource to compete. Outsourcing has the potential to cause significant disruption because staff feel threatened. On the other hand, with careful communication and staff engagement, by bringing the majority along on the journey, the staff do not just accept the decision to outsource, they support it, knowing it was for the good of the organisation as a whole, including all stakeholders.
The financial benefit of starting with these approaches is easily visible in reduced staff turnover and the ability to attract quality staff.
Many organisations are implementing effective staff wellness programs at work. This demonstrates to the staff that the organisation cares for individuals as well as the profit line. By implementing wellness initiatives, the staff gain a sense of nourishment.
When I founded my consumer wellness start-up, Mind Body Move, I identified the key to wellness starts with ‘inspiring the mind, nourishing the body and playfully moving again’. I brought cutting-edge science and ancient wisdom to inspire behaviour change in the individual. Many of the strategies can be applied effectively to any staff wellness programs.
The first steps are easy; you might want to start by having a healthier kitchen, or lunchtime walks with a team.
The greater the wellness of your staff the more productive they will be. From reduced sick days to greater productivity, the financial benefits are easily measurable.
Greater Social Harmony
Let’s make the workplace much more enjoyable. There are 168 hours in a week. A reality check is that a full-time staff member spends more waking hours at work, and commuting, than with their loved ones. Senior managers and business leaders are likely to spend even more time at work.
So why not make the workplace more pleasant and enjoyable by creating activities to increase the social cohesion. The social initiatives within the organisation are like bonding glue, holding the working community (the organisation) together.
Feel the difference between walking into an isolated office, where everyone is in his or her cubicle sending emails, versus another office where there is open communication online and face to face. The productivity lifts significantly with the latter.
Finally, with engaged staff, everyone is motivated to better the business for the future and to keep ahead of competitors and technological changes. The frontline staff are usually first to see the changes happening in the marketplace.
Planet - The Environment
We have covered Purpose and People pillars, and we now move on to how an enterprise can lift engagement by contributing to the social fabric and the Planet.
Adopting more environmentally friendly practices are a well-recognised component of a company's social responsibilities, but the benefits go well beyond this. For example, a greener kitchen plays a small but significant role in demonstrating to the staff that the company cares.
Many sustainable initiatives, like reducing energy use, can save considerable costs to the bottom line. Most organisations have now come to embrace this.
Stakeholders like employees, customers, suppliers and the general public, have started valuing how much an organisation cares and contributes to society and the planet. Broadly, this is called Corporate Social Responsibility (CSR), and it is a much-welcomed departure from a blinkered focus on the financial bottom line.
The unfettered laissez-faire model of neoclassical capitalism since the 1980’s has manifestly failed to deliver protection for society and the environment as a whole. The public is tired of supporting the “greed is good” model that has dominated western economies until the Global Financial Crisis (GFC).
Today, good governance, effective environmental policies, and socially conscious awareness are a defined cornerstone for assessing investments by large fund managers.
Enterprises of all sizes have a big opportunity here. When a contribution to the planet is aligned with the company's purpose, the engagement of staff and customers grows significantly too. Furthermore, this delivers financially to the bottom line.
Michael Porter, from Harvard University, is famous in the management consulting space for creating ‘Porter’s Five Forces Analysis’.
In 2011 (post-GFC), Porter co-authored a Harvard paper with Kramer on Creating Shared Value. They identified a growing need for organisations to solve social and sustainable problems while benefitting economically through the process, they called this Corporate Shared Value (CSV) - this is a game changer.
They distinguished CSV from fair trade by highlighting how CSV is not about buying fair trade but instead, it is about assisting the local farmers with knowledge and resources so that they can be more productive. By doing so, a farmer has greater opportunities as well as rewarding the buyer with better quality and yield.
An organisation has three approaches to better align with their community and the planet:
- Corporate Social Responsibility
- Corporate Shared Value
- Social Enterprise
This is a broad term, and in essence, it implies a business adopts policies favouring good governance, social responsibility and the environment. The public likely to be convinced disillusioned with such a broad definition. Many businesses that collapsed, like Enron and HIH, claimed to have a Corporate Social Responsibility (CSR) policies too.
Small to medium-sized organisations like apply CSR policies in some way. Due to time and resource constraints, they generally contribute (financially or in-kind) towards a charity aligned to a senior manager or owner.
This contribution is best accomplished when a charitable partner’s values align with the organisation, further elevating the values of the organisation, to the staff, clients and general public.
A good example here is the franchise Hire a Hubby. As the name suggests, they are a property maintenance handyman company. They have aligned themselves with a charity focussed on men's health issues - Prostrate Cancer Foundation of Australia. This helps give staff a strong and defined sense of purpose about the company.
Corporate Shared Value
When a business exists to serve the greater good, socially or environmentally, and derive a financial gain in the process, this is called CSV. Tesla cars and home batteries are a good example. Tesla derives an economic benefit while reducing greenhouse gases (GHG).
In Australia, we have Olivers Real Food and in Sydney, Iku Wholefood. Both aim to provide organic food for the health of the society and the planet. Iku is a plant-based wholefood (vegan) enterprise. Both these fast-food outlet derives economic benefit while serving healthier food, which is mainly organic, thus serving the planet by reducing pesticide, reducing GHG, and encouraging better water use.
The passion and dedication of both Jason Gunn at Oliver's and Ken Israel at Iku have been crucial to their success to the growth of each business.
Vegan businesses have seen massive growth in 2017. The local Cruelty-Free Shop is an example of this. While vegan food businesses contribute significantly to the ecological impact, they also align with growing number of people who are starting to care about the treatment of animals and factory farming.
While the term “social enterprise” is relatively new, the model has been around for hundreds of years. Social enterprises exist to serve many of the stakeholders, like suppliers, staff, customers, and the community. Organisation structures for social enterprises used to be mutuals, co-operatives, and not-for-profits.
Lately, there has been a growth in companies which are shaking up the old divide between for-profit and not-for-profit organisation.
An excellent example is the Thank You company which started with water but soon diversified into different market segments. It is a social enterprise which operates to make a profit, but, it then passes 100% of its profits on to a range of charitable initiatives to end global poverty.
A for-profit example is the trending Australian start-up story of Moeloco sandals, with Kathy Wong. For each pair of flip flops sold, Moeloco gives a pair of shoes to the needy in India, so children can go to school and gain education.
On a larger scale we have Zambrero, a Mexican fast food outlet. Their mission is to give one meal away (for the needy) for each plate sold. Their slogan, “Mexican with a Mission”, is clearly visible in the shops and their marketing. Event though Zambrero did not start with this mission, by introducing it, has been the catalyst for their 750% growth in 5 years. Zambrero now has over 160 stores locally and internationally.
Apart from the significant lift in engagement, for both staff and the customers, there is another reason to align your business with the planet. Greater access to social impact funding. Some of the largest fund managers are now looking to invest in enterprises who are making a positive contribution to society. Blackrock is the largest investment fund in the world, with $6 Trillion (funds under management) has sent a letter to each company it invests in to show “how it makes a positive contribution to society.”
Australian business leaders are facing a number of challenges from economic factors, societal trends and advancing technology.
By identifying a clear business purpose and living its values, an organisation attracts those who are aligned with the company, in both staff and customers.
Then by engaging its staff fully, the people become evangelical fans of the organisation. With better engagement, everyone takes greater ownership of the challenges faced by the business, like outsourcing or the adoption of new technologies.
When the company is supportive of the community & the planet - whether it be through corporate social responsibility, corporate shared values, or their social enterprise model - the community will embrace the business as integral to the social fabric of society.
When Purpose, People and Planet together with Profit strategies are clear, an organisation has the opportunity for exponential growth. These four pillars will determine the Organisational Wellbeing in the 21st century.
Through my work as a management coach, consultant and speaker, I assist enterprises to diagnose and lift the Organisational Wellbeing, resulting in a significant lift to engagement and growth. In future posts, I will deep dive into each of these areas, with case-studies and interviews with those leading the field.