- COVID-19 and the George Floyd protests have left many U.S. workers questioning what is important to them.
- While business purpose was once a talking point, it is now an imperative.
- A business's purpose could include providing a service, supporting sustainability or helping vulnerable people.
- Business leaders can drive consumer engagement and employee loyalty by building purpose into their organizations.
Global crises happen. They disrupt. They destroy. They undermine the fabric of our mental models. Occasionally, crises of great magnitude occur simultaneously.
In January 2020, the first case of COVID-19 was reported in the United States. Since then, the pandemic has caused widespread disruption through every facet of people’s lives: health is compromised and loved ones are dying. Additionally, the global economy has been scarred, and businesses, consumer behavior, lifestyles and social interactions have been profoundly affected.
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Then, in May 2020, social unrest in the United States erupted in explosive fashion in reaction to the death of George Floyd and combined with decades of pent-up anger and frustration. And this pain has crossed borders, with protests in support of the Black Lives Matter movement occurring in cities around the globe.
With most workers physically isolated and spending significant time at home amid these events, people are questioning, “What is important in my life? In my work? What is important to me?” If leaders weren’t already questioning their assumptions and approaches, they certainly are now.
Organizational purpose revisited
Organization purpose is defined as the reason businesses exist, and most organizations have purposes that go beyond creating owner/shareholder value and profit, extending to deliver a broader societal benefit. This may translate to saving lives by developing new drugs, allowing people to travel for business or recreation, providing access to information, powering cities (and the internet) and so on. Many companies also focus on creating meaningful experiences for employees, giving back to the communities that support and buy from them, and sustaining the planet.
Some questioned whether a focus on organizational purpose would survive the COVID-19 pandemic, as there was a belief that a focus on profits would eclipse purpose. (Data indicates this a false dichotomy — purpose-driven companies outperform market peers, creating shareholder value.)
Add the social unrest after the death of George Floyd, and it became clear that these social, economic and philosophical crises have become a pivot point for organizational purpose, and companies are doubling down. Before these crises, the idea of building purpose into a brand, service, product or company was oftentimes a talking point. Today, it is an imperative.
The effects of purpose on consumer demand and employee behavior
Marketing science tells us that connecting to an organization’s purpose drives emotional connection with consumers, especially the majority that are belief-driven (regardless of ideology). Smart organizations understand that their products, brands and services can become part of how a consumer desires to see him or herself.
Properly nurtured, these customers can become identity loyal — the brand transcends what it does and becomes a part of who the customer is. The consumer’s sense of self fuses with the brand, and the brand becomes a badge of honor and a symbol of self-expression. Great brands transcend what they do to become a part of who the customer is. And the consumer effectively becomes a valued marketer.
This same type of science is seen among employees. Companies demonstrating best practices relative to the talent experience are three times more likely to report employees are highly engaged and 93% more likely to report significantly outperforming industry peers financially, according to Willis Towers Watson research. Generally, engagement happens when individuals connect their own purpose to organizational purpose by addressing, “Why is the work I do important?”
Identifying the pivot point
In times of high stress, the world sees what companies are really made of. We see how leaders react. And we see how investors, consumers and employees will remember these reactions long after the crisis has ended. Consider the current set of crises: Even removing the outliers (e.g., retail, hospitality, travel), companies react differently based on their beliefs and organizational purpose.
In response to COVID-19, some CEOs have forgone pay and protected jobs while others quickly moved to layoffs and furloughs without making material changes to their decision making or the way they operate. As social unrest around the death of George Floyd gained momentum, some CEOs were quick to announce their position while others remained notably silent. And, of course, we’ve seen every action in between during both crises.
This is where the pivot happens. Many employees — who happen to be consumers — have been working from home. Or they have been furloughed or laid off. They have had time to think. What is important to them? What is the right balance among work, family, community and faith? How much time is reasonable to contribute to work? Which brands do they consume?
As consumers, people already are making purchase decisions based on company responses to these crises. As employees, while many people may be unable to make long-term career decisions in an uncertain labor market, they are starting to think about their commitments to their employers and jobs based on how their companies are handling these crises.
But there are concrete steps that executives can take to re-create their talking points and imbed them into the DNA of the organization to drive consumer demand and employee loyalty:
Give back, focusing on employee well being
Companies rely on healthy employees and vibrant communities. As a result of the crises, many customers and employees have lost people and/or parts of their community who are important to them, and even more will have borne a sense of isolation, loneliness and anxiety.
Some will show signs of post-traumatic stress syndrome while others will exhibit phobias around human proximity or interaction. Many employees, particularly those from the African-American and black communities who already felt the need to “cover” at work will have an even harder time “being OK.” They will struggle with how vocal they can and should be about their anger, pain and sadness.
While most companies are not in a financial position to invest significant dollars, there are actions leaders can take to give back to employees through a focus on well being. To start, well being must be more broadly defined than it has been in the past to include physical, financial, social and emotional well being. For example, companies need to expand their well being strategies to include enhanced support for mental health, ergonomic advice and equipment, and more intentionally around social connections in a virtual world. Ultimately, focusing on employee well being allows people to care for their families and themselves — and take care of their customers.
Balance community givebacks
Many companies have reduced their charitable contribution budgets as part of broader cost-containment exercises. While an understandable business decision on the surface (and often necessary for companies in survival mode), the negative return created could impact the well being and purchasing patterns of communities that consume those companies’ products. Additionally, employees are asking companies to increase their match programs to include organizations like Black Lives Matter, which many programs excluded in the past.
The crises have also provided an opportunity for organizations to experiment with and debate services and products they may be able to offer pro bono relative to their commercial opportunities. The discussion revolves around balancing efforts to give back to the community while at the same time considering long-term marketing impacts. Remember: Actions viewed as compassionate and consumer friendly today will have an impact on identity loyalty in the future.
Execute fair capital-allocation processes
Cost containment, realignment and management are clear priorities for many companies. While the need to act is undisputed, the “how” to act is where companies can differentiate themselves. Companies can begin by looking at non-employment costs, then run a fair process related to jobs and pay. We know that fair processes build authenticity and trust, which in turn drives engagement and brand. To run a fair process:
- First, consider various ways of segmenting the workforce through ethical lenses, including gender, race, ethnicity, identity and income level.
- Next, run models on financial impact, taking into consideration the financial well being of different workforce segments. For example, what is the impact of switching highly paid workers to a four-day workweek versus furloughing lower paid workers?
- Finally, when tough decisions need to be made, act swiftly but with compassion. Communicate the process with transparency.
Re-imagine the definition of ‘the workplace’
It’s time to start thinking broadly about work. Employees are realizing how productive they are away from the office. They are learning to use new tools and can see how flexibility and choice can help them in the future. Combine this with real estate savings potential, and it becomes clear that the concept of the traditional workplace is going to change significantly.
Companies need to look at both what’s possible and what employees prefer. We have learned that workers can be more productive from home. But we also know that employees prefer flexibility, and few prefer working from home five days a week, every week of the year. What is certain is, neither the extreme of the past months nor the one pre-COVID-19 will be the new normal. With employee experience being at least a part of most companies’ purpose, leaders need to spend time understanding employee preferences and the impact of changes to work and the workplace on the long-term well being of their talent.
Do well while doing good
As economies and businesses emerge from the pandemic, reopen worksites and operate in the period of uncertainty that precedes broad COVID-19 immunity and resolution of social issues, there is an opportunity to do well while doing good. There is an opportunity to make prudent financial decisions in the short term while establishing a strategic framework that will result in a sustainable and thriving company in the long run.
Accomplishing this requires leaders — CEOs, CHROs, CMOs and the rest of the C-suite — to go beyond talking points to actually living their organizational purpose. Being authentic and transparent in this effort, regardless how uncomfortable, will provide answers to the questions people have been asking themselves for the past few months. And, in the end, it will separate high-performing companies from the pack.