Purpose and Why It Needs To Guide All Decision-Making

Board effectiveness

3 min read

We invited Erika Percival from leading governance consultancy, Beyond Governance Limited, to share her thoughts on why purpose should be the guiding force behind every decision organisations take.


“Purpose doesn’t make decisions easy; it makes them clear.”

~ Roy Spence

79% of business leaders surveyed by PwC believe that an organisation’s purpose is central to business success, yet only 34% said it guided their decision-making.

It’s surprising that so many companies believe in purpose but so few appear to be guided by it. Never before has the corporate world been under such scrutiny to focus on social goals such as climate change and diversity as well as profits. While there has been progress, it doesn’t seem for many to be a driver for change in its own right.

The dialogue around purpose is increasing, but is it just that? Is it just an add-on for business to improve their CSR credentials?

Purpose is the North Star of an organisation, or as the well-known author of Grow the Pie, Alex Edmans, says “the answer to the question: how is the world a better place by your company being here?”

Apple’s success and fame is down to more than producing cutting-edge technology and design in personal computing, their purpose is to “empower creative exploration and self-expression”. It guides them in every decision they make.

Why does it matter?

Purpose-driven companies are more profitable, make faster decisions, attract the best talent, inspire richer innovation, have greater loyalty, see fewer safety incidents, receive higher customer ratings, and attract more investment. For listed companies, it was found that being purpose-driven enabled businesses to outperform the market by 42% but despite the many benefits not all companies are integrating it into their strategy and embedding it into the fabric of their organisations.

Top-to-bottom implementation

Being truly purpose-driven starts at the top of the organisation with authenticity, clarity, consistency within its strategy and supporting execution, the right communications that embed leadership’s agreed purpose across the workforce, as well as clear guidance on how it is governed and measured.

So, where do things typically go wrong?

From passionate and enthusiastic debates in the boardroom, leaders can find their North Star. Then, we often see this most important job delegated and implemented by those who often were not involved with the initial thinking on a company’s purpose, don’t have the level of understanding and clarity for what needs to be achieved and how it fits with all the decisions that need to be made throughout the organisation, as well as not having the authority to drive the changes required to be truly purpose-driven.

Good practice

Successful implementation of a purpose-driven strategy requires an organisation to re-evaluate and adjust its policies, processes, and procedures to ensure they support employees and other stakeholders. Consideration must be given to whether new mechanisms are required to support the change and, when the implementation is agreed, clear communication is needed to ensure everyone understands, supports, and subsequently embeds its purpose into the soul of the organisation.

Where companies have their purpose at the heart of what they do, employees tend to be more emotionally connected to the business and understand how they personally contribute.

The changes needed to implement purpose don’t stop at the workforce either, they will involve a change in focus for the board as well as the decision-making mechanisms across the business to ensure purpose is front and centre.

Purpose is a never-ending process — it never stops, it just evolves. As a business matures and grows, its purpose needs to be reviewed and reconnected to everyone, continually.

Ideas are cheap, execution is everything

In conclusion, while the board should always agree and drive the purpose, considerable airtime should be given to how employees and stakeholders understand and believe the changes that need to be made, how they will be implemented, and impact what they are already doing.

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Beyond Governance offers a new way of looking at governance. They support boards of directors and key influencers to improve the way their companies make decisions which in turn increases productivity and builds long-term sustainable value. They consult as well as implement pragmatic solutions that consider all stakeholders. The team are former executive level governance professionals from FTSE 250 companies. If you need assistance to streamline your business decision-making, get in touch with them today.

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