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  • Carla V. Minnard

Doing Good Is Good Business: The Case for Purpose Driven Organizations

Many organizations pay lip service to mission and purpose. These concepts are an afterthought at best - often a vague, hastily composed handful of sentences orphaned on a page in the employee handbook. But studies have shown that purpose-driven companies outperform their competitors – by a very wide margin.

In the book Corporate Culture And Performance, John Kotter and James Heskett show that - over a 10-year period - purposeful, value-driven companies outperform their counterparts in stock price by a factor of 12. The book Firms of Endearment, which is based on a 15-year study, showed that purpose-driven organizations outperformed the S&P 500 by a ratio of 14:1! There can be little question that doing good is good business. Purpose driven work helps attract and retain the most talented and productive staff, reducing the tremendous expense associated with high turnover. It also results in a highly motivated and engaged workforce. In the absence of purpose, a company’s leadership often has greater difficulty motivating employees and clients are more likely to have difficulty connecting with the company. This connection is critical to building lasting relationships. One study by the Center for Economic Studies showed that when employees feel they are working towards a good cause, it can increase their productivity by up to 30 percent. Study on Corporate Philanthropy & Productivity (PDF) .

There is no question that engagement drives profitability – for both employees as well as our clients, customers and patients. Today’s successful leaders recognize that economic value and social value are not mutually exclusive, and in fact can be a boost to the bottom line when joined. As Michael Porter and Mark Kramer wrote in Harvard Business Review in 2011: "Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success." There are many ways that today’s purpose-driven companies can incorporate purpose into the core of the business. One example is popular online retailer Etsy. Etsy has collaborated with various states to offer free entrepreneurship courses for underemployed and unemployed residents. Though it’s not mandatory, the course also includes assistance in setting up a store on Etsy’s platform. This is shared value at its best; Etsy adds more artists and vendors to its platform while also empowering underemployed or unemployed participants with the ability to generate work.

With creative thinking, any company can impact whatever social challenges they feel most passionate about while simultaneously boosting the bottom line.

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