Unlocking the power of corporate purpose

The greater the gender balance on the board, the greater a business's sense of purpose

Some 90% of Belgian CEOs and board members believe that having a clear purpose contributes positively to the long-term performance of their business, with 78% having translated this into concrete, strategic objectives. However, only 63% of employees are believed to be aware of the impact of purpose on day-to-day activities – and just 58% report that performance indicators have been properly defined to measure progress on purpose. The greater the gender balance on a business's board, the greater the sense of purpose embodied throughout its strategy, decision-making and communications.

These were the main conclusions drawn from a survey on purpose among 116 CEOs and board members. Conducted by Professor Koen Dewettinck and researcher Jana Machtelinckx of Vlerick Business School, the study assessed how much value Belgian businesses place on purpose and whether they ultimately put such social objectives into practice.

The importance of purpose is high on the radar

Across all sizes and sectors, Belgian businesses are clearly convinced of the crucial role of purpose, with 91% recognising the need for businesses to have a positive social impact, while 90% believe that having a clear long-term purpose also helps improve overall business performance. In addition, nearly 80% of respondents reported that their business has an explicit, written-down articulation of purpose that is clear, authentic and inspiring.

Koen Dewettinck, Professor of Human Resources Management at Vlerick Business School: “Corporate purpose extends far beyond businesses’ corporate vision or mission. It defines their whole raison d'être. Why is it they do what they do? What is their social contribution? Businesses who explicitly identify their purpose as a core element of their business strategy are generally higher performing and financially better off. For those wanting to create long-term, sustainable value for both stakeholders and society as a whole, purpose and performance go hand in hand. However, just having a definition on paper is not enough. You need to really activate and implement your corporate purpose throughout the entire organisation.”

Concrete implementation could be improved

While having a sense of purpose is important, to reap the benefits of it, it also needs to trickle down to employees, as well as your overall business strategy and objectives.

• Only 70% of CEOs and board members surveyed believe their employees are sufficiently aware of their businesses' purpose, while only 63% believe employees sufficiently understand its impact on their day-to-day activities.
• Some 78% report that their articulated purpose is translated into a set of concrete strategic and operational objectives.
• Just 58% say that progress in terms of purpose and the achievement of said objectives is actually being measured via predefined financial and non-financial performance indicators.

Professor Koen Dewettinck: “The survey shows that, while businesses are waking up to the idea of purpose, they are still struggling to embed it into their day-to-day operations, decision-making and operational processes, with employees not sufficiently on board with the wider narrative and what is expected of them. Increasing and improving business communication is crucial for growing employees' levels of engagement, and will also ensure that the business's purpose feeds into its everyday decision-making. Purpose ought to be the touchstone for every decision, ranging from innovation, services and product portfolios to HR policies, investments and customer management. Currently, only half of decisions concerning new suppliers or the supply chain are checked against purpose, for example. C-level management and board members clearly need concrete tools to make their organisation more purpose-driven.”

Women leaders make the difference

In businesses with a higher board-level gender balance, there is a greater focus on purpose throughout. They embed purpose more explicitly, increase the incorporation of purpose into their decision-making, and communicate about purpose more consistently.

In organisations with at least 30% women directors:

• There is a greater focus on the importance of positive social impact (99% vs. 82%).
• Their annual reports consistently communicate impact and progress on purpose-based objectives (69% vs. 47%).
• Purpose is an important decision-making factor when it comes to working with both existing and new suppliers (65% vs. 36%).
• The strategic objectives resulting from the business's purpose are measured by financial and non-financial criteria (66% vs. 46%).