To achieve and retain a top-tier workforce
The awakening of purpose is upon us and has played a central role in business strategies during this time of the Great Resignation. In fact, over the past couple of years, the COVID-19 pandemic has initiated an era wherein more people voluntarily left their jobs at the fastest rate in history. A paycheck is simply no longer enough to sustain people’s professional pursuits.
Especially among Millennials and Gen Zs, purpose is driving the workforce. About 48% of people who quit have pursued new opportunities in different organizations that are more closely aligned with their personal values and ethical behaviors. Purpose-driven companies stand for something bigger than short term financial goals and consistently take action to embed foundational sustainable values in all their business activities and most importantly their leadership behavior. The power of purpose-driven business to recruit and retain top talent is growing.
Purpose attracts and retains a top-tier workforce
Recent studies show that about 70% of professionals consider career choices a key component of defining their life’s purpose. Current generations are most likely to choose employers that align with this sense of purpose. And, as an added benefit, these employees are then more likely to stay at the organization. Research shows that purpose is the number one driver of employee engagement, which is one of the most important indicators a business can measure as the greatest overall predictor of talent retention and optimization. This metric also directly correlates to business outcomes like profitability, productivity, better customer service, and lower employee turnover.
It will be increasingly important for businesses to lead with purpose-driven action. Companies that prioritize purpose as a core operational component not only stimulate growth and elevate brand success, but they also enjoy greater employee retention during this time of mass workforce exodus. As with any changing process, businesses need to weave this shift into operations and decision-making. Leaders who encourage and support employees to work toward the company’s goals are successful in creating a culture that values and prioritizes purpose.
Employees demand leaders to deliver on purpose-driven promises
Patagonia is a standout example of how a successful retail giant has built a culture that “does well and does good.” Valued at $ 3 billion, Patagonia truly lives its purpose: “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” Patagonia is highly regarded for the way they treat staff, and it shows in their employee retention rates. The company has less than 4% staff turnover and a proportionally young talent pool, with Millennials making up over 61% of its workforce.
Influential businesses like Patagonia comprise a new horizon that sees more organizations treating purpose as a business strategy. By embracing this type of leadership development, companies optimize their people’s potential and sustain peak levels of engagement and organizational performance. This trend also marks a shift in the power dynamic, meaning those organizations that fail to incorporate purpose simply won’t be able to compete when it comes to recruiting, retaining, or developing top talent. In other words, employees will no longer tolerate non-purposeful and unethical behaviors from their employers. They are demanding employers deliver on purpose-driven promises.
Layoffs put purpose to the test
Following a volatile 2022, tens of thousands of people lost their jobs. Recent developments in industries such as the financial sector and Big Tech saw large numbers let go at Alphabet (12,000), Amazon (18,000), Meta (11,000), Microsoft (10,000), Salesforce (8,000), and Twitter (4,000). The impetuses for these actions are numerous: markets and the needs of consumers change; technologies evolve; economies experience shocks. Yet no matter the reasons, when a company arrives at the decision to lay off either individuals or entire divisions, purpose is put to the test.
Although these job cuts may have been beneficial to the business and to generate innovation in other areas, the process of how employees are handled remains an issue for the corporations’ purpose-driven approaches. How a company lets people go is a signifier of its values and hence puts its purpose in question. If the layoff process is led with neither purpose nor clear ethics, companies expose themselves to greater risks than merely staff reduction and cost-cutting.
Next generations see to it that leaders “walk the talk”
Based on mishandled layoffs, Millennials and Gen Zs are reconsidering if Big Tech is actually a place they want to work. As an example, employees at Google were not happy with how the CEO dealt with the company’s ongoing employee cuts. Around 1,400 employees have signed a call to action for better treatment of staff after Google announced it would be cutting 6% of its global workforce during its largest round of layoffs in January 2023.
These next gen voices called on Google to avoid terminating employees from countries with active conflicts and humanitarian crises, such as Ukraine. They also urged the tech giant to provide extra support to those at risk of losing their visa-linked residency along with their sources of income.
According to recent studies, Millennials and Gen Zs currently make up approximately 38% of the global workforce and this percentage will rise to about 58% by 2030. This sector of the population does not stay silent. They do not only talk about purpose, but they also act on it. Next gens push their employers to do so as well and demand a purpose-driven tone from the top.
It is clear that business leaders need to be aware of how the next generation thinks and is affected, as this younger segment of the workforce gains power in numbers and in its uniquely, innovative mindset. If current leaders do not practice purpose-driven business and if they do not align with core values of employees, movements and resistance could grow into monumental actions.
Purpose at the heart of business strategy drives competitive advantage
Along with the shared value approach in which sustainability and profitability are positively synergized, purpose fits in as an organizational strategy to remain competitive in a fast-changing economy. While 79% of business leaders believe that purpose is key to success, 68% admit that purpose is not a major focus area in leadership decision-making processes within their organization. Not only does it create huge reputation risks for companies if purpose is not embedded in all actions, but corporate leaders are also held accountable and exposed.
The job cuts at tech companies, financial firms, and other multinationals could signify a lack of purpose that will slow growth and stall progress over the long term. Losing top talent, specifically letting go of valuable employees or risking qualified, younger people leaving for companies with purpose aligned to foundational sustainable values, is bad for business. Purpose must become practice and be at the heart of business strategy.
Executives, CEOs, and recruiters should become aware that embedding purpose-driven solutions, where sustainability is at the heart of business strategy, is paramount for attracting and retaining top talent. People will follow their purpose, and there cannot be a gap between companies’ stated business strategies and their real-world actions.
Businesses gain power by embodying a more purpose-driven mission in the workplace. With a daunting gap in tech skills throughout the workforce, it is wise to incentivize next generations to want to join your company and stay. The greatest legacy we can leave for future generations is transforming work into a meaningful experience and a thriving atmosphere, not just a place or mechanism to survive. It is through consistent vision, strategy, and execution of purpose that business will continue to prosper in a challenging world. This is the power of purpose.
Marga Hoek MBA
Three-time CEO; global speaker and thought leader on sustainable business and capital; two-time golden awarded author; recognized in Thinkers50 and top 100 most sustainable board members
