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Corporate governanceEmployee engagementEthicsLatest NewsESG

Employees are sceptical about corporate ‘purpose’

by Adam McCulloch 27 Oct 2022
by Adam McCulloch 27 Oct 2022 Photo: Shutterstock
Photo: Shutterstock

There is a major disconnect between employers’ stated purpose and employees’ experience of it, which raises questions about the authenticity of some corporate purpose statements, according to a new report.

The study, by EY Lane4, a subsidiary of services giant EY, found that employers were taking a major risk if they ignored employees’ desire for authentic purpose.

Its research revealed that 86% of employees acknowledge that their organisation has a “purpose statement”, but only 58% are aware of what the statement includes. More than half (55%) agreed that leaders will need to become more purpose-led in future and equally consider people, planet and profit when making business decisions.

The research identified signs that purpose was a factor driving career decisions for a significant proportion of the workforce, particularly younger employees. More than a third (37%) of all employees said they would take a 20% cut in salary to work for an organisation that more positively impacted society and the environment than their current workplace – this rose to nearly half (44%) when asking employees in their early 20s.

Nearly half (44%) agreed that working for an organisation that significantly contributed to society was more important now than before the pandemic.

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The research also revealed that senior leaders were more likely to be influenced by purpose than junior colleagues. Half (50%) of business owners said their organisation’s purpose had a “great impact” on their day-to-day role, compared with 26% of those in middle management roles and 24% of employees in entry level positions.

According to EY Lane4, respondents showed significant scepticism of how far business direction was influenced by purpose. Nearly three quarters (71%) of employees believed their leaders still “always” or “often” make critical decisions solely based on financial considerations such as profit, costs and growth.

Adrian Moorhouse, EY Lane4 managing partner, emphasised that authenticity was key if purpose was to be meaningful: “Employers know that the workforce of today and tomorrow value purpose highly, but the research suggests that some of these initiatives just aren’t resonating with their people due to a breakdown in either communication or authenticity. Purpose is a service statement, not a marketing badge, so it should both be articulated and reflected by a tangible shift in how business operates.

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“For purpose to be truly effective, it needs to be seen as a guiding star, underpinning key business decisions, and widely understood at every level of the firm – not just at a leadership level.”

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Adam McCulloch

Adam McCulloch first worked for Personnel Today magazine in the early 1990s as a sub editor. He rejoined Personnel Today as a writer in 2017, covering all aspects of HR but with a special interest in diversity, social mobility and industrial relations. He has ventured beyond the HR realm to work as a freelance writer and production editor in sectors including travel (The Guardian), aviation (Flight International), agriculture (Farmers' Weekly), music (Jazzwise), theatre (The Stage) and social work (Community Care). He is also the author of KentWalksNearLondon. Adam first became interested in industrial relations after witnessing an exchange between Arthur Scargill and National Coal Board chairman Ian McGregor in 1984, while working as a temp in facilities at the NCB, carrying extra chairs into a conference room!

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