Citing a combination of forces — including “the shift of emphasis toward maximizing shareholder value and the role of technology in increasing the pace and complexity of business in countless sectors”, researchers at the University of Georgia and Penn State found that CEO impact on the performance of American companies has increased over the last 20 years. They argue this will continue to increase as businesses become more dynamic and traditional revenue sources become less predictable, creating unique environments where chief executives will make or break the prospects of their firms.
In light of this finding, it’s vital to explore the differentiating factors that set apart outstanding corporate leaders from their peers.
Research from Deloitte Consulting, McKinsey & Co., and Harvard Business Review (HBR) suggests that CEOs can hone certain characteristics that correlate with high CEO and company performance. In particular, researchers point to a CEO’s sense of purpose as having a unique effect on the outcomes of executive leadership.
As an entrepreneur who has spent the last 25 years building companies, I’ve experienced the profound impact purpose has on the short and long-term success of a corporate leader. In this article, I clarify why purpose is a critical trait that every CEO needs to possess and illustrate its overlooked impact on corporate performance.
Purpose-Driven Leaders Drive Results
CEOs who exhibit a clear sense of purpose — and a relentless drive to fulfill that purpose —outperform their less-inspired counterparts.
According to an HBR study of 200 global CEOs, this sense of purpose is consistently found in the best performing CEOs - all whom have an unrivaled intensity, focus, passion, and ownership over their work. It manifests in different ways, from a quiet force that propels a leader to approach problems with an open mind, or an inspiring manifesto that rallies an organization to move swiftly to implement big changes.
What ultimately matters is that the sense of purpose unites the company and its CEO in the pursuit of a meaningful goal. This sense of purpose can be described as the “why” behind a company’s existence. Although this factor may evolve over time, it should be rooted in the primary service it offers the marketplace - and society. This purpose shouldn’t be confused with a mission statement, which speaks to the “what” of a company.
HBR correctly quantifies the difference between a mission and a purpose as the same difference between laying brick and building a cathedral. Laying brick (the mission) is the action of the company, but the motivation or goal (purpose) is much more inspiring. If a bricklayer thinks about building a cathedral as he lays each brick, he’s much more likely to be motivated to complete his work – regardless of the obstacles that present themselves.
Executive consultant Justin Menkes believes that this “subservience to purpose” inspires executives the way it inspires the bricklayer working on a cathedral. In reference to CEOs, Menkes writes, “Their level of dedication to their work is a direct result of the extraordinary, remarkable importance they place on their goal.” When led by a purpose-driven executive, this dedication and passion become a catalyst for employees, particularly in sales. It’s simple: people want to infuse their work with meaning and know their efforts are having a material impact on the organization. Unlike some forms of financial compensation, purpose offers a deeper motivation.
This emphasis on purpose isn’t just a “feel good” approach, it has a direct effect on the bottom line. Specifically, purpose is a differentiating factor for an organization, giving it a competitive edge in recruiting, engagement, retention, and employee performance:
Recruitment, Engagement, Retention, & Performance
An organizational purpose gives CEOs and their companies a strategic advantage, particularly when it comes to talent, one of the top concerns facing corporate leaders today.
Close to half of CEOs of mid-sized businesses are very concerned about the quality of candidates applying for jobs at their firm. Combined with a strong job market and talent shortages, CEOs are looking for new ways to acquire the talent necessary to execute the organization’s strategy and accelerate business outcomes.
A purpose-driven CEO can mitigate those challenges by building an employer brand around the company’s purpose and core values.
Millennials - soon to be the largest workforce segment - in particular, want to work for organizations that emphasize the role of purpose in day-to-day work. As Mark Weinberger, CEO of Ernst & Young, summarized, “People want to do well and do good. They want to understand how they’re making a difference in the world. Things change all the time, but your organization’s purpose transcends any individual product or service.”
According to Deloitte’s 2016 Millennial Survey, the vast majority of young workers agree with Weinberger and believe that CEOs need to make purpose a greater focus in their organizations. By creating an employer brand around a purpose-driven culture, organizations can attract the millennial talent that not only outperform their peers today, but will do so well into the future.
When CEOs inject a sense of purpose into their organizations, it also increases engagement and retention. For example, at purpose-driven firms, employees are 50 percent more likely to be engaged at work, resulting in a maximized ROI on personnel investments. These employees also are much more willing to stay and grow at an organization rather than leave for a competitor. Gallup, for example, found that 71 percent of millennial employees who know what their company stands for are likely to stay for a year or more.
In today’s rapidly evolving marketplace, where new threats and disruptions consistently challenge corporate leaders, it is the CEOs who lead their organization by uniting business units around a central purpose who are best positioned to realize their revenue and growth goals.
About Eliot Burdett:
Eliot Burdett is an author, sales recruiting expert and the Co-Founder and CEO of Peak Sales Recruiting, a leading B2B sales recruiting company launched in 2006.
Under his direction, the company leads the industry with a success rate 50% higher than the industry average, working with a wide-range of clients including boutique, mid-size and world-class companies including P&G, Gartner, Deloitte, Merck, Western Union and others. Eliot has more than 30 years of success building companies, recruiting, and managing high performance sales teams and is a top 40 Under 40 winner.
He has been widely featured in top publications including the New York Times, Fortune, Forbes, Inc., Entrepreneur, Reuters, Yahoo!, Chief Executive, CIO, the American Management Association and HR.com.