In 1962, the purpose of business was simple; use your resources and engage in activities to increase profits, according to Milton Friedman, a leading economist of the time. Friedman said an executive has direct responsibility to his employer. “That responsibility is to conduct business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society.”
Profit as a purpose increased individual greed and created a workforce focused solely on a paycheck.
Society pushed back with a workforce who checked out, who came to work to do only their part. A workforce who failed to innovate, collaborate or help others. In 1990 William Kahn coined the term "engagement" in his groundbreaking research titled, "Psychological Conditions of Personal Engagement and Disengagement at Work.” His premise was “individuals make choices about how much of their real, personal selves they would reveal and express at work.” He argued that offering discretionary effort at work requires meaningful work, psychological safety and psychological availability. Individuals would work better if they felt they were contributing to something important, enjoying rewarding and supportive relationships and provided resources to accomplish their work.
At the same time Edward Deming published his 14 points of quality assurance. Point one has come to be known as a mission statement. Point four was to cease doing business on price tag alone. Point nine is to “optimize toward the aims and purposes of the company, the efforts of teams, groups and staff.” By the mid-90s most companies no longer overtly focused on profit.
Peter Drucker was ahead of his time. Drucker created “The Management Letter” in 1954. The letter is to be written each quarter by the employees to their respective manager. The letter identifies their boss’ objectives, which aligns with the organization’s purpose. Management also writes its own and the organization’s objectives. Then the two sit down and discuss the contents. The conversation is about alignment, not performance. The outcome of the conversation is a unified view of the organization’s purpose and how the department can best serve that purpose.
Moving from chasing money to chasing meaning can be the company’s ultimate competitive advantage. Building and effectively communicating an authentic sense of purpose can turn managers into leaders. Establishing a purpose-driven mission with employee involvement that serves all stakeholders is the first step. It starts with identifying who the customers are, as well as their values and needs. Then clarify how the company is fulfilling those needs. Once a company has a purpose-driven mission, managers have a duty to draw a line between an employee’s daily work and the company’s purpose. Employees must be empowered to help deliver that sense of purpose to its customers and other stakeholders.
The purpose of business is not simple anymore. Clarifying the company’s purpose is the first step. Aligning the employee efforts with that purpose can create a workforce aligned to its purpose resulting in a more effective, profitable company.
Nora T. Akins, of Strategic Management provides management training and refines human resource systems to help employers build respectful workplaces. Reach Nora at 219 873-1735 or firstname.lastname@example.org.