Profit making not profit driven. Attracting and retaining talent. Client loyalty and satisfaction.
This article is the first in a four part series focusing on alternative business strategies. Our starting point is to explore the potential benefits of looking beyond the purpose and structure of businesses to analyse their values, behaviours and culture as drivers of genuine and positive change.
A purposeful business is not just having an ideology or a business purpose, a purposeful business exists to make a measurable difference and impactful change in the world.
Employee ownership – being a purposeful business
Becoming an employee owned business intrinsically links with being a purposeful business. As the first large law firm in the UK to give all eligible members of staff an equal share in its profits, Stephens Scown is leading this approach attracting interest from beyond the legal sector . In our experience, employee ownership means staff become more engaged and motivated to achieve growth with a view to the wider ethos and impact of the business. It also promotes a culture focused on each person’s contribution to the business and this in turn can support the development of a purposeful business.
There are accountable benefits for businesses developing purposeful growth strategies geared towards a positive impact on society. According to Be the Business’ research, high ambition SMEs, those with the confidence to set big goals supported by long term plans, are 14% more likely to experience turnover growth than enterprises that live in the short term.
Profit making represents opportunity
For a purposeful business profit making represents opportunity. The opportunity to make a social and ethical difference while creating long term shareholder value. It is these businesses which tend to reap the benefits of enhancing commercial performance, driving employee satisfaction and retention, developing customer loyalty and maintaining a competitive position in the marketplace.
As businesses are increasingly looking to attract the millennial workforce, whose focus is not solely on salary, it is vital to focus on wider values particularly as the costs of staff and recruitment increase annually. In 2017, the UK’s top 50 employee owned businesses recorded year on year staff growth 2% higher than non employee owned businesses.
There is an evident shift in the approach that corporate businesses are taking to become more accountable and more trustworthy. The gap between the actions of a business and the values it presents to the world are changing, a lack of authenticity creates a lack of trust and customers are more likely to choose a business that prioritises social objectives over generating profit.
Strategic decision making
A purposeful business is at the heart of strategic decision making and it is important to embed any social mission in a company’s articles of association. For any business that is looking to become a purposeful business, a bespoke set of articles can be tailored to embed the social objective of the business within its constitution. Building purpose into a company’s constitution demonstrates a public commitment to change.
In our next article we will be considering practical steps to become a purposeful business.