Home research company Video quick take: Deloitte’s John Mennel explains how purpose drives business value

Video quick take: Deloitte’s John Mennel explains how purpose drives business value

0

Todd Pruzan, HBR

Welcome to Quick HBR Video Shooting. I’m Todd Pruzan, editor for research and special projects at Harvard Business Review.

As stakeholders increasingly expect businesses to engage with societal issues, business purpose has become a strategic imperative that creates widespread benefits across all organizations.

But a new Deloitte report titled “C-suite Insights: How Purpose Delivers Value in Every Function and for the Enterprise” reveals that while a wide range of companies recognize the value of purpose, they often struggle to put it into practice. implemented, with “goal” activities. missing and leaders often isolated from core business operations.

John Mennel, head of goal strategy in Deloitte Consulting’s Monitor Deloitte practice, is one of the report’s authors. John, thank you so much for speaking to us today.

Jean Mennel, Deloitte

Thanks Todd.

Todd Pruzan, HBR

John, what is the purpose and why should C-suite executives care?

Jean Mennel, Deloitte

Excellent question. We define purpose as the raison d’être of an organization and [the] the positive impacts that its core business brings to all its stakeholders and to society. The purpose of an organization sets it apart and makes it more valuable in the long run.

And that’s the main reason why all leaders should care. And in addition to defining the overall goal, we advise clients to really focus on the systems, processes and incentives that enable them to achieve their goal consistently every day, because that consistency in delivering on our promises really is the key.

Todd Pruzan, HBR

Is there a particular C-suite maintainer who should be responsible for the goal?

Jean Mennel, Deloitte

Not really. Each member of the C-suite has a different and important role to play in defining and enabling purpose. The CEO is obviously critical and plays a role, both champion and integrator, and connects purpose to business strategy.

Many companies, including Deloitte, also have a primary goal or sustainability leader who can help facilitate the setting of function-specific goals, enable collaboration and alignment to improve overall results. But in reality, every leader, from CFO to CIO, to CMO and HR director, has their own role to play.

Todd Pruzan, HBR

What business value does purpose bring to a company?

Jean Mennel, Deloitte

It’s interesting. Research shows that purpose drives value for a wide range of stakeholders, so everything from talent to operations to supply chain, brand, cost of capital and investment. And enabling purpose is an integral part these days of being a well-run business and presenting yourself as well-run.

Our research, the recent Deloitte study, indicates that talent is by far the biggest driver of value right now, with 79% of the people we surveyed (C-suite executives) agreeing that purpose supports recruitment, engagement and talent retention. And the business case for the goal can often be based purely on talent play.

Todd Pruzan, HBR

OK, so how and to what extent do C-suite leaders hold themselves accountable for goal priorities?

Jean Mennel, Deloitte

There is significant opportunity to strengthen accountability and improve in this area. Our research shows, for example, that while most C-suite executives surveyed, 70% of the total, say the role is highly connected – impacted by their company’s goal priorities – only around a third say that their compensation is tied to their performance against these goals. So the truth is that there is still a long way to go when it comes to accountability.

Todd Pruzan, HBR

What steps can C-suite leaders take to effectively demonstrate their purpose?

Jean Mennel, Deloitte

We recommend five things to start with. The first is to articulate the why of the business. So how does your core business create value for your stakeholders and for society?

The second is to embed the purpose into the organizational culture. So in the current culture, in the organizational chart, and in the processes and systems that I talked about earlier.

The third is to establish the business case for purpose in each function and measure against it with quantitative KPIs. The fourth is to link executive performance and compensation to goal outcomes.

And the fifth is to elevate the sustainability purpose or function within the organization. And this is often done by creating a primary goal or sustainability manager who reports to the CEO.

Todd Pruzan, HBR

Awesome. Well, John, that’s been a great conversation. Thank you very much for joining us today.

Jean Mennel, Deloitte

Thanks Todd.


To read more about this conversation, click here.