Business wisdom tells us that we manage what we measure. Human nature responds to accountability—when we know our performance is being tracked, we’re more likely to do the work that moves that metric forward. It follows, then, that if we pick the right metrics, we’ll also move the team or organization forward.
But is it working?
Over the last month, we’ve spent hours on calls with business owners, segment leaders, and industry executives. Many are in thriving companies and divisions, but they’re still asking one question: “are we focused on the right things?”
These leaders have OKRs, KPIs, 360s, scorecards, dashboards, and more. They know how productive their team is being, hour by hour and minute by minute. But what keeps them awake at night is the fear that they might have lost sight of something even more important than their objectives and key results: their purpose.
Purpose drives value in successful companies
Eric Larson is Chairman and co-CEO of Tilia Holdings, the third private equity firm he has founded. He recognizes that the private equity industry has earned a reputation over time for putting profit over purpose and people. But that is changing, he says, because many firms now recognize that “purpose drives value in successful companies.”
What Larson and others are finding is that being focused on purpose gives team members a direction that is more meaningful and motivational than simply telling them to raise the income per square foot metric. When people understand why what they’re doing matters, they find ways to move the needle.
If we’re going to measure what matters, then our metrics must reflect our organizational purpose. When they do, we can expect to see more engaged team members and a thriving company.
How can we measure the impact of purpose? At the Center for Values-Driven Leadership, we’re partnering with the International Leadership Association to answer that question as part of a research initiative and summit, Power of Purpose III: Measuring the Economics of Purpose. (Larson is among the executives and business leaders who are engaged with this initiative and will be speaking at an upcoming event.)
We hope eventually to offer a range of measurable factors that have been tested by companies around the world. But for now, across all areas of practice, we can draw these observations about making purpose more measurable:
Purpose should be inspirational, but still grounded in the business. Masonite, a door company, has a higher purpose of helping people “walk through doors.” They’ve found this to be an inspirational metaphor that informs everything from community engagement to career paths and factory operations.
Individuals need to understand how their work contributes to organizational purpose. Creating individual metrics that reflect purpose is one way to help individuals create this understanding.
Measuring what matters requires role-specific consideration. HR may want to consider how purpose decreases turnover. Finance may explore how purpose reduces expenses. Sales may want to leverage purpose for growing customer loyalty.
Across the organization, purpose can be a North Star when all else seems uncertain. Over the last year, many leaders have told us how difficult strategic planning can be in the middle of a pandemic. When facing uncertainty, experts in managing complexity recommend identifying what can be known, and what can be made certain. Even while the organization pivots to adapt, purpose can be an area of stability.
Personal benefits of purpose
Before we wrap up, we want to briefly mention one other remarkable benefit of purpose: it’s like a magic pill for your personal life. For individuals, research shows being purpose-driven:
- Adds years to your life
- Reduces the likelihood of heart attack or stroke
- Cuts your risk of Alzheimers
- Helps you relax during the day and sleep better at night
- Doubles the chance that you stay drug- or alcohol-free after treatment
- Increases your good cholesterol
- Helps you develop better personal relationships
- And gives you a greater sense of meaning, engagement, life satisfaction, and happiness.
“You and I are designed to be purpose-seeking mechanisms,” says Dr. Bob Quinn, author of The Economics of Higher Purpose and founder of University of Michigan’s Center for Positive Organizations. (Quinn is also a keynote speaker at our upcoming event.)
Perhaps this explains why finding ways to measure the impact of purpose can have such an impact on your organization: it’s human nature to move in the direction of purpose, just like plants move in the direction of sunlight. When your scorecards and dashboards are aligned to purpose, the results may follow naturally.