Purpose at the Board level
If you are interested in corporate reputation like I am, you cannot help but notice all the articles about “purpose.” Purpose Purpose Purpose. Without doubling down on your corporate purpose, how can a company be expected to develop a lasting strategy, recruit the best talent, grow revenue for the long-term and build an enduring reputation? Purpose and reputation go hand in hand in achieving such significant goals.
Most of the conversations I’ve had and articles I’ve read on the topic of purpose revolve around CEOs’ and senior management’s efforts to grapple with their reason for being and the best ways to communicate that internally and externally. No easy task whatsoever.
Thus I read with great interest an article from McKinsey on five ways to embed purpose at the Board level. I have to admit that I had not thought much about how Boards might concern themselves with purpose-making because I usually thought of it as the work of CEOs and senior teams. And that is where I have done my most work on reputation and purpose.
The article cited a stat that floored me and made me realize I was not alone in this thinking on non-purpose-driven Boards — of the 181 CEOs who signed the Business Roundtable’s redefinition of Corporate Purpose (stakeholders not just shareholders), only one did so with Board approval.
This stat reminded me of a conversation I had with ESG/CSR directors a few years ago about the Business Roundtable’s 2019 redefinition and how several mentioned their certainty that their boards knew little about this seismic pivot in the business world.
The McKinsey article convinced me that bringing purpose into the boardroom is exactly the right place and now is the right time for such conversations. The consultants lay out five ways to embed purpose at the Board level. Two examples were given that stood out to me.
To fully authenticate purpose among Board members and deepen the all important purpose narrative, one company cancelled their formal board meeting and replaced it with a listening tour with shop employees. I’ve heard of CEOs taking to the shop floor, call service center or check out counter, but taking the board to where the work actually gets done should go a long way in sharpening whether the purpose narrative is truly actionable and meaningful. Listen to learn.
Another piece of advice they gave was in pressure testing the company’s commitment to purpose. They suggest that the board and management ask themselves what the company should stop doing that does not align with its chosen purpose. That must be a very difficult question to ask but one that leads to long-term value.