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Corporate Success - Driven by Purpose or Performance?
Burson-Marsteller EMEA Proprietary Corporate Reputation Research
What is Purpose & Performance about?
In November 2007, Ms. Indra Nyooi, CEO of Pepsico, (www.pepsico.com) authored a bylined article in The Economist 2008 The Year Ahead edition about purpose in relation to
performance and success.
Pepsico defines it as “Performance with Purpose” and it relates to human, environment and
talent sustainability.
Human sustainability is about nourishing consumers with fun and healthy products they can
afford.
Environment is about replenishing the natural resources and minimizing the impact on
environment.
Talent means cherishing employees and making the company a desirable place for people of
all backgrounds to establish personal and professional growth.
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What is Purpose & Performance about?
Infosys (www.infosys.com) is a world class software
company whose reputation and success have been
created through a single minded scope – building
relationships even before considering marketing and
products.
In fact, its purpose is to be the customers’ delight
and to surpass client expectations consistently, but
also to serve as a magnet for best talent, and focus
on quality.
In just over 25 years, Infosys has been driven by this
Purpose and achieved an amazing Performance —
market capitalization around $30 billion and annual
revenues of $4 billion in 2007.
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What is Purpose & Performance about?
Johnson & Johnson (www.jnj.com) has built its success around “your family’s
well being is our passion” set forward in the company’s Credo,
a set of values which define the company’s behavior and responsibility
towards stakeholders.
Johnson & Johnson employees live their Credo profoundly and when
tackling their daily business decisions they refer to their values to be
guided in their management decisions.
Over the past decades, the business has grown constantly and many
analysts believe that the Credo is the differentiating factor which gives
Johnson & Johnson an added value in terms of purpose, which in turn
reflects on performance.
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Balancing Purpose & Performance for corporate success
An in-depth analysis of the “Fortune 500” companies
shows that companies with a well developed, shared
purpose mission and vision are better equipped to tackle
and stay in business during tough economic times.
Striking a balance between Purpose & Performance is one
of the main challenges corporations are facing in the
coming years.
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Purpose & Performance in the media
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What’s new about Purpose & Performance?
Some recent quotes:
“Social, environmental, operational and
innovation excellence are increasingly
just four legs of the same demand-driven
leadership platform”.
“Once a side hobby of idealists,
corporate responsibility has finally grown
into a strategic issue with boardroom heft”.
“Consumers and businesses are realizing
that balance is more than a buzzword.
Being in business for the long-term means
considering social and environmental impact
in the short-term. The more strategic the
view of CR, the more benefit to the business”.
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Striking a balance between Purpose & Performance is one of
the main corporate challenges today and in the future
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What can we expect in the near future?
How does the European business community consider Purpose &
Performance in the construction of corporate success?
Will the role of Purpose grow or will Performance prevail as companies
face fiercer scrutiny from stakeholders with different interests and
needs?
How will this impact corporate responsibility, consumer choices,
investments, and the talent market?
What are the challenges and the barriers and how can corporations
tackle them?
…..these questions were on our mind at Burson Marsteller EMEA and led
us to field an in-depth survey with sister company Penn, Schoen and
Berland.
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Methodology
Almost 200 in-depth one-on-one interviews were conducted across Europe between May and
August 2008 to explore the theme of Purpose & Performance.
Interviews took place in 11 countries: Belgium, Denmark, France, Germany, Italy, Netherlands,
Norway, Spain, Sweden, Switzerland, and the United Kingdom.
Approximately half the interviews were conducted with company respondents (CEOs, corporate
communications heads /managers), and half with non-company respondents (Media, NGOs,
financial analysts, academics, government officials)
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Over 90% believe Corporate Purpose is under increasing scrutiny
“There is a much greater level of scrutiny of the purpose,
vision and values aspects of a company now than 5 years ago”
Strongly Disagree 2%
Somewhat disagree 7%
Strongly
agree 58%
Somewhat
agree 34%
Q: Thinking about businesses generally, do you agree there is greater scrutiny on
vision and values?
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The Purpose & Performance approach is relevant to all businesses
“Performance is profit exactly as said
in the statement. Purpose is social
responsibility in action with internal
and external stakeholders”
90%
10%
Agree
Disagree
“It is the intangible
part of the brand that
makes a difference in
the marketplace.”
“Purpose brings enormous
value to an organisation with a
rippling effect on high
performance ratings with
customers. Engaged
employees need a purpose and
with this purpose comes
customer focus”
“It is a new philosophy
that combines Purpose &
Performance into
business strategy.”
Q: Do you think the approach of focusing on both Purpose & Performance should apply
to all businesses?
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Business reputation is driven mainly
by Performance – but Purpose is gaining ground
% reputation by purpose
Total
Business
respondents
Non-Business
respondents
41%
44%
39%
% reputation by performance
59%
56%
61%
Q: Thinking about a business’ overall reputation, what proportion is actually driven by
Purpose and what proportion is driven by Performance?
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Less time is actually spent on Purpose
though the number is expected to increase
Time spent on Purpose
31%
Time spent on Performance
Past 12 months
69%
Total
62%
38%
Business
respondents
Non-Company
respondents
33%
67%
61%
39%
29%
37%
71%
Next 2-3 years
Past 12 months
Next 2-3 years
Past 12 months
63%
Next 2-3 years
Q: Having heard this definition, and thinking about the past 12 months, what
percentage of your business time / businesses time was spent on Performance issues?
And thinking about the next two to three years, what percentage of your business /
businesses time do you think will be spent on Purpose issues?
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Apart from delivering growth, managing corporate
reputation is most important to a CEO’s own standing
Very
important
67%
Not at all
important
62%
56%
36%
38%
7%
25%
32%
8%
6%
8%
Grow th
Re putation
Mission
Responden ts answering 1-3
15
55%
52%
37%
11%
41%
39%
48%
47%
46%
41%
45%
42%
50%
11%
9%
11%
9%
11%
Pre ss
Cove rage
Ne w
m arkets
Le adership Dividends Re sponsi ble Manage me nt Q Re sults
Responden ts answering 4-7
50%
Responden ts answering 8-10
Q: Please rate the importance of the factors that you think determine a CEO’s good
reputation on a scale of 1 to 10, where 1 is not at all important and 10 is very
important?
CEOs are key to setting Purpose & Performance objectives
It is share d a cross
de pa rtme nts
Public a ffairs/ Corporate a ffairs
Corpora te com m uni ca tions or
gl oba l com municati ons
Ex ecuti ve ma nagem ent
The Chai rm an / Board
24%
14%
21%
31%
45%
Offi ce of the CEO
Q: What function do you think generally oversees a business’ mission of
purpose and performance?
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62%
Companies that deliver on Purpose & Performance are
seen as role models and even deflect criticism
Trust in the company e ve n i f its
sha repri ce fall s
34%
Be lieve in the com pa ny even if
it come s under publ ic pressure
43%
Follow the company in the
m edi a
49%
Re comm end the com pa ny as a
good em ploye r
58%
Be lieve it is a company to
pa rtne r w ith
61%
Be lieve it is a role m ode l in
busine ss for other compani es
to fol low
69%
Stron gly agree
Q: Presuming a company is effective at balancing Purpose & Performance, what extent
would you...
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Nearly three in five see a tension in focusing
on both Purpose & Performance
No – 43%
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Yes – 57%
Q: Some people have said that there is a tension between Purpose and Performance
and that managing this is one of the key challenges facing CEOs. In your view do you
think there is a tension between Purpose and Performance?
Nearly three in five see a tension in focusing on both Purpose &
Performance
How do companies manage this tension? Some quotes:
“You work on finding the areas where they go hand-in-hand, and there are actually
quite a few areas where they do. For instance, the environment. There are many laws
that cost money, and by reducing the strain on the environment, you also reduce
costs.”
“Open communication (especially through the CEO to make matters transparent),
highlight performance problems, inclusion of employees.”
“Performance keeps a company in business. Investors are fickle and will go
somewhere else to find performance. But for longer-term customer engagement,
companies need a strong purpose.”
“By searching for objective ways to measure the impact of purpose on performance.”
“Transparency; Active internal and external communications strategy.”
Q: How is your business / organisation looking at ways to manage this tension?
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Surprisingly, Shareholders and CEO’s are perceived to be
the principal barriers to focusing on Purpose
NGOs
The gene ral public
Governm ents
Cus tom e rs
Regulators
The m e dia
Staff
The board
CEO / Snr m anagem e nt
Share holders
7%
9%
10%
11%
12%
13%
15%
25%
27%
52%
Q: Which, if any, of the following do you think are the biggest barriers to focusing on
Purpose within your company / a company?
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Balanced Purpose & Performance is important, yet nearly
40% think performance is how CEOs are ultimately judged
Ultimately judged
on Performance – 39%
Q: Which of these statements is closest to how you feel?
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Purpose & Performance
both important – 61%
1 Company out of 3 does not verify if employees understand
the company’s purpose
No – 33%
Yes – 67%
Q: Do you measure how well your employees understand your business /
organisation’s mission, vision and values?
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Everyone agrees that CEO’s need to drive a broader sense of
Purpose with employees
0%
50%
Strongly agree
100%
Somewhat
agree
Q: Thinking about businesses, do you believe it is important for a CEO to develop
a sense of Purpose not just Performance amongst employees?
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The vast majority see business is no longer
defined by the short-term
81%
“No business survives
beyond the short-term
without considering its
impact on the wider
world.”
19%
Agree
Disagree
Q: Thinking about businesses generally, please listen to the following statements and
indicate whether or not you agree with them…
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Conclusions
 The vast majority feel that Purpose is more important today than it was 5 years ago
 Business reputation is build thru 40% Purpose and 60% Performance
 Yet... time spent on Purpose is only 30%...but is expected to increase upto 37% in the
next 2/3 years
 CEOs are the gate-keepers of Purpose but along with shareholders, they are also
viewed as a barrier to its development
 There is a recognized tension between Purpose & Performance
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Conclusions
 One company out of three does not verify employee understanding of its Purpose
 The vast majority agrees that CEOs need to drive a broader sense of Purpose with
employees
 There is a high level of consensus that no business survives without considering its
impact on the wider world
 More than half think that both Purpose & Performance are important, yet there is still a
very significant number who feel Performance is the ultimate measure
 Companies that deliver on Purpose & Performance are viewed as role models and are
more trusted
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Purpose & Performance