Organizational Purpose
Purpose points to an organization’s reason for being beyond financial objectives. Whilst in a capitalist economy, for-profit companies need to make a profit to be economically sustainable, these companies ultimately exist to contribute to society in some way. Understanding the purpose of an organization is one way of understanding what it means to do the right thing.
What is Organizational Purpose?
To ask for the purpose of an organization, is to ask: Why do we exist? This is a simple question, and yet, it’s often difficult to answer. Often, organizations already have a stated purpose, yet it is important to frequently reflect on this purpose with the idea of an ethical organization in mind. The purpose of an organization is often presented in terms of its mission.
Formulating an organisational purpose can broadly be distilled into three steps:
The first step in formulating an organizational purpose is accepting that the organization exists to make people’s lives better, and not just to make profits. It therefore consists in understanding what people would lack if the organization wouldn’t be there. Philips, for example, describes its purpose as "improving people's lives through meaningful innovation".
The second step in developing an organizational purpose is generating ownership of this purpose.
This means that an organization’s leadership should consult with employees and other stakeholders in the organization to ensure alignment. If the stated purpose of an organization does not resonate with its members, it breeds disengagement, rather than alignment.
The third step is considering purpose from different points of view: What does our organization bring to the customer? How do we contribute to our industry? What greater cause does our organisation help realise? How do we help our communities? What does the organization bring to its employees?
It is important to note that an organization’s purpose is not marketing talk. To be effective, it needs reflect the true ambition of the organization, i.e., be aligned with what the organization does and how people work in a day-to-day fashion.
Organizational Values
An organization’s purpose is broad and future-oriented and needs to be translated into day-to-day reality. The related question to ask is, "given our purpose, how do we behave?".
It is important to frame organizational values not too broadly, covering everything that humans find important, because this will make them vague and ineffective. Rather, values reflect what an organizational culture is really about, what sets it apart from other organizations. It therefore usually consists of only a handful of statements.
To build an ethical organization, values need to be approached critically. Some values, such as "move fast and break things" can have severe negative side effects. To determine core values, one should therefore ask two questions:
How should we behave?
How could this behavior have negative impacts?
Consider some of the core values of Ben & Jerry’s Ice Cream:
We strive to minimize our negative impact on the environment.
We strive to show a deep respect for human beings inside and outside our company and for the
communities in which they live.
These statements effectively communicate the goals of the organization's culture and its vision statement "making the best possible ice cream, in the nicest possible way."
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