One of my coaching clients asked me recently if a company can have a soul. This question is very common in today’s fiercely competitive business environment - witness a recent search on Google came up with over 100 million results.
Based on my experience with executives and a review of the best thinking on leadership and governance, I have identified the following characteristics of a company with soul. By soul, I mean a broader, higher purpose than just more robust quarterly results.
Social responsibility: Profits are of course one of the most important drivers of business, but they cannot be its sole purpose. Not all profits are equal. It matters how money is made. For example, companies such as Amazon, Twitter and Facebook have implemented policies to avoid having hate speech associated with the products and services they allow on their platforms. Companies with a higher purpose realize that profits involving a social objective create a positive cycle of prosperity between a company and society. These organizations embrace the interdependencies and synergies between their stakeholders: shareholders, employees, vendors, customers, society and the environment. Companies such as Tata, Unilever and Google see their organizations as greater than their individual component parts. Social responsibility is becoming important for executives and the companies that they lead. Research indicates that there is a positive correlation between this type of corporate culture and profitability.
Environmental responsibility: Forward-looking companies understand that our natural resources are being consumed at an unsustainable rate. They see it as a stark, existential threat for humanity. They also recognize the real prospects for sustainable growth by developing innovative and technologically compelling solutions to reduce ecosystem loss. Some, like Intel, Ericsson and Ecolab are creating sustainable long-term value for their shareholders and all their stakeholders by decoupling resource consumption from growth. Forward-looking companies, such as these, grasp the opportunity to reinvent a greener more sustainable economy for the generations to come. The most forward-looking ones are already doing so.
The human imperative: The slogan of one of Canada’s oldest and most efficient steel makers, Dofasco (now part of ArcelorMittal) is Steel is our product, People are our strength. Research confirms this adage by showing the link between superior human resource management and superior organizational performance. Successful companies, such as Starbucks and Southwest Airlines, invest time and effort to hire the best talent, and devote considerable resources to retain them. They engage employees who not only have the required competencies, but who also share the businesses’ purpose, values and culture. They stress employee training, empowerment and involvement. They promote teamwork and a team culture characterized by sharing and collaborating. A good team always produces better results than individuals working alone. Incentive programs are team based and compensation policies are fair and transparent. Forward looking companies create purposeful work that challenges and encourages their employees to learn and grow.
Moral authority: Companies with a higher purpose have moral authority. A company’s stakeholders (shareholders, employees, customers, vendors…) want to know that the company is honest and dependable and that its values align with their own. Stakeholders do not want to be manipulated. The most successful leaders seek to align the values of their stakeholders to create organizational cultures that bring about lasting change, and achieve the desired results. Stakeholders value privacy highly. Trust is the cornerstone; and it is built with transparency, integrity and respect.
Executives who are successfully managing the volatility and complexity of the global economy have a strong sense of purpose. They embrace a reality greater than themselves and the companies that they lead. They create a corporate culture focused on achieving effective, practical, sustainable and transformational results for the long-term. The Bonar Institute is committed to assisting companies discover and nurture their higher purpose, their soul...