Does organisational purpose have a future?

Unilever was once the poster child for purpose-led business. Former CEO Alan Jope even declared in 2019 that brands without purpose had “no long-term future” there. But by 2023 his successor Hein Schumacher was calling purpose an “unwelcome distraction” for some brands, adding that the time and investment poured into sustainability may have even “diluted” performance. Social mission, once central, comes second to profitability and productivity.

Unilever’s story is symptomatic of a wider trend: a questioning of whether organisations should have a social purpose at all and a return to the ideas of Milton Friedman – that the main responsibility of a business is to maximise revenue and increase returns to shareholders. As a headline in the Wall Street Journal put it: “Companies that embrace social purpose have second thoughts”. 

“There’s definitely a backlash [against corporate purpose],” believes Alison Taylor, clinical associate professor at NYU Stern School of Business and author of the book Higher Ground: How Business Can do the Right Thing in a Turbulent World. In extreme cases leaders are “ignoring basic corporate governance, let alone purpose”, she adds. But at large: “There’s a sense that purpose has collapsed under the weight of its own not very convincing PR.”

The truth, which might make some HR leaders uncomfortable, is that at least some backlash is deserved. In some organisations purpose is coming under fire because it never got below the level of marketing; in others, because organisations and leaders over-reached the limits of what they could realistically deliver.

Why is organisational purpose facing a backlash?

Several forces have prompted this reset, not least polarising culture wars and political pushback against DEI. Commercial realities play a role too. It’s no coincidence, Taylor says, that “peak purpose era was the peak of worker power”, but now companies hold most of the cards. One HR leader The People Space spoke to shared how in her organisation, which previously put a lot of emphasis on sustainability as central to its purpose, leadership conversations have shifted to focus on financials. 

“We talk more about numbers; sustainability no longer feels front and centre,” she says. This context makes talking about purpose internally more challenging. “It’s tough,” the HRD admits. “How do you reconcile the fact that our share price took a nosedive and we only gave modest salary increases with asking our people to believe in the company purpose and give us discretionary effort?” 

When purpose loses credibility

Then there’s the fact that many purpose statements were never worth much anyway, adopted superficially in the face of consumer and social pressure but never embedded or operationalised. Any perceived inauthenticity does more harm than good, and Taylor sees younger generations as particularly alert to it. 

Her current undergraduate cohort are “more cynical than anybody”, she says. “They are obsessed with authenticity… there’s an exhaustion with efforts that are perceived to be PR-led and they hate ‘flip flopping’.” Companies rolling back DEI commitments in the face of political pressure only serve to increase cynicism, as do fears over the impact of AI on employment prospects and climate change. Recent analysis by the UK’s Observer found mentions of ‘climate change’ in FTSE 100 annual reports had dropped by nearly 20% since 2022, while mentions of ‘net zero’ had dropped nearly 30%. 

That said, even those organisations who have genuinely tried to be purposeful can find themselves “drawing more scrutiny and criticism than if they hadn’t bothered in the first place”, according to Taylor. In a pugnacious environment, where different stakeholder groups often have very different views, leaders may feel they can’t do right for doing wrong.

How purpose supports performance and decision-making

Neil Morrison, group HR and communications director of FTSE 100 water company Severn Trent, views this debate as a question of “how you get business back to focusing on what it’s meant to focus on: performance and productivity.” “That is what is good for the economy and creates jobs,” he adds. “Purpose has got blurred over the last decade, getting further away from what the organisation is there to do.”

For a regional operator such as his, much of that is a focus on employability and creating thriving communities. “We do a lot in terms of affordability and hardship support,” Morrison says. “The extension is how we can help people from getting into the situation in the first place – driving growth through good work so people never fall into hardship.”

HR has a role to play in helping organisations distinguish between purpose as brand language (which still has value for many), purpose as employee promise and purpose as operating discipline. As Morrison says: “HR leaders can start the conversation around what purpose is for us, why are we here and tie it down to the commercial objectives of their organisation.” 

Embedding it through operational and decision-making is where purpose drives value, adds David Collings, professor of sustainable business at Trinity College Dublin. At the height of the pandemic he tracked 50 CHROs and clearly saw that purpose helped their organisations navigate through chaos.

“Those who responded best to making decisions at pace had a strong focus on purpose,” he explains. “It gave them a context in which to make decisions when there wasn’t a playbook. And that gave them agility: a reference point when there was no reference point.” Values, he adds, are the operationalisation of purpose, bringing purpose to life through behaviours – "without that, it’s little more than a tagline”. 

Collings adds that while academic evidence points to a correlation between purpose and retention and people feeling more positively about their employer, the evidence base for a link between performance and purpose is weaker. But there is “conclusive evidence” that shows “short termist” HR practices, such as downsizing, are “destructive to long-term performance”. 

Why purpose must shape operational choices 

Treating purpose as systemic rather than ornamental is what counts. “If you have a purpose, make sure it has a point, so it supports decision-making and how you’re designing organisational structures,” advises Julia Mixter, interim executive director of transformation, IT, data and people at housing association Saxon Weald. “If not, it’s performative.” 

She believes purpose matters more than ever as organisations make decisions about AI at scale: "If your ESG statement talks about early careers and emerging talent but you are using AI as an excuse to reduce entry-level jobs, you’re being inauthentic and will get called out quickly.”

At a similarly strategic level, Aneta Jajkowska, global head of diversity, inclusion and belonging at Dassault Systemes, says the company’s purpose around ‘sustainable innovations capable of harmonising product, nature and life’ led it to quickly suspend operations in Russia after the invasion of Ukraine: “The company purpose is connected to life and this was against life, so we withdrew.”

Most employees won’t be accountable for making decisions on that scale, but purpose can provide a framework for decision-making at a more granular level too. Mixter gives an example from her world: “What’s more important – value for money or customer outcomes? If a trade operative is fixing the plumbing, they can get through more jobs if they go in and out quickly, but if [the customer] is a lonely older person, they could support them by talking for 10 mins. Which matters more? There isn’t a right answer, but the clearer you can be with your workforce to help them make those decisions for themselves, the better."

Can organisational purpose accommodate individual meaning?

Some criticism of corporate purpose and values argues that companies are trying to tell their people what and how to think. Is it realistic or sustainable to expect every employee to feel connected to company purpose? Or does individual purpose, however transactional that may be in connection to work, matter more? Amy Taylor is chief people officer at accountancy firm PKF Francis Clark. She sees the role of purpose as bringing personal meaning to people’s work. “If you come to work to pay the bills, that’s fine,” she says. “Purpose is individual and coming up with a purpose statement that is meaningful to a range of people is difficult. The main thing is to help people think about what makes work meaningful for them.”

When the firm looked at its purpose statement a few years ago, leaders discussed whether to go for a grand “our purpose in the world” statement, she explains. “But that didn’t feel authentic – we are an accountancy firm. So we opted for something more aligned to bringing benefits to our clients and our people.” That doesn’t mean the firm doesn’t value sustainability and doing good in its communities – it recently achieved B Corp status – but that it has clarity on staying in its lane.

What does credible organisational purpose look like?

Ultimately, Alison Taylor says, many of the challenges to purpose have come from companies “trying to paste a purpose statement on top of something else”. “Purpose isn't a substitute for a bad culture and it's not a substitute for a negative business model,” she points out. “You can’t sprinkle purpose fairy dust and make your other problems go away.” 

Fixing culture and business models must come first. Purpose that is embedded in and aligned to both, acting as a genuine north star for decision-making and behaviour rather than an edict over what employees should believe adds value, not distraction.

Summing up purpose done well, Taylor advises leaders to be honest and realistic about the impact their organisation makes. “Be focused and don’t overpromise on the problem you intend to solve,” she adds. “Be able to describe the way you add value and actually mean it, to help your people feel proud you are doing something useful.” 

In that sense, Morrison muses, the future of purpose is actually a return to the history of the concept: “Giving people a sense of what an organisation was trying to achieve above a purely profit motive.” And in a more volatile, contentious climate, simply declaring what you stand for is not enough: purpose with purpose means proving why you are here.