More Purpose or More Efficiency?

The current Future Organization Report 2021, published by the Institute of Information Management of the University of St.Gallen, provides recommendations for the agile transformation of companies.  

The report revealed this surprising information for me: 25 percent of employees do not know the current targets of their company. Just imagine a company's production running at only 75%. This would immediately be discussed at the next board meeting. 
Yet, it is really not a new insight that only informed employees are also motivated and committed. 

But even if goals are transparent and understood, it is often still not clear why these goals are actually worthwhile and valuable. 

People often do not understand the difference between strategic corporate goals and purpose. A corporate goal, for example, is to achieve a 15% growth rate with new products in the next year. However, this information does not tell us why the company exists and what it contributes to customers and the society. 

• Corporate goals are the road signs of a company – and, hence, need to provide direction for their employees. It is they who need to know how their own commitment contributes to the overall goal. This knowledge increases motivation and commitment.  
• Employees then recognize, for example, why processes need to be redesigned. They create direct added value by using their own experience for improving logistics and IT processes or by making suggestions for improvements.  

However, the drive to achieve ambitious goals ultimately springs from the why question.

• The purpose of a company shows their employees why a company exists and makes their jobs meaningful. 
• Meaning is important for both the workforce and the leaders of a company: 64 percent believe that a higher-level purpose should be taken into account for critical management decisions. This makes decisions comprehensible and increases acceptance. 

Employees show higher levels of intrinsic motivation when the see and understand that their work has purpose. This directly translates into more satisfaction and better performance. It also results in lower absenteeism and staff turnover. The result: increased efficiency and productivity in the company. The Future Organization Report 2021 provides evidence of exactly these connections. 

Sustainability plays a central role when it comes to purpose: Sustainable decisions place the company in a broader societal and environmental context. To learn more about why this is not in contradiction to operational efficiency see my last CEO blog article. And what about diversity? According to the Future Organization Report, agile companies are already on a good path: more than 87 percent of those surveyed say that they enjoy receiving “a broad range” of feedback from people with different perspectives. This attitude, in turn, is positively correlated with innovative work conduct.  

Some progress has already been made. This is another finding from the study.  

• Company agility has steadily increased in recent years. Agility has become part of the process organization and agile project management is one of the established “tools of the trade”.  
• Since the coronavirus pandemic, at the latest, the internal digital communication using collaboration tools has taken a giant leap forward. 
• The pandemic has also created the willingness to rethink and redesign ways of working that were previously considered set in stone. 
• But the coronavirus crisis has made it clear that there is a need for action to create significantly more and better digitized processes.  

For the next development step, leaders need to rethink from new perspectives. Today's leaders have a much broader mandate within their organizations than just to increase efficiency. Their task is to communicate corporate goals and purpose in context. In doing so, they will create a corporate culture where employees feel more included and invited to take initiative. It is therefore time to significantly strengthen the exchange between leaders and employees. In my view, this is the only way to reach ambitious corporate goals.  

Just as exciting is what the recent Future Organization Report has to say on where we stand in terms of customer focus. Again, the sense of purpose is a key element of achieving customer loyalty. More on this aspect is following in my next blog. 
Whether internal or external: There is no conflict between purpose and efficiency. In the contrary: More purpose will lead to more efficiency, if done properly!