Becoming a purpose-driven business is a hot topic among corporate leaders at the moment. Patagonia’s recent transfer of nearly all its stock to a not-for-profit served to highlight the issue, while a recent legal battle between Ben & Jerry’s and their owners, Unilever, is a reminder that purpose can be a point of conflict.

But though there may be much talk of companies defining purpose, employees appear to have a poor opinion of their leaders’ efforts. A survey finds that 70% of workers at large firms believe their employers’ purpose is “conflicted”, or “only somewhat aligned”, with day-to-day operations.

A hefty 68% say their companies have changed “only a little” or “not at all” since setting out a purpose.

But purpose, as an idea, does appear attractive. One in three employees said they would choose purpose over a higher salary while 48% said they wanted more action on their company’s purpose.

The results come in research from Given, an advisory firm. According to chief executive Becky Willan: “At best, this means businesses are missing out on the full promise of purpose but, at worst, it exposes business to the risk of ‘purpose-wash’ when purpose only shows up in marketing or PR.”

A messy business

The concept of purpose in business was placed on the corporate agenda in recent times largely due to the collapse of Enron, and then the financial crisis of 2008, which shook public trust in big business. A search of Harvard Business Review reveals more than a thousand articles discussing purpose as a business concept. One article emphasising the difficulty of getting to grips with purpose is headlined: “The messy but essential pursuit of purpose.”

In the UK, discussion of purpose seemed to peak in 2021 with the end of a four-year study by the British Academy, led by Oxford University professor Colin Mayer.  This defined corporate purpose as finding “profitable solutions to the problems of people and planet, not profiting from creating problems for either.” Mayer worried that “too often companies also profit from producing problems”.

However, there has been scepticism of the concept and of companies claiming to have made it their guiding star. When US chief executives club the Business Roundtable declared in 2019 that its members—among them Amazon and Apple—would henceforth dedicate themselves to redefining their corporate purpose in favour of stakeholders, subsequent research concluded there was little in it.

After conducting research looking at company documents, Harvard professors Lucian Bebchuk and Roberto Tallarita concluded that the Roundtable’s purpose declaration seemed to have been “for show”. They said it did not represent a “meaningful commitment” and was not expected to “bring about meaningful improvements in the treatment of stakeholders”.

Last month, the Roundtable issued a statement saying that its corporate purpose declaration “continues to reflect” the view of members.

There is a focus on purpose among campaigners in the UK. Much of that has centred on reforming section 172 of the Companies Act 2006 to reflect assertions that companies should have a purpose. The Better Business Act campaign explicitly calls for directors’ duties to be adjusted to reflect a move from promoting the “success” of their companies to pushing the “purpose” of their organisations.

That campaign is still under way, though accompanied by disappointment in some quarters that recent government statements on audit reform were not also used to address section 172.

Given’s research suggests there is an appetite for purpose, but many corporate leaders may be at a loss when it comes to understanding or implementing the concept. That may not be entirely surprising: it is a relatively new idea. But improvements may be necessary if companies are to continue convincing new recruits to work for them.