Social Purpose business and the case for changing strategies
There is a strong business case for having a social purpose. Evidence is mounting that businesses that stand for solving societal challenges are performing well. The research on the social purpose business case shows there are six main business benefits for pursuing a social purpose business.
Social Purpose Business builds customer commitment
Social purpose companies attract and retain customers, and build customer brand advocacy
There is a new wave of consumer and they care about impact just as much as value or quality. Companies all over the world are starting to recognize and acknowledge this growing trend, and are responding accordingly. Here is a snapshot of some of the reasons companies are deciding that it’s finally time to develop their own social purpose business:
- Two-thirds of consumers try to support companies that have a social purpose and two-thirds refuse to buy a brand if it doesn’t, while over 70% of global consumers would recommend a company with a purpose over one without and this number is rising.
- Nearly 70% of Canadian consumers believe companies should show how their products and services make the world better.
- For every 10% increase in purposeful performance there is 5 – 12% increase in premium pricing, purchasing decisions, and advocacy.
Social purpose increases employee engagement
Social purpose companies recruit, retain and motivate employees & build employee brand advocacy.
The workforce has also seen a significant shift, because the right fit is more important than ever. It’s more than just job role and salary (although, both of those things are still very high on the list). More and more, job roles are being selected based off of overall impact and connection to a greater purpose. The workforce wants to feel that they are making a meaningful contribution, not only to their workplace, but to society as a whole.
- 60% of millennials want to work for companies with a ‘purpose’; a sense of purpose and impact on society is the second top criteria for young people when considering job opportunities. There fore, this must continue to rise.
- Purpose drives engagement: Purpose-driven workers have 20% longer expected tenures, are 50% more likely to be in leadership positions, 47% more likely to be promoters of their employers and have 64% higher levels of fulfillment in their work.
- Employees of social purpose companies are considerably more likely to recommend the company’s products and services. They are also more likely to recommend their company as an employer.
There are enhanced stakeholder relationships
Social purpose companies strengthen third-party relationships & enable collaboration.
Relationships are important in a business context. This is not new information. But, social purpose is proving to be a new way for stakeholders and other companies to form relationships, because they help people rally together around common causes.
- Businesses that demonstrate social purpose build trust, reputation and loyalty with their stakeholders, opening up opportunities for new and deeper partnerships
- Opportunities to grow the business, generate new market insights and open consumer engagement channels can be found by working in partnership with governments, industry and civil society.
- As many societal challenges will require government, business and civil society collaboration to address, business which adopt and pursue social purpose are better positioned to address the coming disruptions.
Social purpose business builds social capital
Social purpose companies strengthen operating context and increase trust.
There is a direct link between the health of a community, and the health of a business operating within that community. With an defined social purpose, this link becomes stronger — and your workplace can start to draw vivid parallels between the output of the work, and the positive impact in community.
- No company exists in isolation — each operates in an ecosystem where local conditions affect its markets and the productivity of its suppliers and distributors. Business has a stronger base for customers to draw upon because its community is healthy. Communities with strong social bonds are healthier and more resilient, and their members are able to work together to solve problems.
- Social capital (the networks of relationships among people and organizations) contributes to economic growth and poverty reduction.
- Consumers of trusted companies buy their products and services; recommend them to friends; pay more for their products and services; share positive opinions about the company online; defend the company; and buy its shares. Distrusted companies realize the opposite results.
Business improves financial performance
Social purpose companies enhance financial performance, and increase access to capital & manage risk.
Simply put, having a social purpose is a competitive advantage in the business world. Recently, over 180 CEOs of some of the largest companies within the United Statescame together to announce that business must focus on a broader set of stakeholders — and that includes community — in order to be successful.
- Companies that operate with a social purpose, outperformed the S&P 500 by a factor of 10 between 1996 and 2001; purposeful business outperformed other companies by 206% in the stock market between 2006 and 2016.
- 58% of companies with a social purpose experienced growth of 10% or more versus 42% of companies not prioritizing purpose; 42% of non-purpose led companies showed positive growth
- Having employee and stakeholder buy-in makes a social purpose company fundamentally more agile, able to respond quickly and effectively when opportunities arise or danger threatens.
Innovative business inspires an innovation generation
Social purpose companies increase innovation. They enable business transformation & enhance resiliency.
Creativity and innovation are celebrated in the business world, because these two traits help companies overcome major obstacles. Therefore, coming together with a social purpose invites creativity and innovation into the room, at every level of the organization.
- Society’s needs are “innovation hot spots”. Social trends that affect society can provide opportunities for social purpose companies to meet unmet needs. Social purpose business that develop innovative solutions have an opportunity to grow their business in export markets.
- 73% of executives agree that a social purpose helps their company navigate today’s turbulent environment.
- Social purpose is a response to societal pressures on business to transform, and equally a successful strategy to help business manage transformation.