Overcoming the Purpose Gap: Why There’s a Muddle in the Middle

At the end of 2020, the world sat in hope that the new year would present new prospects, and that the events of last year would be consigned to history. However, what has unfolded is a wake-up call. Accelerating geopolitical tensions, the increasing gulf in social and income inequality, climate change pushing the planet to its tipping point and the pandemic’s unrelenting strain on people, businesses and economies made 2020 not a temporary hiatus from the status quo, but the beginning of a different world.

While governments endeavor to combat the world’s most intractable problems, business leaders are facing mounting pressure from shareholders and stakeholders, alike. More than ever before, businesses can’t just stand on the sidelines, and are being held accountable to their purpose statements. But what does “purpose” really mean?

Purpose is the “why” of an organization’s existence—the driving force and the bond that brings the organization together to achieve success. For decades, purpose has evolved from an initial profit and shareholder focus, but has now expanded to embrace the influence and impact an organization can have to effect positive change.

Paul Polman, the former CEO of Unilever, observed that people “don’t want to look back at what they’ve done and say, ‘Well, I built market share of Dove 4.5% ….’ No, they want to say, ‘I helped so many millions of women achieve self-esteem. I helped so many people improve their nutrition levels and, in doing so, I’ve actually strengthened the institution I represent.’ And that is really purpose in action.”

While organizations aim to deliver meaningful change, a gap has formed between intention and action related to corporate social responsibility commitments. Today, society is increasingly challenging organizations to fulfill their deeper purpose. However, leaders must tread carefully or face the possibilities of a public backlash, union protests, boycotting of brands and regulatory action if their CSR initiatives fail.

In a world experiencing major challenges, there is little room for error. Businesses can no longer merely pay lip service to sustainability, equality, diversity and fairness, and employees, investors, customers and regulators are urgently calling for them to make good on their commitments.

“It’s not what we say, it’s what we do,” concurred the business audience of C-suite leaders at Putting Purpose into Action, a recent event organized by Bloomberg, in collaboration with Kearney. The attendees acknowledged that “there’s an entire generation looking to business leaders, a little exhausted by our words, and very much focused on the how.”

For any company, closing the purpose gap is crucial, and failure to do can result in not just reputational damage, but potentially an exit of stakeholders, higher turnover and even regulatory action. So, what creates this gap between words and action, and how can it be tackled?

In May 2021, Kearney interviewed 300 chief executives and chief experience officers, 300 middle managers and more than 200 entry-level employees from the private sector. It asked them how their organizations have committed to creating shared public value, whether by reducing carbon emissions or by fulfilling any of the wide range of purpose commitments that companies have made.

Kearney used the results of the survey to allow each company to see its own purpose quotient, which shows how far an enterprise has embedded its corporate purpose into its activities and practices. It also reveals how wide a company’s purpose gap is, and identifies the areas where it’s falling short, enabling each organization to rectify their situation.

“We found that at the top of the organization, directors want to demonstrate their commitment to purpose. They realize that companies have an obligation to society, to the environment and to their people, as well as to their historic stakeholders and shareholders,” says Alex Liu, Managing Partner and Chairman of the Board at Kearney.

But this intention often doesn’t percolate down to the middle managers of the business. “There’s a bit of a muddle in the middle,” says Liu. “There’s this wall of cynicism that’s built up over time, and there’s a legacy of belief that we’re only here to make money. ‘I’ve been doing this for this many years, this is how our company should behave,’ is a typical view.”

The purpose gap between senior and middle management is one of many gaps that exist within organizations. Another purpose gap has been opening between staff from different generations. Millennial and Gen Z middle managers and entry-level staff are very demanding about corporate responsibility and are alert to greenwashing, and the survey found that younger employees are more skeptical about how committed their companies are to purpose.

Abby Klanecky, Chief Marketing Officer and Partner at Kearney, believes one of the first steps a company should take to address these gaps is to look internally and identify which employees feel least connected to its purpose strategy. “If there’s a purpose gap between company leaders and their staff, it will only get wider when external partners, customers, communities and investors are brought into the equation,” she says.

Given the challenges facing today’s world, businesses, now more than ever, need to decide on their purpose and build it into their everyday practices. As Unilever CEO Alan Jope said in 2020: “Brands with purpose grow, companies with purpose last and people with purpose thrive.”