BM_IMD_REPORT-How-Authentic-is-your-Corporate-Purpose

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4.3 The current state of authentic corporate purpose among organizations Given that it is so difficult to identify a single organization that most respondents would unprompted identify as having an authentic corporate purpose, we were keen to understand how respondents saw the authenticity of their own company’s corporate purpose. As such, we asked executives two questions about the corporate purpose of their organizations: First, we asked respondents to rate the authenticity of their organizations’ corporate purpose, and second, we asked them how often their organizations’ corporate purpose guided their decision-making. With respect to their own organizations, the executives generally “agreed” that their own organizations had an authentic corporate purpose. On a scale from 1 (Strongly Disagree) to 7 (Strongly Agree), the average score was 5.60 (refer to Appendix XII for survey data related to the presence of authentic purpose in respondents companies). However, slightly fewer respondents agreed that their corporate purpose guides the decision-making in their organizations (5.3). In fact, only 14% of executives stated that corporate purpose “always” guides the decision-making in their firms (refer to Appendix XIII for a breakdown of responses to these questions and to Appendix XIV for data on the influence of corporate purpose on decision-making). As per our definition, for a corporate purpose to be seen as authentic, the company’s perceived corporate purpose and the actual strategic decisions and actions that the firm takes must be aligned. Therefore, the gap between purpose and corporate decision-making is an important finding supporting the general difficulty in identifying organizations that have an authentic corporate purpose. 4.4 The role of leadership in driving an authentic corporate purpose We also deliberately set out to understand the role of leadership in establishing and maintaining an authentic corporate purpose. Leadership is central to organizations overcoming barriers such as short-term financial and competitive market pressures that can derail decision-makings alignment with corporate purpose. Our study suggests that as organizations grow in scale and across geographies, it becomes increasingly challenging for leaders to ensure that authenticity of corporate purpose is maintained by aligning purpose with decision-making. We asked several questions with respect to the leader’s role in ensuring their company’s authenticity of corporate purpose. First, we asked respondent’s directly about the effectiveness of the leadership of those organizations they identified as having an authentic corporate purpose. As Table 1 shows, in general, executives feel that the leaders of organizations with an authentic corporate purpose are effective, capable and leading operations satisfactorily. Table 1: Leaders of Companies with an Authentic Corporate Purpose Question Average In your opinion, to what extent is the overall functioning of this company's leader 6.14 satisfactory? In your opinion, how effective is this company's leader? 6.05 In your opinion, how capable is this company's leader? 6.20 (1-Not at all to 7- Very Much So) 18
We then asked more specifically for respondents’ opinions about the relationship between leadership and the authenticity of a firm’s corporate purpose. As indicated in Table 2, the executives in our study strongly agreed that leadership is an important factor in establishing the authenticity of a firm’s corporate purpose. This is not surprising because the leader sets both the direction and the overall objectives of the company. In addition, the leader personifies the company’s identity and image through his/her communications with stakeholders. This supports the idea that corporate purpose must be consistent with both corporate leadership and action (i.e. both “walking the talk AND talking the walk”). Table 2: Leadership and Authentic Corporate Purpose Questions In your opinion, how important is the role of leadership in establishing the authenticity of a firm’s corporate purpose? Average 6.62 (1-Very Unimportant to 7- Very Important) We explore the relationship between leadership and authentic corporate purpose in more detail in Section 6. 5. Testing the Authenticity of Corporate Purpose Model Having identified the challenges with establishing an authentic corporate purpose and the role of leadership in driving this process, we now turn to empirically specifying the dimensions of authentic corporate purpose. In section 3, we outlined our general conceptual model of authentic corporate purpose, which consisted of both an internal and external component and four organizational activities: leading (balance, awareness, transparency and self-regulation), stewarding (embeddedness, long-term orientation and connectedness), delivering (reliability and consistency) and differentiating (reputation, passion and originality). Using the survey responses, we then conducted a confirmatory factor analysis (CFA) to test the relationship between these 12 dimensions and the construct of “authentic corporate purpose” (N=199). 19
Page 1 and 2: How Authentic is your Corporate Pur
Page 3 and 4: Contents Executive summary ........
Page 5 and 6: Executive summary Introduction Over
Page 7 and 8: although awareness is critical to a
Page 9 and 10: Research by Burson-Marsteller and I
Page 11 and 12: To validate the dimensional structu
Page 13 and 14: Leading Image: In contrast, researc
Page 15 and 16: 4. Survey Results and Key Findings
Page 17: Figure 4: Top Five Companies with a
Page 21 and 22: 6. Leadership and Authentic Corpora
Page 23 and 24: 7. Qualitative Research Findings In
Page 25 and 26: One executive described the “doub
Page 27 and 28: companies as members. Other such fo
Page 29 and 30: - Is the organization aware of the
Page 31 and 32: 1) Seeking feedback from stakeholde
Page 33 and 34: knowledge for the broader good. Tha
Page 35 and 36: - Does the organization openly shar
Page 37 and 38: • Strategy has to illustrate purp
Page 39 and 40: making process. If managers are not
Page 41 and 42: De Hoogh, A. H., Den Hartog, D. N.,
Page 43 and 44: Leading 13. Appendices Appendix I:
Page 45 and 46: Appendix II: Qualitative Interview
Page 47 and 48: Appendix III: Qualitative Interview
Page 49 and 50: Appendix V: Characteristics of Surv
Page 51 and 52: Appendix VII: Industry Demographics
Page 53 and 54: Appendix IX: Companies Identified a
Page 55 and 56: Appendix XI: Ranking of Full List o
Page 57 and 58: Appendix XIII: Status of Authentic
Page 59 and 60: Appendix XV: Standardized item fact
Page 61: Appendix XVII: Confirmatory Factor

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