The impact of CEOs on the performance of American companies has increased over the past 20 years, according to researchers at the University of Georgia and Penn State. They argue that this impact will continue to grow as businesses become more dynamic and traditional revenue sources become less predictable.
In light of this finding, it’s vital to explore the differentiating factors of outstanding corporate leaders. Myriad research cited here suggests that a CEO’s sense of purpose, in particular, has a unique effect on the outcomes of executive leadership. In my own experience with building companies, I’ve seen the profound impact that purpose has on the success of a corporate leader. I’ve also seen its overlooked effect on corporate performance.
Purpose-driven leaders drive results
CEOs who exhibit a clear sense of purpose—and a relentless drive to fulfill that purpose—outperform their less-inspired counterparts.
According to a Harvard Business Review study of 200 global CEOs, a sense of purpose is consistently found in the best-performing CEOs—all of whom have an unrivaled intensity, focus, passion, and ownership over their work. It manifests in different ways, from a quiet force that propels a leader to approach problems with an open mind to an inspiring manifesto that rallies an organization to move swiftly to implement big changes.
What ultimately matters is that the sense of purpose unites the company and its CEO in the pursuit of a meaningful goal. This purpose can be described as the “why” behind a company’s existence. Although this factor may evolve over time, it should be rooted in the primary service the firm offers the marketplace—and society. Purpose shouldn’t be confused with a mission statement, which speaks to the “what” of a company.
Executive consultant Justin Menkes believes that a “subservience to purpose” inspires executives. In reference to CEOs, Menkes writes in a Harvard Business Review article, “Their level of dedication to their work is a direct result of the extraordinary, remarkable importance they place on their goal.”
This dedication and passion become a catalyst for employees, particularly in sales. It’s simple: People want to infuse their work with meaning and know their efforts are having a material impact on the organization. Unlike some forms of financial compensation, purpose offers a deeper motivation.
The impact of purpose on recruitment, engagement, and retention
An organizational purpose gives CEOs and their companies a strategic advantage, particularly when it comes to talent, one of the top concerns of corporate leaders today.
According to an ADP Midsized Business Owners Study, half of mid-sized businesses are very concerned about the quality of job candidates. Combined with a strong job market and talent shortages, CEOs are looking for new ways to acquire the talent necessary to execute the organization’s strategy and accelerate business outcomes.
A purpose-driven CEO can mitigate those challenges by building an employer brand around the company’s purpose and core values.
Millennials, in particular, want to work for organizations that emphasize the role of purpose in day-to-day work. According to Deloitte’s 2016 Millennial Survey, most young workers believe that CEOs need to make purpose a greater focus in their organizations. By creating an employer brand around a purpose-driven culture, organizations can attract the Millennial talent that will outperform peers today and well into the future.
When CEOs inject a sense of purpose into their organizations, it also increases engagement and retention. For example, in a Deloitte Core Beliefs & Culture survey, 73% of respondents in organizations with a strong sense of purpose said employees were fully engaged. Gallup research has found that 71% of Millennial employees who know what their company stands for are likely to stay for a year or more.
At a time when new threats and disruptions consistently challenge leaders, CEOs who lead by uniting business units around a central purpose are best positioned to realize revenue and growth goals.
With executive leadership skills, you’ll be equipped to serve as a visionary, trailblazer, strategist, communicator, coach, and more—and to optimize your company's performance.