Every Company Can (and Should) be Purpose-Driven
The problems associated with low employee engagement has spawned a myriad of content, all filled with best practices and initiatives to increase motivation and productivity. But much like the reactiveness of our healthcare system that treats mostly symptoms instead of truly focusing on wellness, so too are our treatments of low employee engagement in our organizations.
According to an article in the July-August 2018 issue of the Harvard Business Review titled Creating the Purpose-Driven Organization, the disappointing results that companies continue to experience around low employee engagement despite training, alterations in incentives and increases in managerial oversight can actually be blamed on the approach itself, and not the people.
In the article, researchers Robert E. Quinn and Anjan V. Thakor drive the point home that “applying conventional, economic logic, where you view your employees as self-interested agents and design you organizational practices and culture accordingly” will always yield disappointing results, and the true path to long term sustainability (or health and wellness for the organization) is always a result of helping connect its people to their purpose.
This is a hard truth for most executives to realize, as it generally takes a crisis of some magnitude to shift leadership’s thinking that the most effective bottom line results actually come from helping the employees connect with the organization’s purpose.
That Gerry Anderson’s situation as president of DTE Energy in Detroit when after the Great Recession in 2008 he “knew that he had to get his people to devote more of themselves to work,” or they would be facing some very serious financial implications.
But how exactly could he get employees to “break free of old, tired behaviors” in favor of performing up to their full potential, where they would bring “their smarts and creativity to their jobs, move into deep learning and make surprise contributions?”
Having been invited by major general Joe Robles, then the CEO of USAA and a DTE board member, to visit some USAA call centers, Anderson “watched positive, fully engaged employees collaborate and go the extra mile for customers,” and when he asked how that was possible, Robles answered that a leader’s most important job is to “connect the people and their purpose” and explained how every employee “underwent an immersive four-day cultural orientation and made a promise to provide extraordinary service to people who had done the same for their country — members of the military and their families.”
The article notes that before the recession, Anderson would have rejected any statements about purpose as empty and simply about rhetoric. “But having run into a dead end in figuring out how to make his own organization thrive” once the recession hit, Anderson was forced to reexamine some of his basic assumptions about management.
Taking a cue from Robles, Anderson returned to DTE’s Detroit headquarters and made a video that articulated his employees’ higher purpose. “It showed DTE’s truck drivers, plant operators, corporate leaders and many others on the job and described the impact of their work on the well-being of the community — the factory workers, teachers and doctors who needed the energy DTE generated. The first group of professional employees to see the video gave it a standing ovation. When union members viewed it, some were moved to tears. Never before had their work been framed as a meaningful contribution to the greater good.”
The video brought DTE’s new statement of purpose to life: “We serve with our energy, the lifeblood of communities and the engine of progress.”
But according to the article, what happened next was even more important: “The company’s leaders dedicated themselves to supporting that purpose and wove it into onboarding and training programs, corporate meetings, and culture-building activities such as film festivals and sing-alongs. As people judged the purpose to be authentic, a transformation began to take place. Engagement scores climbed. The company received a Gallup Great workplace Award for five years in a row. And financial performance responded in kind: DTE’s stock price more than tripled from the end of 2008 to the end of 2017.”
So why did that work so well when every other intervention had failed? After all, it’s counterintuitive to what we’ve learned in business schools and subsequent experiences “that work is fundamentally contractual, and employees will seek to minimize personal costs and efforts.”
[These] are not necessarily faulty assumptions, as they describe the behavior in many organizations reasonably well, it’s just that it creates a self-fulfilling prophecy. “When managers view employees this way, they create the very problems they expect. Employees choose to respond primarily to the incentives outlined in their contracts and the controls imposed on them. Consequently, they not only fail to see opportunities but also experience conflict, resist feedback, underperform and personally stagnate. So managers, believing that their assumptions about employees have been validated, exert still more control and rely even more heavily on extrinsic incentives. Employees then narrowly focus on achieving those rewards, typically at the expense of activities that are hard to measure and often ignored, such as mentoring subordinates and sharing best practices. Overarching values and goals become empty words. People do what they have to do. Results again fall short of expectations, and managers clamp down further.”
“So you now face a choice: you can double down on that approach, on the assumption that you just need more or stricter controls to achieve the desired impact, or you can align the organization with an authentic higher purpose that intersects with your organizational practices and culture accordingly.”
The biggest takeaway from the article for me is that if an energy company can find a purpose that it’s employees can connect to, so can yours — regardless of what industry you’re in. And where the article does provide a nice roadmap for organizations to start this transition, it simply won’t happen unless the leadership can let go of command-and-control thinking in favor of a more collaborative process that engages people’s natural seeking systems.
Lessons for Organization Development:
In the companion podcast to the article (HBR Ideacast #639) researchers Quinn and Thakor talk about some of the main lessons learned in writing about DTE Energy.
1. Purpose-Driven organizations outperform those that are not, but it must be authentic.
“Organizations in which there is a clarity of purpose and it’s clearly communicated to the employees in the organization achieve very significant outcomes,” says Thakor. “So there is evidence that it does have tangible economic payoffs. But here’s the paradox: If your employees feel like you’re pursuing a purpose because you want them to work harder and you have certain economic goals in mind, it tends to lose its authenticity and people tend to view it as just another mechanism by which you’re trying to control them to get them to work harder and produce greater economic output. The fundamental paradox is that you have to pursue it as you believe in it.
2. Changing mindset doesn’t always take a crisis, but one is usually needed for true organizational transformation.
“I think what happens in a crisis is that people tend to rise to a higher level of effort,” says Quinn in the podcast interview. “At DTE Energy, they had a crisis and Gerry [Anderson] asked them to rally — he wasn’t sure what he was asking for — but they rallied. His great discovery was that there was enormous discretionary energy available in his workforce that he wasn’t tapping into.”
Quinn also notes that when the crisis was over, Anderson had this amazing meeting where he sat down with direct reports to look at their numbers and in a year that should have been disaster, it was the best year in their history. People were stepping forward with such enthusiasm that he then asked them a critical question: “How do we want to lead this company so that they continue to perform at this level? What would that take, not from them, but from us?”
The response was that people shared not only from their brains but also from their hearts, and based on that, they formed a vision and changed how they led. The results were such that over the next three years DTE Energy tripled their stock price.
3. You can’t get to purpose by viewing it through the vertical structure, which is ultimately based on control.
Quinn says in the podcast that “everyone hungers for purpose and meaning, no matter what they actually say and do. [For example], I can be very passive aggressive and tell my boss in a thousand ways that I don’t want to anything but take my paycheck, but that’s not a true message. Everyone hungers for meaning. Everyone hungers for achievement, respect, and results. People want that. But if they don’t have a chance to access it, or they don’t believe it’s possible, they turn off.”
We’re so ingrained in running businesses through vertical management (because it’s all that we know) that it becomes virtually impossible to for an organization and its employees to truly find its purpose, and only when compelled by a crisis did DTE Energy figure out that they had to give up this control and allow the employees to find, and connect with their purpose.
“Most CEOs don’t believe in purpose work and they think it’s a waste of time,” says Quinn. “But therein lies the opportunity. If you can learn to do purpose work, you are going to be different from most managers and executives in the world. You have leadership capacity they don’t have. Because most executives are not leaders. Many CEOs are not leaders. Your position does not make you a leader. What makes you a leader is influence, and that’s different than authority. Purpose is all about influence.
4. You don’t invent a purpose, you discover it.
“You do not invent a higher purpose; it already exists. You can discover it through empathy — by feeling and understanding the deepest common needs of your workforce. That involves asking provocative questions, listening and reflecting.”
“But the moment you have a purpose that’s authentic, it becomes the arbitrator of every decision. Every decision is made in relation to that purpose. There are many companies that have purpose and value statements on the wall but it has no relevance to what happens day to day, and everyone says, that’s just hypocrisy and you’ve just made the workforce more cynical than ever. But what happens in a purpose driven organization is that they got the right purpose. And everything focuses back to that purpose. So it becomes an authentic thing, and it’s empowering.”