People and Purpose Before Profit
Insanity: doing the same thing over and over again and expecting different results.
—Albert Einstein
Capitalism as an ideology expresses the idea that the purpose of organizations is to grow and deliver profit for their shareholders. We accept this, almost blindly. Since 2008, a new specter of inequality has begun to be reported in regard to tax avoidance and evasion, with respect to both wealthy individuals and big businesses. The observation is that although the individuals and organizations involved are not doing anything illegal, their actions are morally wrong. When Amazon, Google, and Starbucks were exposed for not paying any corporation tax on UK sales, many would have shrugged their shoulders and asked what all the fuss was about. All organizations set themselves up to be as efficient as possible, and to pay the least amount of tax that they legally get away with, that’s just good business sense. These companies aren’t doing anything illegal, they are just structuring themselves to avoid paying too much tax so they can make more profit and increase shareholder return.
However, there remains an important question, Why? It might seem like a childish question to ask why is it important that an organization make more profit; after all anyone who has ever been involved in business will understand the financial drivers of a business. But the question is an important one. Why earn more profit and for what reason? Obvious answers are, of course, that an organization needs profit in order to continue trading and it is also important to provide shareholders with a return on their investment in the business, so more investment can be made to keep the investment flowing. Profit from operations can be used to invest in the business to ensure it stays in business, stays competitive, and stays profitable. All sound business reasons for the pursuit of profit. But I return once more to the question of profit for what purpose? Why should an organization want to stay in business? For what reason do organizations exist in our society?
With the financialization of our economic system and societal values, the conclusion I have come to is that the pursuit of profit for the sake of profit has become seemingly circular. The key differentiator between Temperatism and capitalism is that human endeavor and effort and resources used for profit and wealth creation should be for a purpose beyond additional profit and wealth creation. A farmer would not grow crops to create seed so that he can plant more crops and for no other reason. It would be pointless. I believe that the purpose of profit must be for the betterment of humanity. We work hard and use our inventiveness and creativity to come up with new ways of making money because we want things to be better.
The global economic system and the true cost to society of our reliance on the capitalist market have been exposed by the credit crunch. Financial truths have been buried under the rubble of lies told by the numbers. The pursuit of short-term profit and financial success has hidden the costs to the long-term health of both our economy and our society. We now have the facts at our fingertips to challenge financialization and the conventions of capitalism at both a market system and a societal level. The truth is that the capitalist pursuit of self-interest is not compatible with sustainability, either in the environmental sense or in the sense of social good and equality of wealth creation. Self-regulation fails to contain the greed is good mentality, and financial results are an inadequate measure of the true impact of the external costs created by the profit agenda. Many organizations have made our lives better with their products and services, but for other organizations they don’t produce anything that advances the betterment of humanity. If organizational profit isn’t used to contribute to improving the health, education, security, and wellbeing of society as a whole, then we must begin to challenge its purpose.
Profit for purpose might take the form of a contribution to the society in which the organization operates, through corporate social responsibility or paying corporation tax, but also the way in which they treat their employees. It’s not that profit is bad and there should be reward for those who take the risk with investment in business. So the return on investment to shareholders isn’t the problem. But Temperatism challenges us to consider what the purpose of all our activity is really for. Research shows that as we get more wealth, our happiness actually reduces. If the top one percent in society are getting richer and the rest of us are getting poorer and more miserable, then we cannot passively accept that there is nothing wrong when organizations structure themselves purely for the purposes of making more profit. Sooner rather than later we must pursue the why and for what purpose question regarding profit. If we don’t, then it will be crisis that will cause these questions to be asked. When our water, food, energy, security, healthcare, and education reach the crisis point, it will be too late to say to organizations that they need to take their proper place in society and begin focusing on profit as a vehicle for doing good, because organizations will be in a prime position to make more profit as an end in itself.
It is remarkable that for all our advancements in efficiency and technical achievements, and despite the industrialization of scientific inventiveness, the management of human affairs continues to be focused on the numerical outputs of our endeavors. Even looking back merely a decade, we can see that modern society is phenomenal in its ability to create. Despite this we are unhappier, more depressed, and suffering from higher levels of anxiety than at any other point in history. It seems like the real outcome of progress is misery. Scientific management has provided the means by which we can measure our worth and our value, to plot our status and climb up, or fall from, the social ladder. The higher up the ladder we are, the more successful we believe we are, all the while growing more anxious about losing the status we have achieved. We are left bereft of friendship and community while at the same time driven to consume what we can no longer afford, eating what is no longer healthy, and drinking excessively or taking illegal drugs to dull the pain. We must be able to expect more from the amazing inventiveness of humanity. Otherwise our efforts will only achieve a continuing decline in our own wellbeing and the threat of further breakdown in our society.
Valuing Individuals Equally
The result of our measurement is that we no longer value each human life equally. The military term collateral damage has wormed its way into our social and business lexicon to justify the results of our actions that harm other people. Conferring of status helps us all sanitize and justify wasted talent potential and worse still enable us to ignore the wasted lives of those whose talents are left to rot in bowels of forgotten sections of society. I don’t believe it is acceptable to refuse to do all we can, everything in our power, to stop the preventable wasting of talent of a single individual. Research demonstrates that our society is more cohesive when rank and status is replaced by equality. The more equal a society is, the more sociable we become, and our true humanity can be released more fully. Equality is more than simple redistribution of wealth; it is the creation of a society “in which we are less ranked, devalued, psychologically shaped and constrained by status, in which our position in the social class hierarchy imprints itself on us less indelibly from early life onwards, in which the purpose of life and the idea of success are less dominated by and reduced to the idea of being better than or superior to our fellow human beings” (Dorling, 2011). As we pursue greater levels of profitability and wealth creation, the evidence suggests that we have gone past the point of gaining any real benefit from the machinery of economic growth, and instead the growing levels of inequality are leading to an increasingly broken society and a broken economy. While growth should provide the vehicle to benefit the poor, instead it is the wealthy that get richer, at the expense of the poor. “Typically, the poorest half of the population get something like 20 or 25 per cent of all incomes and the richest half get the remaining 75 to 80 per cent” (Wilkinson and Pickett, 2010). In addition, we have only just begun to face up to the fact that the environmental impact of our efforts could spell the end of life on earth. It feels like we have pushed the self-destruct button and are powerless to take the actions necessary to turn it off.
Human beings are born with a heart and soul that yearns for more than profit. Evidence shows that purpose that is purely a profit goal does not engage employees, but instead they want to be part of an organization that has a purpose, which resonates with their own personal inner purpose. The reason organizations such as Virgin and Innocent Drinks have such a committed workforce is that both organizations pursue a purpose that switches people on—and the outcome is greater and, more importantly, sustainable profit and wealth for all. Too few organizations realize that a purpose is needed at the heart of their operations in order to be successful and deliver sustainable performance. The more opportunity that individuals have to put effort, hard work and their talent into something that achieves a purpose that they can align to, the more the individual will develop discretionary work habits and devote themselves to the achievement of high levels of performance.
In organizational life, our value to an organization is based on price. How much we are paid, how much we cost the company to employ us, is recorded in minute detail on workforce spreadsheets and on an outgoing line on the profit-and-loss statement. Human beings with all their potential, knowledge, skills, and talent are boiled down to a number.
Marx’s critique of capitalism was fundamentally moral. It was, he thought, too hateful and unjust to just survive. It forcibly alienated the worker from his tools of production and hence his specifically human substance, leaving him vulnerable to exploitation. It sacrificed the “productive life of man,” to the “money system,” use-value to exchange value. (Skidelsky and Skidelsky, 2012)
This financialization of human effort depletes us of our ability to contribute additional value in regard to innovation and creativity. To be known as an employee number and a cost on a spreadsheet dehumanizes us from our potential to do more than the number we have been allocated. Economists may try to convince us that it is possible to measure something only in financial terms. We have been taught that we can manage only what gets measured and something that can be given a number is something that can be verified. But we have learnt through the credit crunch that what the numbers say isn’t always true and is not representative of the reality of a situation. It might be that the full value of an individual may be difficult to measure, but potential and engagement does have a return on investment, and it does impact the bottom line. Humanity is more profound than purely our economic efforts and the return on capital employed. As the West has shifted from a manufacturing to a knowledge industry, it has become increasingly difficult to measure the productivity and worth of each individual. What value you put on knowledge and the outputs it produces are far more subjective than the production of a tangible object. In education we are measured by examinations and in work we are, in most instances, measured by competencies. But our true value lies not in what we do, but in who we are. Many organizations decry the lack of innovation and creativity, while at the same time creating processes, systems, and an organizational environment where creativity is stifled in the grip of quarterly financial reporting, managerialism, and process efficiency.
When an organization is faced with cost cutting due to economic pressures, leadership teams and accountants scour the ledgers to see where there can be a reduction in cost, and they come to rest at the cost of human capital. A simple calculation is made as to what cost needs to be trimmed and the conversation moves on to other cost savings: marketing budgets, training budgets, capital equipment, stock holding, etc. But the numbers that accountants look at are a cost number not a value number. It can’t place a measure on how the group dynamics create a chemistry that sparks ideas and creativity, or how a seemingly unimportant person can be the catalyst for innovation or performance. Too often, after a spate of redundancies, organizations come to the crushing realization that they have just let go someone who help the key to an important piece of knowledge vital to the organization. Human beings aren’t capital that can be boxed or reduced to a simple or singular dimension.
In delayering exercises, managers are instructed as to what their new revised budget for headcount is and told to get on with it. The managers then pull together a restructure plan to decide how to reduce headcount while still getting the same work done without any detriment to customer service and quality, and a redundancy program begins. The result is that an individual’s life will be turned upside down. But what has been lost from the organization is greater than the value of a job being done. It is the reason why organizations now take great pains over recruitment and selection. It is no longer enough to have bums on seats, but to have someone who has the right attitude, behavior, knowledge, skills, and the X-factor that ensures that more than a task is completed. It is the reason why, despite the advances in robotics, many jobs are still done by human beings. The ability to contribute greater than the sum of our parts, especially when we are placed in an environment where group dynamics and culture enhance our talents, means that human beings will always be more than a number. Our potential is far greater than our performance, our discretionary effort far greater than the task in hand. But of course we can’t measure potential or possible discretionary effort. If a manager was asked to give a value of their capital equipment—then they could tell you the cost and the benefit associated with the plant in their business’ what is more, they’ll be able to tell you the utilization of the capital equipment, how much of its potential the organization is actually tapping into. So we do value potential, just not that of people.
Temperatism challenges business leaders to adopt a new perspective. It asks organizations not to count what the people are costing, but understand what value they are adding and what value they could add that the organization is not yet providing the opportunity to release. Leaders will find that the organizations profit and loss is missing an important line in assets—people potential value, or PPV for those who like three-letter acronyms. PPV refers to the ability of organizations to achieve the maximum contribution of individual talent potential in order to contribute to the overall effectiveness of the organization’s efforts. Motivation theory demonstrates that as individuals are allowed to contribute more fully of themselves to their work and take responsibility for the work that they deliver, they are able to develop their ability to realize their full potential. If you were to question executives as to whether people are their number one priority, their answer will be yes. But question them further and they will eventually admit that people don’t come first, profits do. You only have to look at their people practices to realize the true priority of the business. An organization is like a garden, which has great potential for growth and beauty. But cultivating a garden requires resources, time, and effort. It also demands that the organizational leadership look out for and deal with weeds, removing them as necessary to avoid them from growing and killing the plants that have been planted.
Purposeful Endeavor
If an organization fails to grow and change, adapting to the shifts in the environment in which it operates, it will die. But being able to change and adapt requires an organization to understand what it is in the first place, what its start point is; a pursuit of growth and profit without end does not engage the character of employees. Why an organization exists provides the foundation stone upon which it can create structures and processes for its employees to build their capability to deliver organizational strategy. Like a building without a solid, firm, and unshakeable foundation, an organization without purpose is unlikely to survive in the long term. The fact is that all organizations have a purpose, even if it has got lost along the way. Organizational purpose tends to happen at the point at which the founder decides there is a reason to create the organization in the first place. Organizations don’t just exist to make money or profit for their shareholders; they exist for a higher purpose.
It is the leader’s job to do the work that the organization is designed to do. Not keeping busy, not squeezing square pegs into round holes, but expending time, energy, and resource on achieving the organization-shaped purpose. Leaders need to be at the helm, steering the organizational ship to do immeasurably more than they ask or imagine. At the same time individual employees must be released to explore and achieve their talent potential so that they contribute not just to the task at hand but a higher value that satisfies not just the organizational purpose but the very core of self. Rather than self-interest, the pursuit of self-fulfillment is a higher placed purpose.
Human beings, even the most rational and logical of us, are better at focusing on something we can feel a connection to. For the vast majority of us, we cannot feel a connection to a million or billion pound number, because we have no experience of what that means; it is meaningless. In Shaping the Future research, the CIPD found that
feelings towards profit-related purpose are generally negative, with employees saying it makes them feel de-motivated and less committed to their organisation. Nonetheless, just under a third feel that focusing on investors is the right thing to do in the long run. It seems in order to produce a motivated and committed workforce, the main purpose needs to have a social basis to it—profit does not seem to “kick start” the workforce. (CIPD, 2010)
The problem with profit as the core reason for an organization’s existence is that the majority of employees in an organization struggle to connect what they do on a day-to-day basis with a number. The problem with profit as a purpose is that the majority of employees in an organization don’t care about a number. They may care when it comes to paying their bonus if it is linked to the profit number. But individual employees in a firm cannot connect what they do on a day-to-day basis with profit. For people to commit to the direction an organization is taking, they require an organization to have a meaningful purpose. Although strategic planning focuses the business leader on how to deliver an organization’s strategy, it fails to explain where strategy is created. In a modern global economy, organizational purpose is at the heart of the organization and must articulate not what must be done, but why we are here.
So if not a profit-focused purpose, then what? There are many types of purpose that an organization can have, but purpose broadly falls into two categories. The first is a societal purpose, which focuses on the contribution that the organization makes to society as a whole, such as being fair or acting with respect. The second category of purpose is one that defines human endeavor in terms of a business challenge such as quality or recognition as the best. Organizational purpose inspires purposefulness in employees and that should be something all organizations aspire to. In the development practitioner world there is a much used story about a NASA employee who was sweeping the floor and was asked by John F. Kennedy what his job was; he answered it was to put a man on the moon, a purpose that was articulated by Kennedy in 1969. But this story illustrates the power of purpose more than any other. The individual had purpose in what he was doing, he was putting a man on the moon. Imagine the pride that the employee must have put into his job and how motivated he must have felt when his alarm clock rang in the morning. The idea of aligning a diverse employee population, who all have different ideas, values, and beliefs, to one goal can from the outset seem a daunting task. Take that to a local level, national level, or global level, and the likelihood of everyone heading in the same direction diminishes with every individual who comes on board.
Very often organizations and societies are defeated in their purposes because of an inability to come together and find agreement on how to move forward. The conflict in the Middle East demonstrates the difficultly of alignment even when the goal of peace is held by all sides. The problems of alignment begin very simply when one individual or group chooses to make self-interested decisions and choose to present data and information in a manner that is beneficial to their interest rather than the common purpose. Different attitudes toward appropriate behavior, transparency, and fear of losing face or positions of power all play a part in tearing apart talks and finding common ground. Self-serving behavior can be limited by expectations. The belief that compromise should be reciprocal and the expectation that if one party takes a step or makes a decision that helps another toward preserving their interests should be rewarded with like behavior.
Reciprocity therefore oils the wheels of conflict resolution. Often though it is these first tentative steps that are the most difficult to make and if reciprocal behavior does not happen it leads to greater conflict and withdrawal of cooperation. The U.S. Debt Crisis in July 2011 was extraordinarily ordinary. It’s extraordinary because the parties involved were putting the future of their whole country in crisis for the sake of politics, self-interest, and personal point scoring. It’s ordinary because it happens all the time where strong beliefs are involved. The issues that the politicians were grappling with were actually nothing to do with the debt crisis, but rather the fact that their normal relationship is based on conflict rather than collaboration. Differences of opinion regarding what the right thing to do next became less about doing the right thing and more about personal point scoring than about solving the problem at hand. Purpose had got lost in the midst of politicking.
The situation in the United States did highlight the requirement for different thinking and the importance of alignment especially in a crisis. Collaboration becomes more difficult to nurture in a crisis because strong ideas and opinions become more entrenched. Therefore, alignment and reciprocity need to be nurtured as part of the day job; they need to be ordinary rather than extraordinary. If parties have demonstrated that they can be trusted to work together for the common interest and deliver on promises when things are calm, then in a crisis the “trust bank” holds real value in getting things done. If the trust bank is empty because of a history of pursuing individual self-interest, as demonstrated by the financial institutions even in the period following the credit crunch and bail-outs, then the process of alignment to a common purpose takes a bigger leap of faith and a demonstration of faith by one party. While both sides think of the other as untrustworthy, alignment is impossible and deeply held opinions and beliefs about the importance of self-interest become immovable and concessions will not be made. While the “me first” mind-set overshadows the needs of the common interest, alignment cannot and will not be made.
The impetuous for the Peace Settlement in Ireland came from the Republicans, who after decades of fighting a system that they fundamentally disagreed with decided instead to play by the rules of the system in order to achieve their aims and ultimately delivered the route of alignment to and delivery of a common purpose. In organizations, the alignment of purpose can take a number of forms. It may be between individuals working on a project, departments and functions working together to deliver an organization-wide solution, being in partnership with customers, or working with competitors to deliver vital solutions in an industry context. Whatever the context, alignment of purpose is the key to the delivery of results and performance. Fighting can be the death knell of the successful completion of a project, and splits and disagreements can lead to the poor implementation of a solution—and are often the cause of the dire success rates of change projects. It is only by laying aside strong opinions, beliefs, and secular self-interested thinking and a steady focus on the common interest or doing good that progress can be made. By asking yourself what is right for right now, it is possible to lay aside the past and concentrate on finding a solution, even if, like in the situation Sinn Fein found itself, the process of achieving the common interest goes against some of what you believe. However, it becomes possible when concentrating completely on the here and now, to lay aside previously immovable beliefs.
In pursuing a Temperatist agenda, government, society, and organizations must answer the question, what is our purpose? You may think that it might be playing with semantics to talk about purpose. There is so much management speak already, so what is so different about using the word purpose as opposed to strategy. The Oxford English Dictionary defines purpose as “the reason for which something is done or created or for which something exists” whereas strategy is about a plan of action; at an individual level, purpose is being rather than doing. So when an organization approaches the question “What is our purpose?” the answer is not a profit number, or a growth percentage; for society purpose is not a GDP figure. Rather purpose is what is at the very heart of why we exist. When all is said and done, it is what really matters.
Purpose is a central feature of Temperatism. “Who are you?” and “Why are you here?” are the first questions that should be explored in regard to individuals. In regard to an organization, “What is the organization’s purpose?” Neither strategy nor financial targets, are the start point of any organizational endeavor and importantly what purpose is there for the profit and wealth created by the organization. For societies, “What is the purpose of society?” needs to be explored and understood, in regard to both the social structures used to create cohesion and the culture and the type of social values we wish to live by. Why are the questions so important to Temperatism, whether at an individual, organizational, political, social, or human level? Because who we are drives all our actions and behaviors, it gives us the motivation to do something, or not, and is distinct as our fingerprints and DNA. Why we are here is the food that gives us the energy to keep going regardless of obstacles and difficulties. It is more than a goal that once reached can be checked off our to-do list, but rather a dynamic purpose that not only changes us and our actions, but has the power to make a difference to those around us.
Is it possible for an organization or society to be successful without having clarity around its purpose? Yes. Organizations and societies have been and will continue to be successful without having a purpose. The question is not of success, but sustainability of the success achieved. The world is changing and the pace of change is increasing. The issue and challenge is how a Temperatist agenda convinces government and organizations that the market system based on quarterly reporting is flawed and that a purpose-driven agenda, based on doing good, will not only replicate financial success but also create long-term sustainability that benefits investors and the society. It would be difficult to find a mechanism that can be utilized to demonstrate to an organization that produces consistently good financial results, that they are measuring the wrong thing, and that their performance may not be as good as they believe it to be. The challenge is to redefine competitive advantage, to shift success measures from efficiency to effectiveness, and measure organizational success on the impact it has as a part of the whole, rather than in splendid isolation.
Today organizations marvel in the creation of efficiency. Efficiency can be repeated, copied, and adapted and is based on structures, processes, and hard systems. Effectiveness comes from utilizing knowledge, innovation, and creativity, which comes from people. People are unique and provide a critical element of sustainability in regard to success. Efficiency can be created without meaning being understood; it can be achieved by doing things better. But effectiveness requires people to have a sense of purpose and for people to commit to the direction that is being taken, people require a meaningful purpose. Therefore, in the new global economy, the difference between being able to sustain performance or not will be the clarity of purpose, which is shared among all individuals involved in the endeavor. Purpose connects the talent of individuals within society or the organization with the activities that take place. Understanding the connection between the people, the talent they possess, and the talent required for the achievement of purpose to be achieved creates the environment in which the individual’s potential can be released. Creating an individual’s role around the talents they possess and aligning the talent to the needs of the organization’s purpose provides the foundation for mapping the talent required, while enabling individuals to develop a self-awareness of how their talent can be used and how they can develop their capability in line with the needs of the efforts toward achieving purpose. If individuals are unable to express their talent in their day-to-day activity, purpose cannot be sustained or achieved. It is the ability of individuals to express their potential flowing into the purpose that helps engender an environment for sustainable performance. Without people using their talent, purpose cannot be expressed or achieved. With talent being released to achieve its full potential, the achievement of purpose becomes possible. The talent within breathes life into purpose and creates the pathways by which activities have the momentum to move society or organizations forward.
Purpose also provides the glue by which individuals connect and group together. It provides the focus for relationship building and collaboration between individuals, teams, and groups collectively helping the pursuit of purpose. Harmonious communities tap into the collective talent gathered from around the wider network, making it is possible for performance to expand from pockets to an organization or society, wide sharing of expertise, knowledge, skill, and experience. Harmonious communities therefore enable purpose to become meaningful, shared, and translated into activity. Take for example the architects of the abolition of the slave trade, William Wilberforce. His purpose had implications beyond purely that of stopping the trade in human suffering. The following extract from UCB Word from today is a brilliant example of the impact and ramifications of a purpose-driven life.
Wilberforce presided over a social earthquake that rearranged the continents and whose magnitude we are only now beginning to fully appreciate. During his first years in Parliament, Wilberforce wined and dined each night and was touted as “the wittiest man in all of England.” Looking back on it he wrote, “For the first years I was in Parliament I did nothing—nothing of any purpose.” But in committing to Christ he discovered his life’s purpose. It was not about achieving personal greatness, but about serving others. (The UCB, 2012)
Individuals don’t have to have a religious conversion to have a purpose in life, but having a purpose is more than simply an individual setting a goal that affects them as an individual. A purpose is always within the context of the setting in which a person lives or an organization in which they operate. How a person lives and what they do with their life will affect those around them, stranger or friend. Our lives do not exist in a vacuum and our actions can have consequences, intended and unintended, that can change the world for better or worse. Many individuals may not consider it is possible to change the world in the same way William Wilberforce did; for a start they may not hold political office and have no access to law makers. But there are many who have power and wealth, who do not change the world and have no consequence beyond the continuation of inequality and the existing structures and systems. Equally in history there are examples of individuals who have no power beyond their ability to bring people together for a common purpose and a passionate belief in the purpose they pursue, who have radically changed the society in which they reside. Many may disregard their ability to influence and persuade, as they may not describe themselves as “witty.” But Wilberforce could well have been nothing more than a witty footnote in history had he not discovered his life purpose. Having a purpose is the beginning of making a difference, not just in the life of individuals but possibly in a way that changes continents. Don’t underestimate the ability of individuals and organizations to be agents of change. We are all more powerful than you think.