Aligning Purpose with Corporate Performance: The Essence of Purposeful Leadership

Over the past decade, the corporate purpose has taken center stage in economic and social debates. In France, the Pacte Law and the creation of mission-driven companies have pushed this topic to the forefront. And yet, as Rodolphe Durand, Professor of Corporate Strategy at HEC Paris and holder of the Joly Family Chair in Purposeful Leadership, explains, "On average, 80% of employees are unaware of their company's purpose and cannot articulate it."

Professor Durand recently delivered a Masterclass discussing the various aspects of corporate purpose and its impact on organizational performance. Let’s explore the concept of purpose and how to embody it at all levels of the company to improve performance.

Corporate Purpose: A Universal Concept with Varied Formulation Methods

Corporate purpose defines a company's fundamental mission beyond profit generation. It articulates the company’s role in society and its non-financial objectives. According to Rodolphe Durand, "Corporate purpose can be defined as the 'why,' the deep reason for an organization's existence beyond its financial performance." While its definition may seem clear, formulating purpose can prove challenging for businesses, especially since methods and their success rates vary. Rodolphe highlights four approaches to formulating a company's purpose, some more effective than others.

• The most human, internal approach: This method involves engaging teams on the ground to co-create the company's purpose. This could involve workshops and seminars, without the use of external technological tools. "I remember seeing a specialized distributor operating in 17 countries who involved all 17 countries in defining their purpose," recalls Durand.

• The technological approach: Here, the company gathers keywords and feedback during workshops, which are then analyzed using Natural Language Processing (NLP) tools. These tools help identify recurring themes in stakeholder comments.

   

• Consultancy firms: Consultants survey customers, suppliers, and social media to collect relevant data and gain insights into the company’s perception.

   

• Communication agencies: This approach, criticized by Rodolphe Durand, involves working with an agency and a few executive committee members (ComEx). The risk? A disconnect between the official narrative and the daily realities of employees.

According to Professor Durand, “If you want to engage in a purpose-driven approach, you must gauge your social body, either organically or technologically, with or without external help.”

As with the formulation of corporate purpose, its implementation can be equally complex. Why? Because it’s a process subject to varying levels of commitment depending on the organizational hierarchy. Both academic studies and practitioner research reveal that the perception of corporate purpose weakens as one moves down the organizational chart.

 “Top managers can articulate the purpose and its various dimensions, making rhetorical and narrative links to performance,” explains Durand.

 However, frontline employees often view purpose as a concept detached from their tools and territory.

The Dangers of a Poorly Embedded Purpose

“Stating a purpose without aligning it with management practices creates a disconnect,” insists Professor Durand. For purpose to be authentic and ingrained in the organizational culture, it must be integrated into management methods. Its credibility relies on its consistency with the actions of managers and employees at all levels. A gap between the stated purpose and actual practices can erode trust, generate cynicism, and demotivate mid-level and frontline teams.

Moreover, the degree of buy-in significantly impacts corporate success. “You may have teams that are fully aligned with the purpose, while others are not at all,” says Durand. This lack of alignment can lead to social comparisons, resentment, and inequalities that inevitably reduce the potential performance benefits of purpose. 

“It’s estimated that disparities in alignment result in a 30% loss in performance benefits,” he confirms.

More critically, if you declare a lofty purpose without backing it up with action, it can lead to negative reactions—and even sabotage, especially among middle managers facing conflicting pressures.

Impact on Economic Performance

The link between corporate purpose and economic performance is not always straightforward. “Academic studies show that, on average, having a purpose-driven business has no significant effect on economic performance,” states Durand. Why? 

“Because there are plenty of purpose-driven companies that outperform, but just as many use purpose rhetorically without integrating it into practices and do not outperform.”

 Several factors explain these findings, such as the diversity of implementation practices and varying levels of employee buy-in.

However, purpose can improve engagement, alignment of values, cohesion, and employee satisfaction, all of which can contribute, directly or indirectly, to the company’s overall success. Under certain conditions, the financial and non-financial impacts can be amplified. Everything depends on how purpose is integrated, embodied, and harmonized across the organization. For this, the company can rely on Purposeful Leadership, which involves leveraging a purpose-driven leadership model that empowers collective action and creates a competitive advantage.

Purposeful Leadership: Aligning Purpose and Performance

Purposeful Leadership has been at the heart of Rodolphe Durand’s research for years. His Purposeful-Based Leadership method hinges on aligning corporate purpose with business performance and, more specifically, on moving from strategy to impact. When asked how to tangibly align purpose with performance, Durand emphasizes value embodiment, autonomy, feedback culture, and recognition—but also notes that purpose requires a specific approach based on seven key levers:

Coordination: The first lever to collectively accomplish missions that will shape the company’s and society’s future.

Legitimacy, Autonomy, and Resources: These performance boosters encourage teams to take ownership of issues, exercise sound judgment, and experiment with solutions.

Innovation and Trust: These foster openness to difference, bold thinking, and acting while staying attuned to customers.

You (the individual): At the heart of the model, every employee is encouraged to take risks and engage in continuous learning.

Rodolphe Durand shares this methodology with board members, CEOs, HR directors, and leadership development executives seeking to enhance organizational performance.

To learn more about embracing Purposeful Leadership, discover the program "Aligning Corporate Purpose with Performance," led by Rodolphe Durand. You’ll be equipped to turn each lever of impact into concrete actions and develop an immediate, tailored action plan for your company.

Join us on November 7th for two days of training "to make purpose tangible and inspirational", featuring Hubert Joly, former CEO of Best Buy, and Antoine Frérot, Chairman and CEO of Veolia.