Ask anyone and they’d tell you that the sole purpose of a business is to earn a profit. While it’s true in most cases, the fact remains that there are many firms out there who exist to help individuals, communities, and countries. Their sole purpose is not to earn money but to help the people.
However, CEOs these days insist that providing purpose before profit is important for all businesses and not just NGOs or government agencies.
Why Are We Suddenly Putting Purpose Before Profit?
The conversation started last year when CEOs of over 180 corporations got together.
The CEOs sat down to discuss several aspects of business and came up with a statement to define “the purpose of a corporation.”
They believe that the maximization of profits will not be enough in the future for big businesses to survive as the demands of workforce, society, and investors are constantly changing.
If you look at the stats, you will see how right the decision is. The next generation of employees wants to deal with companies who value ethics. According to this report, about 93 percent of millennials want to buy from businesses that believe in sustainability.
Similarly, employees prefer companies that respect their time and help them improve their skills.
So What Do We Need to Do?
Experts believe that businesses wishing to stay relevant in the future must take steps to meet – if not exceed – customer expectations.
The best way to do so is to invest in employees by “compensating them fairly and providing important benefits, in addition to education and training to develop new skills for a rapidly changing world.”
Other tips include:
- Dealing ethically and fairly with suppliers
- Taking steps to support the communities
- Generating true and long-term value for stakeholders
Jamie Dimon, JPMorgan Chase’s CEO, who was present at the discussion, said that this “will help to set a new standard for corporate leadership.”
Others present at the meeting included major names like PepsiCo, P&G, The Coca-Cola Company, J&J.
What Do Others Have to Say?
The opinion among businesses appears to be positive.
Darren Walker, The Ford Foundation’s president, called it ‘tremendous news” and applauded the decision-makers.
“It is more critical than ever that businesses in the 21st century are focused on generating long-term value for all stakeholders and addressing the challenges we face, which will result in shared prosperity and sustainability for both business and society,” he said.
However, some sections do not believe that we’ll see many changes.
“If businesses really want to be part of this movement for change, then great. But that change has to be radical and transformational. If not, it’s empty words and spin,” says Katie Hill, a representative for the ethical certification body B Corp.
Some businesses like The Body Shop are already following this formula and now with big corporations ready to jump the bandwagon, we may see a shift in the near future.