11 Sep 2019
A study into the controversy surrounding share buybacks found no evidence that they artificially inflate executive pay or starve firms of cash for investment.
29 Mar 2018
Today’s talent is attracted to companies whose values match their own
The most attractive companies to today’s talent are driven by purpose, according to London Business School (LBS) experts.
“Maybe we will stop talking about purpose in 10 years’ time because it will just be ingrained in any organisation as a taken-for-granted – that any company that wants to be successful must pursue purpose,” said Alex Edmans, Professor of Finance at London Business School (LBS). “A purposeful company will still focus on long-term performance even when times are difficult. The best companies stick to their purpose rather than be distracted by short-term demands.”
• Watch: Alex Edmans’ TEDx Talk on purpose and profits
That purpose tops the agenda for millennials is backed up by PwC’s recent Workforce of the Future survey, which found that 88% of them want to work for a company whose values reflect their own. Millennials will comprise 75% of the global workforce by 2025.
“The contract between the organisation and the individual is beginning to change,” said Lynda Gratton, Professor of Management Practice at LBS. “The old contract looked like this: ‘I work to buy stuff that makes me happy.’ The contract is negotiated by tangible assets. The new contract will be, ‘I work to make me happy’. We have to think about work as being the thing, not the money you get from it. I don’t see many companies realising how profound that change will be.”
• Watch: Lynda Gratton on the future of work
The Deloitte 2017 Global Human Capital Trends report similarly found that most millennials look beyond a company’s financial performance when deciding whether or not to work there. Only one in five survey respondents said they would choose to stay at a solely profit-driven company for more than five years.
“There has to be a strong connection between what your company wants to do and be, and what you want to do and be,” advises Richard Hytner, Adjunct Professor of Marketing at LBS. “If you can’t see any connection at all, you’re in the wrong place. Don’t expect your company to find that connection. There are many things you can – and should – delegate responsibility for in life. Your personal purpose is not one of them.”
• Read: 5 tips to find your personal purpose
Paul Polman, CEO of Unilever, once told a business-school audience: “You need to have something where you want to have an impact and that aligns with your values. It will drive your passion. People’s self-worth should not be measured by their net worth.”
Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship at LBS, added: “When companies are genuinely committed to purpose and sustainability it is reflected in their governance structure. The top of the organisation sets the tone and signals a credible pledge to purpose.
“Responsible businesses have a governance structure that monitors and advises on environmental, social as well as financial issues. When leaders understand and thrive within the broader social and environmental context in which their businesses operate, it also signals to employees, investors and key stakeholders how important purpose really is.”
Dr Ioannou cited Intel as a strong example in this area. The company has made social responsibility everyone's job, with clear sustainability goals. “In 2008 the leadership team took a bold step and tied environmental performance to employee compensation. Since then, Intel has continued to rally the troops through a series of responsible competitions and sustainability projects. The winning teams receive environmental excellence awards and a pay bonus.”
He advised senior executives to follow suit, setting ambitious targets and providing generous incentives that fully reflect their organisation’s purpose. “You fail to send out a consistent and credible message when, for example, social responsibility is part of your company’s media rhetoric yet only financial performance is incentivised.”
Do your employees love coming to work?