Why You Need a Purpose Audit

For purpose to be effective, it needs to be authentic.

Authenticity builds trust.

Yet, recent research from key stakeholder groups across the globe advise there’s a growing scepticism towards companies that say they are purpose driven. 

The issue? There’s a perceived gap between what is being stated - and what is actually being executed. 

Measuring Purpose - Laissez-Faire

Unlike progress made in sustainability reporting, there are no set standards, metrics or accounting disclosures for measuring purpose - they’re at the discretion of every company. 

Further, established or traditional accounting practices records the costs, incomes, assets and liabilities of the company - as well as the costs of the resources a company employs, and the earnings it derives from them. Essentially, what is recorded are what a firm owns and maintains, but not on what it depends on, or is responsible for, including its impacts on other parties. 

As a result, current accounting methods do not provide all the information that is relevant to promoting responsible, purposeful business practices. 

According to Harvard Business School, in contrast, purpose performance measurement aims to create a framework of “measuring what matters” (including, but not limited to, financial performance). 

Why Bother?

Of course, if that all sounds too hard, businesses may choose not to work from a purpose driven model.  

However, it is reported that businesses avoiding putting in the work are likely to suffer from ‘continuity bias’, thinking the next 50 years will be much like the last. 

Ben Kellard, Director of Business Strategy, Cambridge Institute for Sustainability Leadership (CISL) advises the biodiversity collapse, climate change, growing inequality, and the fourth industrial revolution are converging to create exponential systemic change on all fronts.

He believes any company that thinks it can carry on with the business models of the past is deluding itself.

Why An Annual Purpose Audit Matters

The performance of a company purpose and how that is communicated to stakeholders is essential to building trust. 

Purpose is not a quick fix - to establish it, and its efficacy, takes time. Case in point, it took Patagonia (world renowned for its purpose model) a decade just to get their purpose statement right. 

As purpose sits across all departments in a company, affects all stakeholders and is a key point of difference in a market setting, a purpose audit can identify any “purpose gaps” that need to be addressed to authentically remain and embrace the purpose journey. 

The starting point for any audit is to refer to the framework of how purpose is adopted in a company. This includes a defined purpose (why the company exists), vision (what is its strategy), mission (where it aspires to be) and values (how it operates).

There are three components to an audit which need to be considered against the framework:

1. Internal audit - all departments. 

2. Key stakeholder review - customers, employees, investors, partners and planet.

3. Market review - industry and competitors.

Once the audit findings are completed, this provides a powerful opportunity to communicate your progress and next steps as well as celebrating milestones met. 

This level of transparency and authenticity will support your purpose objectives and results.

If you’d like to know more about the benefits, approach and timeframes for conducting a purpose audit, contact us today.