In a purpose-led company, the role of the Board is to be the collective trustees of the company’s purpose. It is therefore also important to create a shared understanding and commitment of the board to become purpose-led and to avoid purpose being seen as merely a tick box approach to governance and reporting.
The importance of purpose is highlighted in the 2018 UK Corporate Governance Code. It requires Boards to establish the company’s purpose, values and strategy and satisfy itself that these and its culture is aligned. It goes on to say that a well-defined purpose will help companies articulate their business model and engage with their workforce, customers and the wider public. But there is little guidance as to what having a purpose really entails and what difference it might make to the company and the way it operates day in and day out. So it is probably not surprising that the Financial Reporting Council observed in their first report on the adoption of the new code by FTSE 100 companies, that too many companies substituted what appeared to be a slogan or marketing line for their purpose or restricted it to achieving shareholder returns or profit. These critical comments are given additional resonance by the Covid-19 crisis and suggest that a change of mind-set is required if companies are to become purpose-led. But if Boards are to invest in that change there has to be a genuine understanding of what purpose is and why it needs to lead.
It is therefore important to engage the Board as well as the leadership team in discussions on purpose so that both have a shared understanding of what being purpose led means for the business. This alignment should also help provide continuity when a CEO moves on.
To support engagement with boards, this Blueprint paper Purpose for PLCs – Time for Boards to Focus outlines why purpose is important and what it really involves and may be helpful in discussions about purpose with Boards.
Example:
Here is an example of an agenda we have used in engaging a Board. We sent all the participants our Board paper in advance as a pre read.
The workshop formats shared in the resources section can also be used with Boards.
For more on the role of the Boards see this course discussing Governance.