September 2, 2013

Press Release

Leading corporations believe in Corporate Purpose, according to the Burson-Marsteller/IMD Power of Purpose Study

London, 2 September, 2013 – Burson-Marsteller, a leading global public relations and communications firm, and IMD, one of the world’s top business schools, have released the conclusions of an in-depth study into the importance that leading corporations attach to having and communicating a strong corporate purpose. Entitled The Power of Purpose, the study builds on previous research and looks at the relevance of corporate purpose in the context of transparency, managing change and reputational recovery after a crisis. The study concludes that corporate purpose has become a beacon which guides and directs key business decisions, informing strategy and ensuring that everyone is aligned across growing global businesses.

“First and foremost corporate purpose is a corporate strategy that drives business decisions. Communicating it is the next step,” said Jeremy Galbraith, CEO, Burson-Marsteller Europe, Middle East & Africa. “This study shows that corporate purpose is becoming central to guiding business decisions. Communicating it clearly, internally and externally is one of the key strategic tools for companies seeking to build trust and reputation with stakeholders.”

The study showed that companies feel there is more danger today associated with a lack of transparency than too much, especially given social media. Transparency around purpose is also critical internally as it creates a culture which unites employees, instils shared values and provides motivation and inspiration.

Corporate purpose tends to gain in importance at a time of organisational transformation. There were three scenarios where corporate purpose was identified as particularly relevant: following a change of leadership; following a merger and for re-establishing and refreshing a brand.

Purpose is also a key strategic tool for companies in a crisis, providing a story to tell and as a way of countering accusations that are perceived to be inaccurate. For corporate purpose to be effective, it should be in place before a crisis hits.

“Business leaders are rapidly realising that companies cannot do business on a failing planet – and that they are being held accountable. As the power of the global corporation is growing beyond national or regional boundaries it is clear that a purpose defined solely around profit is inadequately articulated since it does not reflect this vastly changing dynamic. However, it is essential that purpose is embedded in overall organisational strategy so that there isn’t a disconnect between what companies say they do and what changes are really being made to how they operate,” said Dr. Aileen Ionescu-Somers, Director of the CSL Platform at the IMD Global Center for Sustainability Leadership.

“At Burson-Marsteller we believe that the most successful organisations are guided by a clear sense of purpose – a distinct and powerful world view that shapes their business, guides their actions and ultimately determines their reputation and success.This study shows that leading corporations believe in the power of purpose to weather whatever storms come their way, be that leadership change or reputational challenges. This is a big evolution and will shape how companies operate and communicate in the future,” concluded Jeremy Galbraith.

To read the Burson-Marsteller / IMD Power of Purpose study click here.

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Methodology
Burson-Marsteller commissioned Penn Schoen and Berland (PSB), a leading research firm, to undertake independent, in-depth, qualitative, interviews of Communication Directors from 20 of the world’s leading companies to obtain a snapshot of opinion from some of Europe’s leading communications professionals. The interviews took place between April – June 2013. The research was informed by previous studies carried out by IMD Business School in 2010 and 2011, with this year’s study focusing particularly on topical themes of transparency, change and crisis recovery. The following companies participated in the research: Barclays, Bayer, Danone, Ford, GE, Heineken, Ikea, Johnson and Johnson, McDonalds, Novartis, Roche, SAP, Shell, Statoil, Telefonica, Trafigura, Unilever, Vale, Vodafone.

Previous Research
In 2010, together with leading European business school IMD, Burson-Marsteller commissioned the Corporate Purpose Impact study of over 200 leading European companies from 10 industries. The study consisted of an in-depth qualitative study based on interviews with a selected group of 27 companies as well as a Corporate Purpose Impact Ranking including all 213 European companies. The study found that a strong and well communicated Corporate Purpose can contribute up to 17% of a company’s financial performance. Corporate Purpose builds trust with stakeholders and is growing as companies increasingly understand its impact on financial performance and the importance of their social role. Energy, Pharmaceutical & Healthcare and the Technology industries scored above the average while the banking and insurance sectors scored below. Philips, Nokia, L’Oreal and BASF led the Corporate Purpose Impact Ranking 2010 with Philips being the only company to reconfirm its top spot in the 2011 ranking joined by the German companies Adidas and Henkel as well as the Norwegian energy giant Statoil.

In 2008 Burson-Marsteller conducted a proprietary survey on the theme of Purpose & Performance in cooperation with Penn, Schoen & Berland in 11 European countries amongst 200 leading corporate executives and opinion-makers (CEOs, presidents, government officials, financial analysts, academics, NGOs, journalists, and communications heads / managers). The research evidenced that 40 % of a company’s reputation is determined by its purpose and 60 % by its performance. Striking a balance between substance and responsibility in a world where corporations are expected to deliver on profit and ethics is imperative. The research concluded that companies who deliver on purpose and performance are viewed as role models and are also more trusted. However, there is an in-built tension between the two objectives, and management must find a way to strike the right balance.

The survey was originally inspired by corporate vision of Indra Nooyi, Chairman of PepsiCo, which she called Performance with a Purpose: “Performance with a Purpose is based on the belief that companies can – and must – achieve business and financial success while also leaving a lasting and positive imprint on society.”

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About Burson-Marsteller
Burson-Marsteller, established in 1953, is a leading global public relations and communications firm. It provides clients with strategic thinking and program execution across a full range of public relations, public affairs, reputation and crisis management, advertising and digital strategies. The firm’s seamless worldwide network consists of 73 offices and 85 affiliate offices, together operating in 110 countries across six continents. Burson-Marsteller is a unit of WPP, the world’s leading communications services network. For more information, please visit bm.com or burson-marsteller.eu.

About IMD
Based in Switzerland, IMD is ranked first in open executive programs worldwide (Financial Times, 2012 & 2013) and first in executive education outside the US (Financial Times 2008-2013). With more than 60 years’ experience, IMD takes a “real world, real learning” approach to executive education (www.imd.ch), applying an open, collaborative and pioneering approach to everything that it does. For this reason, IMD’s newly launched Global Center for Corporate Sustainability (CSL) has a research and learning platform with an active membership of global companies and other partners such as NGOs, international organizations and think-tanks focusing on promoting innovation for sustainability. The CSL Platform pursues a mission of contributing to leadership in sustainable development by focusing on mainstreaming social and environmental issues in corporate strategies and providing knowledge sharing platforms to promote strategic innovation and best practice in sustainability initiatives (www.imd.ch/csl-learning-platform).