Leading with purpose creates more engaged employees, greater community engagement, and better business results. 

As leaders, we are all familiar with the constant, wearying need to reshape our organizations from structures that were designed for relatively predictable times and transform them into nimble networks that can predict and respond to frequent, disruptive changes in their external environments. In this new age, stability must emanate from something more enduring than goals and strategy.

As Simon Sinek explains in his well-known TED talk, most people in an organization know what the business does, many know how, but very few actually know why their organizations do what they do. According to Sinek, “inspired leaders and their organizations think, act and communicate from the inside out”. They start with why or, essentially, their purpose.

While starting with why is good leadership practice, it is also grounded in business performance. In their study, Jim Stengel, former adjunct professor of marketing at the UCLA Anderson School of Management, and a team of his students identified 50 brands with the best growth and performance relative to their competition over the past 10 years had something in common – they were all built on ideals. Their brands were directly connected to an ideal, providing a higher order benefit, like joy or positive impact to society. Not appeasement or altruism, the brand connects to a fundamental human value – improving lives.

Looking inside, demographic shifts in the workforce are making their mark, profoundly changing employees’ expectations of work and shifting the nature of employee/ employer relationship.

Employees are demanding different things from their organizations. Leadership and generational expert Tammy Erickson explains: “For many today, meaning is the new money. It’s what people are looking for at work. Clear company values, translated into the day-to-day work experience, are one of the strongest drivers of an engaged workforce, one primed for successful collaboration.”

Erickson’s research reveals that high levels of engagement, and the associated discretionary effort, occur when our work experiences reflect a clear set of shared values. The values codify and operationalize what the organization stands for, linked to its purpose.

While newer to business, this currency of meaning has been around for a long time and relates to our well being.

Psychologist Mihaly Csikszentmihalyi links purpose to “flow” – the state of intense absorption, in which we forget our surroundings and ourselves. Looking first at musicians, he set out to understand what made people feel that it was worth spending their life doing things without fame or fortune. Across 40 years in more than 8,000 interviews from artists to monks and business executives, he sought how to put more and more of everyday life in that “flow channel”, where we find meaning and happiness in what we do. He found that with a strong sense of purpose, you are likely to experience flow more frequently as well as other psychological benefits such as hope and self-esteem, critical in times of uncertainty.

Yet despite this data linking purpose to success in the market, employee engagement, psychological well being and discretionary effort, Deloitte’s 2013 culture survey shows the majority of employees (68%) and executives (66%) believe businesses are not doing enough to create a sense of purpose and deliver against it in a meaningful way.

As leaders, we need a new compass to navigate an unfamiliar world, respond to customers who want more than utility for their money and to employees searching for the meaning behind their toil. It seems like a good time to reacquaint ourselves with the “WHY” of the businesses we lead and to make sure we’re leading with purpose, internally and externally. The world seems to be asking.

An adapted version of this article appeared on the Dialogue Review website