How Busi­nesses Can Profit with Purpose

Money helps us meet our basic needs, but what about our need for mean­ing? Busi­nesses will profit — not just fi­nan­cially — by find­ing their souls.

San Francisco Chronicle Late Edition - - BIG IDEAS - By Robert Strand, Ph.D., Ex­ec­u­tive Di­rec­tor, Berke­ley-Haas Cen­ter for Re­spon­si­ble Busi­ness

How do you mo­ti­vate some­one to work? For many the re­sponse is quite sim­ple: money. Want more work? Pay more money. Econ­o­mists have long in­structed us that hu­man be­ings are ra­tio­nal self-in­ter­est max­i­miz­ers mo­ti­vated solely by the dol­lar.

The dis­ci­pline of eco­nomics has his­tor­i­cally dom­i­nated busi­ness schools and man­age­ment re­search and, it fol­lows, that the fun­da­men­tal as­sump­tion of self-in­ter­est max­i­miza­tion is ap­plied to com­pa­nies. As the econ­o­mist Milton Friedman fa­mously wrote “the so­cial re­spon­si­bil­ity of busi­ness is to in­crease its prof­its.”

A more pow­er­ful mo­ti­va­tor

How­ever, the view that money is the way to mo­ti­vate some­one to work is only half cor­rect. And it is half ter­ri­bly, ter­ri­bly wrong. The re­search is in and it is clear: For knowl­edge work­ers, one must pay enough money to take the is­sue of money off the table. But be­yond that, money is a ter­ri­ble mo­ti­va­tor.

In fact, money can be a de­mo­ti­va­tor as in­cen­tive plans of­ten end up en­cour­ag­ing em­ploy­ees to think more about money than the work. In­stead, purpose is in­creas­ingly rec­og­nized as the great­est mo­ti­va­tor for em­ploy­ees and or­ga­niz­ing force.

Purpose grows in im­por­tance with new gen­er­a­tions of em­ploy­ees who are in­creas­ingly de­mand­ing that the or­ga­ni­za­tions at which they spend their pre­cious time con­nect to some­thing much big­ger. Great thinkers like Daniel Pink and my Berke­ley-Haas col­league Barry Schwartz have much to say in sup­port of this.

Can a busi­ness self-ac­tu­al­ize?

Themes like so­cial in­clu­sion and cli­mate change rep­re­sent op­por­tu­ni­ties for com­pa­nies to con­nect their em­ploy­ees with purpose. We re­cently held an event to ex­plore how com­pa­nies like Adobe and Mi­crosoft are in­no­vat­ing their hir­ing prac­tices to make it more pos­si­ble for in­di­vid­u­als from un­der­rep­re­sented pop­u­la­tions to ful­fill their po­ten­tials at their firms and, ul­ti­mately, en­cour­age greater so­cial in­clu­sion.

For many large, es­tab­lished com­pa­nies, con­nect­ing em­ploy­ees with a sense of purpose is re­mark­ably chal­leng­ing. This is where a cor­po­rate so­cial re­spon­si­bil­ity (CSR) or sus­tain­abil­ity group can serve an im­por­tant role. CSR and sus­tain­abil­ity groups can iden­tify ma­te­rial is­sues for that com­pany, such as en­cour­ag­ing so­cial in­clu­sion or bat­tling cli­mate change, and bring th­ese is­sues into the com­pany. Prof­its are a bit to the com­pany like oxy­gen is to the body: Nec­es­sary for sur­vival but a pretty lousy thing to live for. Com­pa­nies that con­nect their em­ploy­ees to a greater sense of purpose are those that will fos­ter health­ier or­ga­ni­za­tions and ul­ti­mately re­al­ize greater prof­its.

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