Responding with purpose

Rowena Morris (RM): Welcome back to COVID-19 business in focus, where we explore the business impacts of coronavirus. I’m Rowena Morris, a director at PwC, and I’m your host for the series.

Coronavirus has put the relationship between companies, governments, society and the public into the spotlight. More and more, businesses are expected to help societies solve the problems arising from the pandemic, and many are rising to the challenge using their purpose to inspire positive action. In this episode, we’re going to be discussing how businesses can bring their purpose to life in responding to the challenges of COVID-19. We’ll explore how some organisations are getting this right already, and we’ll share practical tips on what you could consider applying in your own business both in the short and longer term. I’m delighted to be joined today by PwC partners Emma Cox and Brenda Trenowden. Emma and Brenda are PwC’s purpose experts, and they provide crisis leadership advice to our clients.

Emma Cox (EC): Hi Rowena.

Brenda Trenowden (BT): Hi, thanks for inviting us today.

RM: Thanks for joining our virtual studio both, lovely to have you here. So Emma, to kick things off, although it seems a strange question to ask what purpose is, I think it’s really helpful to revisit from a business context perspective what it actually means to have a purpose in an organisation.

EC: Yes, thanks Rowena. Purpose is one of those words that’s been talked about a lot recently, but a lot of people get quite confused as to what it is and what it isn’t. So purpose is really an organisation’s reason for existing beyond just the financial. It sets out why you matter to society, what your differentiating capabilities are and the impacts that you can create for wider societal stakeholders. So for us at PwC for example, our purpose is to build trust in society and solve important problems. And that’s a great unifying theme: it’s sort of our ‘North Star’ that helps guide our decision making.

Purpose is something that’s actually been growing in traction, in importance, to become a real buzzword if you like, over the last year, with a load of companies talking about why purpose is important, I think probably brought on by rising societal inequality and also by lack of trust in business, so you’ve seen a number of big announcements by groupings of business that have really brought purpose to the fore, and also here in the UK the corporate governance code changes have made businesses really focus on their purpose. So even before COVID, we were all talking about this.

BT: And I think Emma, that’s absolutely what I’ve been hearing from clients as well, and I think the whole concept of stakeholder capitalism, as you say, has been really growing and I think businesses have been thinking much more carefully about how do they interact with the communities that they’re in. How do people view them, from their employees to their investors, to their customers, and how do they really bring that to life, and interestingly, although there’s been growing pressure from investor groups, and I’ve seen this with my thirty percent club hat on, as we think about our investor group and we think about some of the big issues that we want businesses to consider beyond just profitability, we’ve started to hear much more of this as we’ve come into the crisis.

So since early March, companies have been sending out notes to clients about how they’re reacting to COVID and many have started their communications to clients with purpose. I’ve heard of clients talking to their staff much more about purpose, in terms of how they’re making decisions, and I think one of the things that’s really important for people to remember is that purpose is not about just doing good, and it’s not in conflict with profit. I’ve read some articles, even before the crisis, I think people have been a bit cynical about purpose and thinking it’s virtue signalling, or part of CSR, and that companies should get back to just focusing on earning revenues for their shareholders and not be thinking about purpose, but I think that’s really not the way that companies should be approaching things. Purpose is about long-term sustainability and about really thinking of: why are we here? Who are we here to serve? Where do we fit in the market and, really importantly, are we relevant? And so purpose isn’t lofty aspirations and vision; it’s very much how companies should be grounded in thinking about their reason for existing.

RM: So having that clear purpose, that’s effectively communicated and understood within an organisation, at a time of crisis, I suppose is especially important?

BT: Yes – I think when you have short-term, knee-jerk responses in a time of crisis, and you haven’t got purpose, you haven’t got that background, it often leads to some decisions that are really going to come back to haunt you down the road, so I think companies that have spent a lot of time, that have communicated, that speak about purpose very authentically, are able to use it almost like a policy check.

So if you think about it, when times are difficult, and we all revert to kind of doing things that we don’t necessarily appreciate afterwards, if you can come back to thinking about your core beliefs and what you really stand for, it really helps in terms of those decisions. And once again, maybe bringing it down to some actual examples, because it’s easy to talk about this from a theoretical or very lofty level, but some companies that I’ve been speaking to in the previous weeks in early April have been saying that when they’ve been taking decisions about customers for example, so a bank, about lending, but they’ve thought about the fact that their purpose is to be a trusted, long-term partner. One bank said, and I thought this was a brilliant way to describe their purpose in simple terms, was ‘to lend real money to real clients, to do real things with, and to be there long-term for their clients’, so to be very relationship-led, and when they had a difficult lending decision to make, and this decision was really on the cusp, and that had been building even going in to the crisis, it went to their credit committee, and they realised that by not lending the money to this long-term client, the client would go under, and 8,000 jobs would be lost. And they decided that one of the big issues was really saving those jobs and keeping the company going and being that long-term partner and so they lent the money. And they said that wasn’t the only deciding factor but it was really important. And if I think back to my previous experience in banking, and certainly through the financial crisis, I’m not sure that we would have taken those decisions. I think often for a credit committee, the easiest decision is to say ‘this is a high risk, let’s say no.’ but this particular bank was so grounded in its purpose, that that’s the decision they took and I think that stands them in good stead as they come out of the crisis.

EC: Yeah Brenda, I think that’s a lovely example, and I think I’d echo your comment about it being really important that business thinks now about using purpose to guide the decisions that it takes. The decisions that it takes now will actually really impact on how it’s viewed in the longer term – not just on how it thrives and survives, but actually how broader stakeholders: how its employees, shareholders, governments, regulators et cetera view those businesses. And just even in the early weeks – end of march, beginning of April – of this crisis, we’ve seen winners and losers come through and a lot of media attention being paid.

Now I think one of the things that’s striking to me is that the businesses that are really (one feels) getting it right are the ones that are focusing on how their core business can have the most positive impact on society, and how they can take actions now that really will help the economy, people, thrive and make it through this. So you see some of the actions of the supermarkets: now, they haven’t necessarily got it right all of the time, but they’ve been very open about trying to recruit people, keep supply lines open, make sure that they keep their employees and their customers safe, and I think that’s been good.

One of the things I think also is communications is really really important, and the way that you talk about what you’re doing, and the choices that you’re making – again, using purpose to guide that, referring to it, being really clear with your employees what you’re doing, I think that really helps, because lots of businesses have got to make really difficult decisions at the moment, so where they’re furloughing staff, actually if you’ve got a really clear policy as to why you’re doing it, what you’re doing, and what your plans are at the end, actually employees will trust that a whole lot more than if it’s just a decision that doesn’t seem to come from anywhere.

When I look at what we’re doing within our own firm, within PwC, there’s been very clear communications about looking after our people, looking after health and wellbeing, mental health, et cetera, making sure that people know what is available to them, and also a real clarity on job security. I think that also really helps, so where you can remove a fear factor from people, then they can focus on doing what they do best, and that focus on actually what is important, again you see lots of great examples of companies where their initial market has disappeared turning to other things.

I love the story of companies turning their factories for making designer clothes into making masks and gowns for example, or stocks of spirits being used instead of scotch whiskey, for making hand sanitiser. So there are some things that are very direct, but it’s not always those frontline stories – some of the smaller stories about how individual businesses are treating individual employees, or their supply chains, extending credit to your supply chains, helping make sure that those supply chains continue to work, I think is really important.

BT: And I think your point about the communication and how they communicate frequently and authentically is critical, because I think if we look at it, not all businesses can respond the same way, so some of the very large businesses have said to me, what we want to do is make sure staff are OK first, that they’re not working too hard, that their mental health is well, and we want to remove the fear, so we’ve said nobody will be made redundant during this time, we don’t want you worrying about your job and things, we want you to just be able to get through this. And that’s great if you can afford to do that, but at the other end of the spectrum, I’ve spoken to some smaller businesses who are really just thinking about are they going to be able to operate post-COVID. Are they going to be a going concern, and they can’t afford to take that fear away. Some have furloughed staff, some have had to make some staff redundant, but again, exactly as you’ve said, they’ve communicated, they’ve been very open, they’ve tied it back to ‘this is what our business is about, this is what we can afford to do’ and I think that piece about trust – if employees feel they understand why those tough decisions are made and they feel they’ve been made fairly, and they know the reason why some have been made redundant and some have been kept on, a minimal staff, they’ve responded quite well.

And I heard about one small business that had taken these tough decisions, and they are very much at risk of maybe going under. They’d furloughed a lot of staff and made others redundant. When they had town halls – and they’d only done town halls maybe once a month – are now speaking to staff twice a week, and just being open and honest with them. It’s incredibly important.

RM: It’s so important, and I think it’s really helpful to hear some of those practical examples. Are there any other examples you’d want to share with people around how you’ve seen people using their purpose to respond to coronavirus?

EC: I think we’ve covered a lot of them, but I think one of the other things I would probably bring out is the importance of leadership in this crisis, and the way that individual leaders communicate.

Brenda just touched there on the importance of town halls, keeping in touch, but I think it’s communication from leadership at every level of the organisation that’s really important, and making sure the messaging is consistent all the way down. I think the other thing that leaders can do though, is listen. New leaders at all levels or your organisation will emerge out of this crisis, so also making sure that you listen to ideas bubbling up from different parts of your organisation, because people who are at the coalface see how things can be adapted to respond to a need. So you’ve seen that with a bunch of the ideas of how businesses are repurposing what they’re doing or how they’re focusing their logistics and their supply chains to get to the areas that matter. But just asking: so again, another small example of what we’re doing at PwC, we’ve got an ideas platform where people can put their own ideas for things that we can do to help our clients, our people, our communities, and then we’re sharing and socialising those with everybody so we can see, actually, what ideas can be used in different bits of the business.

So I think leadership and communications are two practical things that really everybody can do, and these types of actions can really bridge and build trust between different elements of your stakeholders, so between your shareholders, your investors, your employees and your wider framework of government and regulators that you operate within.

RM: Really good points there. And I think so important to consider some of the longer-term implications and challenges in all of this, so with some organisations with business-as-usual out of the window, and everything we thought we knew being challenged, I suppose for Brenda, what’s the opportunity for the future for organisations?

BT: I think that’s a really interesting question Rowena, and I’ve heard so many different things from businesses and it really depends on where you sit in the business. I think, when we’ve talked to board-level directors and top of the house, particularly on the boards – boards have been given the opportunity to really think much more toward the future. They’re not in the weeds, they’re not necessarily fighting the day-to-day crisis in companies, and so they’re being able to really reflect on what are the decisions we’re taking now? How do we want to look coming out of the crisis? How do we use this to reimagine our business?

In some cases, board directors have said we’re going to deal with some long-standing issues that we hadn’t dealt with before, and we’re going to accelerate some of those discussions. Maybe people are going to take bolder decisions. But I think an interesting parallel in terms of how some companies are thinking about this is if you go through a personal crisis in your life – either an illness or death of a loved one, or maybe even you have your own personal health scare – it makes you think about your purpose, your priorities, your values. And usually, it causes you to really redesign your life a bit, sharpen your focus, ground your thinking, your activities, and your purpose. You probably will do things differently and you really will hone things down.

And I think in a way, business is the same. and for most leaders, the crisis is causing them to re-evaluate their businesses, how they operate, how they go back to their core principles and their purpose, their reason for existing, and that’s a natural starting point.

And I think for some businesses, they’re really thinking about focusing in on their strengths, and so often, when times are good, people go off and think about doing some other businesses, maybe broadening out their portfolio et cetera, and this is an opportunity to say ‘you know what, this is what we’re good at, this is why we’re here, this is what people think about, and this is what we want to be known for.’ So I do think that that parallel, in terms of how people think when they’ve had that kind of shock, it really brings them back to anchoring their behaviour going forward in their purpose.

RM: And do you think there are some considerations for companies as we emerge from COVID? So what will really stick, do you think, for organisations?

EC: I think someone coined a phrase recently of ‘build back better’ and I think that’s a really nice thought and it builds on what Brenda, you were just saying about businesses taking that longer-term view as they move from the firefighting phase into stabilising and strategizing for the future: actually really focusing on what their core purpose is and how to deliver the best business that delivers the best return for everybody with a positive return for society, will be the ones who really come out of this well, and therefore using the time now as Brenda said, if CEOs are reflecting and strategising looking forward, actually using purpose to ground those great long-term decisions to make the business more sustainable, more resilient in the longer-term, will really pay dividends, I think.

BT: I agree. It is really coming back to really thinking about how do we want to do things differently, but how do we want to create a business that’s sustainable. And thinking about maybe being bold, accelerating ideas that perhaps we’re just being thrown around as ‘what if we did this, what if we did that?’ There’s a real opportunity here to be creative, and once again, keeping purpose as a guiding light, but really trying out things that maybe businesses wouldn’t have tried out before, and I think we’re all learning to do things in a different way and really adapt, and businesses are having to do that as well.

So I think once again, you have to have that guiding light, you have to think about the framework in which you operate, but I think businesses are going to think about doing things very differently but they will have to think about what their role is in society, and the spotlight is really on all businesses now, so for some, that will turn out really well, and I think for others, we’re already hearing about the businesses that people maybe don’t want to support because they haven’t been true to their purpose and they haven’t thought about their wider stakeholder group. So I think it will be really interesting to see.

RM: I really like your top tip around using purpose authentically as a bit of a policy checklist, so are there any other practical tips as we wrap up this episode, any other practical tips for companies looking to turn their purpose into positive action to help society tackle this huge challenge? Maybe Emma, if you could go first.

EC: I think I’d agree with what Brenda just said, which is frame your key decisions in light of your purpose. Use your purpose to really guide your thinking on those big decisions. Don’t think in isolation – you’re part of an ecosystem, you’re part of a supply chain, so think through what your contribution is relative to that and think how you work and collaborate with others. And get your communications right. More clearer, focused, internal and external, I think people need to know what you’re doing and need to know it very clearly.

BT: and I think from my side, I would come back to really honing the core values, so: why are we here? Who are we here to serve? Where do we fit in our market and are we relevant? Those are the questions that companies need to be asking themselves. And then I think the importance of people. The companies that really think about their people, their customers, their communities, and when you think about purpose, we often think the purpose of the company, but the best companies will really think about ensuring that their employees feel a sense of purpose themselves as well, and that’s really a secret sauce for successful companies. So I would say make sure that purpose flows all the way down, and that they really look after their people and give them a sense of purpose.

RM: Excellent, some really good practical takeaways there and really interesting conversation. Thanks very much, both.

EC: Thanks Rowena.

BT: Thanks.

RM: So if you’d like to know more about the themes we discussed today, visit our website at pwc.co.uk/covid19 and please do subscribe to keep up to date with all of our latest episodes. Thanks everyone for listening, and until next time, stay safe.

Participants

• Rowena Morris, director, PwC
• Emma Cox, partner, PwC
• Brenda Trenowden, partner, PwC