Strong stance, strong crisis management: Purpose as an anchor in crisis

Purpose and crisis management

The corporate world and its values are changing. Until recently, maximizing profit was a legitimate business purpose. Today, this alone often no longer represents a raison d’être. Instead, purpose has become the order of the day: Companies that want to survive in today’s business environment need a long-term vision. This purpose should go beyond increasing profits. It should have a connection to society and make a positive contribution to society’s development. Purpose, however, does not only serve the sustainable viability of a company. Especially in crisis situations it can act as an anchor for a company and become a compass for crisis management.

What is corporate purpose?

“We want to become the market leader in our industry” – We all know such old corporate mission statements. But they have little to do with purpose. After all, purpose is not about the financial objective, but rather about the sense of existence of a company. The purpose of a company expresses the contribution the organization wants to make to society. At the same time, the purpose also reflects the values and attitudes of the company.

In other words, the corporate purpose indicates what a company stands for, how it wants to promote social development and what role it sees for itself in terms of responsibility.

This is made clear, for example, by the mission statements of the business network LinkedIn (“Create economic opportunity for every member of the global workforce”) or the car manufacturer Tesla (“To accelerate the world’s transition to sustainable energy”). Both providers do not focus on the end in itself of selling their products, but describe how they want to make a positive contribution with their work.

Why is Purpose important?

We at PREVENCY® have also defined what we stand for as a company and what drives us. Why is that? Because we believe in meaningful work. In addition, we are convinced that our purpose guides us in our daily work. Especially in difficult decision-making situations. For (potential) employees, too, an attractive and lived purpose is becoming increasingly important. Especially younger professionals prefer to work for a company whose corporate purpose they are convinced of. Moreover, recent studies have found that a clearly formulated purpose increases employee commitment and employee satisfaction. If that is not enough, then let us say: Profit follows purpose. This is also proven by recent studies. Companies with purpose orientation generate about 20 percent more revenue than comparable organizations without purpose, and their market value also grows 10 times stronger on average^[1][2].

What does purpose have to do with crisis management?

In the context of (digital) crises purpose plays an increasingly central role. Because corporate purpose is not only important to internal stakeholders. Consumers, too, are today attaching more and more importance to the fact that their own values match those of retailers or service providers. If this is not the case, the discrepancy can quickly lead to disappointment or indignation among customers. A lack of purpose can quickly become a crisis trigger and driver. If, on the other hand, a company has defined a clear purpose and positions itself accordingly in the crisis, the corporate attitude can also act as a crisis mitigator. Moreover, it serves as a compass for crisis management decisions and the associated communication.

Lack of purpose as crisis trigger and driver

Crises today have many different triggers. With regard to social media, however, values and attitudes are becoming an increasingly relevant topic. This is also evident in the much-discussed Cancel Culture: organizations and individuals are boycotted due to ethical and moral missteps. For companies, this means that those who do not have a value compass can quickly fall into a self-induced social media crisis. If the company’s violation of the moral standards of a larger group becomes public, criticism hails. They become outraged, unleash a shitstorm and, in the worst case, call for a boycott. Why? Because they simply expect more from a company. The crisis scenario is then fuelled by the outrageous economy of the social media, which further encourages an escalation of the situation.

The situation is similar in crisis situations that do not arise from a lack of purpose. If a company gets into a crisis, crisis management measures are also evaluated by the public in terms of their purpose: Does the company react morally right in the crisis? If the answer in public is “no”, the crisis becomes worse.

A current example of this is the case of Adidas from the beginning of the Corona crisis. The company had announced that it would stop paying rent during the crisis. The reaction on the net: great outrage! And why? Because this operational measure collided with the generally prevailing ideas of morally correct and fair behaviour. Just how much weight the public outcry carried is shown by the reaction of Adidas: the sporting goods manufacturer apologized and continued to pay the rent.

Purpose as a compass for crisis management

A clear purpose with a corresponding set of values helps to make difficult decisions in a crisis – both operatively and communicatively. This is particularly true for polarizing crisis issues with high escalation potential. Those who have already defined a clear overarching purpose and attitudes to certain issues before the crisis, will find crisis management decisions easier to make. If, for example, a company is focused on environmentally conscious management, it will soon be clear what to do when it learns about a supplier that is exploiting ecological resources. If you as a company have a concrete attitude towards issues such as racism or sexism, you can react and communicate accordingly in the event of corresponding accusations or the like.

Furthermore, decision-making is also easier and faster with a pre-formulated purpose: certain topics no longer need to be discussed in the crisis team, because the attitude towards the issue is already clear. The time gained can then be used to prepare other measures. This can contribute to more successful crisis management in an emergency.

If you look at purpose against the background of social media crisis communication, further advantages become clear: Attitude has implications for how communication on the net should be designed. This includes, for example, how to address people, but also how to deal with topic-specific comments. The purpose can be used to answer questions such as “Are right comments deleted in principle? How do we deal with insults? How do we deal with sexism? …”.

With a strong attitude from firestorm to candystorm

In 2018, a (right-wing) firestorm was brewing over the German health insurance company DAK. The trigger was a poster advertisement on the subject of pregnancy, on which a black model could be seen. The poster triggered a right-wing firestorm and right-wing users called the model, among other things, a “rapist”. The DAK used the avalanche of indignation to show attitude. The health insurance company quickly developed the campaign “#Haltung gegen Hass und Hetze” (Attitude against hatred and agitation) and clearly positioned itself against racism. The result: DAK triggered a candystorm and even received several awards for the campaign.

The case shows very clearly: Those who take a stand on difficult issues during times of crisis can dampen the crisis and, in the best case, even turn it into a positive situation. So even those who did not define a proven purpose before an acute crisis, can score points by quickly developing an attitude towards the specific crisis situation. At this point, however, the question arises: How do I develop an attitude especially in already difficult situations such as a crisis?

How do I develop an attitude – especially in a crisis?

Developing a corporate purpose is a process and it takes time. We therefore recommend that you do not wait until an acute crisis occurs before dealing with the topic of “purpose”. If you have formulated a purpose in advance, you will save time in the crisis and will not make any rash decisions. If you want to venture into the definition of purpose, you can use the following questions as a guide:

• What is the raison d’être and purpose of our company?
• What values do we stand for? What convictions do we have?
• How do we solve which social problems?
• What added value do we create for our stakeholders?
• Which topics and issues are important to us?

Definition of purpose in the context of crisis preparation

Once the purpose has been defined, attitudes to specific issue topics can also be defined during crisis preparation. For this purpose, issue topics must be identified, e.g. through a risk analysis, and a corresponding attitude must be developed. Here too, companies must ask themselves a number of questions, such as How clearly do we want to position ourselves? How political do we want to be? Which values do we want to communicate and how? Which operative measures can be derived from our attitude? Topics, attitudes and instructions can then be documented in the crisis manual. If a crisis occurs with a specific topic, it is then possible to quickly find out how the company stands on the case and how it wants to position itself.

Purpose is more than a buzzword

In general, the management level should definitely be involved in the development of purpose, values and attitudes. Because: Purpose is a fundamental decision for the orientation of the company. Once an attitude has been communicated – even during a crisis – it cannot simply be forgotten later. In the worst case, this leads to massive loss of credibility and reputation. The background to this is the so-called reputation-reality gap: public perception of the organizations as well as the corresponding expectations of the stakeholders and the real behavior of the company diverge. The result is a gap that could possibly become the next trigger for a crisis.

Attention! Even in a crisis, you should be aware of the consequences of taking a stand: it is not a good idea to focus on purpose only because the buzzword is badly damaged. Purpose is not a marketing measure, but has to be lived and implemented operationally. Only a seriously meant purpose can have a positive effect – on crisis management, on the company’s reputation and above all on society.

Do you need help with purpose definition, crisis management or communication? We are happy to help!

Better safe than sorry.

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^[1] EY (2017): The Business Case for Purpose. Online: https://www.ey.com/Publication/vwLUAssets/ey-the-business-case-for-purpose/%24FILE/ey-the-business-case-for-purpose.pdf

^[2] PWC (2017): Purpose Workplace Study. Online:  https://www.pwc.com/us/en/purpose-workplace-study.html