A renewed sense of purpose
At the beginning of the year, we found that most CEOs were seeing the primary objective of their organization shift from purely profit to also consider their purpose in society. Less than a quarter (23 percent) saw the organization’s overall objective in narrow ‘managing for shareholder value’ terms, with 54 percent taking a broader, purpose-driven approach focused on multiple stakeholders. Furthermore, one in five (22 percent) say that their primary objective is to improve society.
More recently, purpose has helped CEOs understand what needs to be done to meet the needs of stakeholders during the crisis, from employees to communities.
Purpose has become a central pillar for CEOs: 79 percent say they feel a stronger emotional connection to their corporate purpose since the crisis began. At the same time, however, the massive disruptive impact of the pandemic has caused many CEOs to question whether their current purpose really meets the needs of stakeholders. In fact, 79 percent say they have had to re-evaluate their purpose as a result of COVID-19. Carefully listening to different stakeholders and encouraging dialogue, will be an important element of this re-evaluation, particularly if it becomes clear that the current purpose needs to be adjusted to better meet the needs of a stakeholder group.
From empathy to action
This increasingly personal and emotional connection to purpose during the pandemic reflects the fact that CEOs face similar health and family challenges as their people and communities. In fact, well over a third of chief executives (39 percent) have had their health, or the health of one of their family, affected by COVID-19.
The pandemic will be remembered by many as a defining moment for this generation. CEOs are clearly determined to learn from the pandemic and their own personal experience to recalibrate and make not only the best-informed decisions, but also the most authentic ones. Out of those who were personally affected by the health implications of the crisis, only 4 percent made no change to their approach to the pandemic. In all, 55 percent changed their strategic response, either completely or to some degree. Another 40 percent, while not changing their strategy, did pay more attention to the human aspect of the pandemic.
Standing up for equality
At the beginning of the year, we found that CEOs were increasingly prepared to personally lead the way in tackling society’s major challenges. Around two-thirds (65 percent) said that the public is looking to businesses to fill the void on societal challenges. At the same time, 76 percent said they had a personal responsibility to be a ‘leader for change on societal issues’. During the pandemic, there are numerous examples of companies playing a significant role in their country’s response, from developing products and services for front-line workers to financial contributions.
Being able to draw on a diverse spectrum of talent is critical to addressing the unique challenges of the pandemic, and CEOs are looking to strengthen their anti-discrimination approaches. In the wake of widespread protests following the death of George Floyd on 25 May, 81 percent have either publicly announced new anti-black racism measures in 2020 or plan to do so in the near term.
For CEOs who had already introduced new diversity and anti-racism measures, the top three areas actioned were:
- Performance management
- External interventions, such as donations
- Supportive interventions, such as allyship training
Linking anti-racism measures to performance objectives can be used to set specific and measurable diversity targets and can ensure that supporting equity in the workplace is the responsibility of all leaders and managers.
Reflections for the new reality
While the pandemic has given companies the opportunity to demonstrate how they can make a real difference to society, scrutiny of corporate actions has also never been stronger. To maintain and build on the trust of employees, customers and communities, CEOs must demonstrate that their organization’s purpose is meaningful, relevant and makes a difference. For some, this will mean moving from generic purpose statements to more specific and measurable approaches. Carefully listening to different stakeholders, and encouraging dialogue, will be an important element of making adjustments and managing any trade-offs that need to be met between different stakeholders. The pandemic has shown the power of purpose. However, it must be integrated into the fabric of the organization in order to succeed and the CEO must lead from the front to ensure it actually delivers.
Unless otherwise indicated, throughout this report, “we”, “KPMG”, “us” and “our” refer to the network of independent member firms operating under the KPMG name and affiliated with KPMG International or to one or more of these firms or to KPMG International.