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Purpose and performance in professional services

The Professionals discusses purpose and performance in professional services firms with David Stead, Chief Strategy Officer at Maanch.

What does Maanch do and what is your role?

Maanch is a UK-based B Corp developing technology to measure, monitor and report on the impact of investments, business activities and philanthropy through the lens of ESG and the UN Sustainable Development Goals. Through a holistic view of impact, we help embed impact across a portfolio or organisation.

My role covers areas like strategy, marketing, BD, client advisory and innovation. Backed by a great team, I use my diverse experience across financial markets, NGOs and professional services to shape that holistic approach to impact.

What is a purpose-led company?

For me, it is a firm with a clear sense of why it is in business and the value it creates for society. Where the purpose is embedded throughout its culture and activities, and backed by a strong business case and delivery plan. It’s not fluffy stuff – it makes sense commercially as well as ethically. Investment in purpose, in sustainable business, is an investment in the long-term health of the firm.

Professional services firms are a collection of different people and personalities, with an equally broad mix of clients and customers. How do those firms find and define purpose?

Well, variety is the spice of life! It’s about harnessing that variety to benefit all stakeholders, not just the owners. This needs a shared sense of values and direction so that individual and organisational motivations are aligned.

At the core is strong leadership, encouraging the involvement of all but also willing to make the hard calls and stay true to purpose when put to the test.

Practically speaking, if purpose is not in place, make that the start of a purpose-led strategic review, gathering internal views about how best to apply all the firm’s assets to create social, environmental and economic value. Then be bold and bring in stakeholders like clients and NGOs to enrich the discussion.

In short, purpose, plans and performance should be inextricably linked. A clear purpose can drive stronger performance. At Maanch, we call this Net Societal Impact.

What challenges will professional services firms face?

Often the partners are the owners and outside investors don’t exist. If this is the case, the pressure for change won’t be coming from investors, asking for stronger ESG performance but from employees, clients and regulators.

Talent will have high expectations of a firm’s commitment to sustainable business and will go elsewhere if these aren’t met.

Clients are getting more demanding, as can be seen in tender situations, and new business will go to the stronger purpose-led performers.

Regulators are tightening their scrutiny of firms in areas like climate, diversity, working practices or governance; that pressure for accountability and transparency will only increase.

However, let’s not forget the huge opportunities behind such challenges. Sustainable development goals (SDGs) and the call for sustainability create openings to service the under-served, to enter emerging markets, to work in more innovative ways to address society’s needs and tap into big pools of talented young people. Professional services firms can play an exciting role in the drive for impact and a more sustainable capitalism.

How should purpose be managed or policed?

If everyone is genuinely on board, behaviour should be self-managing. But performance against purpose does need to be tracked and fully incorporated into the strategic planning and reporting process. KPIs based on ESG or SDG factors can be set in coordination with financial targets.

Technology is starting to help embed the process by aggregating key data and bringing it to life so the right decisions can be made. The Maanch impact dashboards are a valuable tool. 

In terms of policing, or at least being held to account, this will happen in several ways:

  • Clients are increasingly questioning suppliers and will favour evidence-based sustainable firms with a strong sense of purpose.
  • Employees are questioning leaders and may form working groups to push the case for change.
  • Social media uncovers irresponsible behaviour and soon picks up on a CEO whose good words are betrayed by bad practices in the organisation.
  • Regulators are asking for more reporting of non-financial data and are keeping a watchful eye!

Where are the pitfalls for professional services firms?

Mistakenly thinking that the shift to a new way of doing business, to stakeholder capitalism, is just a fad! I believe it’s a fundamental change that reflects the emergence of a different kind of society and economy. One where greater value is assigned to firms who make money in a responsible way and whose client work helps to solve the problems of society and our environment. A firm has to stand for much more than profit per equity partner or its CSR budget. It needs to make a net societal impact.

The real test of purpose is in the hard decisions. When changes must be made to drive it through. If the actions or behaviours of certain people, clients, suppliers, or even investors, are in continued conflict with the purpose, all credibility will be lost if they are not dealt with. The pitfall is pushing that under the carpet.

What of the future?

I am very optimistic even in these very difficult times. More leaders are realising that business can’t succeed in a failing society. Professional service firms are packed with talent and potential. They can be a major force for good.

David Stead is Chief Strategy Officer at Maanch, an impact platform for philanthropy, impact investors and corporates. Visit www.maanch.com.

Matt Baldwin
Co-founder – Coast Communications

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