This month we were delighted to be “In Conversation” with Christopher Saul, former Senior Partner of Slaughter and May and advisor to executive teams. We explored why purpose is growing in importance to businesses and what this means for legal teams. Here’s what we learnt.
Purpose explains why your business exists
It is no longer enough simply to say “to make money”. As Chris explained, a purpose statement needs to explain the unique proposition an organisation offers to its stakeholders, including but not limited to investors. It needs to be robust enough to underpin and drive the business strategy, to excite stakeholders and to act as a guide for decision-making through-out the business. A strong purpose also sets out a path for the future of the business and gets employees, customers and other stakeholders excited about what’s to come.
What about ESG? Is this the same thing?
Often spoken about alongside purpose, ESG, or environmental, social and corporate governance, are the three factors that give shape to the sustainability and social impact of investing in an organisation. Through setting out its purpose, an organisation then sets up the framework for structuring ESG priorities and reporting.
Legal have a natural role to play in driving the purpose agenda
Legal leaders are well-placed to take on a central role as “internal activists”, asking the questions that help the executive team and Board to articulate and stay true to the business’s purpose. Lawyers’ strong analytical skills mean they are naturally able to work out how purpose can be articulated and brought to life through the “lego bricks” of contracts, policies and procedures.
2021 should be a year for thinking about the Legal team’s own purpose
As Chris commented, over the course of his career he has seen the standing of the in-house legal function overall rise substantially. In the wake of the current crisis, he identifies an opportunity for legal leaders to rewrite the purpose of the legal team as they contribute to the business “building back better”. In completing the move from “gatekeeper” to “business partner”, the legal team has the opportunity to add value in three areas that will be vital over the next three years; in working with the leadership of the business to find new opportunities to do path-finding M&A, in partnering to create a meaningful ESG operating framework and in linking arms with the rest of the business to realise tech transformation.
Now is also the time to make sure lessons are learned from the events of 2020
Legal leaders should be making sure they reflect with their teams on what they have learnt from this year and how to make their operations more robust and able to add value going forwards. There are ways to find opportunities to increase business agility across the different responsibilities of the team. For example, in looking at contracts, are there changes that can be made in terms of force majeure provisions, governing law and jurisdiction to benefit the business in the event of further disruption? Are customer and supplier contracts well-matched? Is the business keeping pace with changes in regulation and does it have a positive relationship with the necessary regulators? What is the likelihood of events such as fraud or major supply chain disruption taking place in the future and is the business prepared to respond?
A strong purpose also helps teams and leaders to be more agile
In setting out a clear way forward, your organisation’s purpose gives everyone a compass to inform their decision-making. This makes it easier for functional leaders to make decisions quickly and for employees across the organisation to be more autonomous and driven. As remote and hybrid working models look set to continue through the immediate future, articulating a clear purpose will also help to unify and motivate employees when the team cannot benefit from the electricity of being physically together.
Measuring the impact of purpose
It is easy to get lost in monitoring hundreds of KPIs, particularly those relating to ESG, and frustrated by perceived “box-ticking”. Chris left us with this thought, “What counts, gets counted. What really counts, can’t be counted.” In other words, all the leaders in a business need to be held accountable not just for the financial and other quantifiable measures, but also for the emotional heart of the business – for why the world is a better place for the business being here.