African SMEs must be driven by purpose not Profits

In my years in business school; it was constantly drilled in our minds that for one to succeed as a manager or steward one had to ensure that there an increase in shareholder value not profits. All other stakeholders such as society, government, employees among other follow shareholders.

One quickly comes to the realization that the said economic model doesn’t fit to the current realities. For instance an organization cannot achieve above average performance with a sluggish, uninspired and demotivated staff.

Most employers and managers fresh from business school who expect top performance from their staff often employ the economic model viewing employees as self-interested agents and would often deploy rudimentary strategies such as training, more incentives and increased managerial oversight often with dismal results.            The assumption is underpinned on the notion that work is fundamentally contractual, and employees will seek to minimize personal costs and effort.

The economic model approach to employees and prioritization of incremental shareholder value favors legacy companies, monopolies and mostly government institutions. The current market realities cannot afford companies especially SMEs the same luxuries.  Increased competition due to globalization, rapidly shifting consumer taste and preference, gravitation towards environment conservation among other factors have pushed even legacy companies to seek competitive advantage from all quarters.

An important emerging advantage is purpose driven organization that reflects something more aspirational. The organizational purpose shows the common citizen, employees and other stakeholders how being involved with the organization contributes to making a difference in society; whether its creating employment, conserving the environment, helping the needy, delivering an important product or service. The purpose of the organization has the net effect of giving employees as sense of meaning hence drawing their support that goes beyond economics.

Although faced with great hardships; African SMEs can focus on aligning themselves with genuine purpose that intersects and guides their day to day decisions. Once employees realize that there is no hypocrisy or gap between stated purpose and management behavior; they will give their all to the organization in terms of creativity, deep learning and risks.

Purpose is not an elusive ideal but is a pragmatic approach to improving a company’s performance and competitiveness. People who find meaning in the work they do don’t hold back they defy conventional economic assumptions and do more than expected.