‘Social purpose not profit should be key driver for companies’

The wellbeing of staff, local communities and broader society should be placed higher on the boardroom agenda, according to a pledge made by the CEOs of 14 major companies.

The companies including Capita, Unilever, NHS England, Hogan Lovells and PwC have signed up to the commitment put together by not-for-profit group the Purposeful Company to the effect that “profit is not the purpose of a company, profit is the outcome of identifying and pursuing a purpose that benefits society”.

The aim is to demonstrate that having a purpose beyond a simple profit motive “brings strategic clarity, operational discipline around what’s material to stakeholders and more meaningful work for employees”.

Clare Chapman, head of Acas and co-chair of the Purposeful Company, said: “This is a moment to be seized. The more purposeful companies, the greater the chance of success in building a stronger and fairer economy and addressing the climate crisis.”

Meanwhile, a new Acas analysis estimates that workplace conflict costs UK employers £28.5bn every year, an average of just over £1,000 for every employee.

The estimate is based on the total cost to organisations in handling workplace conflict that includes informal, formal and legal processes as well as the cost of sickness absences and resignations.

The report shows that nearly half a million employees resign each year as a result of conflict and that handling disagreements and complaints early before employment relationships are damaged can help save businesses money.

Acas Chief Executive, Susan Clews, said: “A failure by employers to deal with conflict early can be costly to businesses and our study estimates that these costs add up to nearly £30bn a year.

“Poor conflict management can also cause staff stress, anxiety or depression and impact workplace productivity. There’s a clear benefit to everyone in handling problems as early as possible.

“While our main findings relate to just before the pandemic took hold, our report reveals potential for increased conflict as organisations try to adapt to new changes after Covid-19.”

The report estimates that 9.7 million employees experienced conflict in 2018/2019.

The annual costs to employers identified in the report include:

• £11.9 billion from resignations;
• £10.5 billion from disciplinary dismissals; and
• £2.2 billion from sickness absences.

Acas says workplace conflict can lead to staff stress, anxiety or depression which has a knock-on effect on productivity. The report identifies effective conflict management as critical in maximising productivity and efficiency in organisations and suggests investing in effective and early resolution to repair employment relationships.

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