Leveraging purpose as a decision-making tool delivers clarity in the chaos

Why would any company revisit a purpose statement in the middle of a tumultuous time?  That’s exactly what UPS executives decided to do when they refreshed a decades’ old purpose statement and operationalized it globally to come out stronger than ever. 

At the recent goBeyondProfit CEO Forum, UPS’ Kevin Warren broke down the how, why and day-to-day benefits any company could realize from a purpose refresh.

Key insights and approaches:

Kevin Warren
Executive Vice President
& Chief Marketing Officer
UPS

Formulating a new purpose for better business optimization

Tell us why a pandemic and new CEO seemed like the right time to formulate a new purpose statement.

“In March of 2020, when the pandemic hit, it was really in our faces on many fronts.  UPS has a huge scale. We’re 114 years old, with 540,000 employees worldwide. We will be a $95 billion company this year. We operate in 220 countries and territories.

“Normally UPS’ package volume and Gross Domestic Product (GDP) are tightly correlated so we were scenario planning for 30, 40 and 50% volume drops. But instead, this thing called E-commerce had the exact opposite effect. So instead of volume going down, it went up to where we were having holiday Peak season volumes in March, April, and May. Normally we plan for Peak season; we hire a bunch of folks. We didn’t have time for any of that!

“Also, as you’ll recall, it was tough to get hand sanitizing wipes. We had to actually make the hand sanitizer to protect our drivers and package handlers. And then we also had the George Floyd killing and social unrest happen.

“And at the same time as all this, we did a CEO succession plan. The first woman in our 114-year history, Carol Tomé, was taking over.

So, we had a convergence of all these things, and we said, “Okay, a crisis is a terrible thing to waste. Let’s take a step back and reflect on our ‘why’; we know our ‘what’. 

“So, we went through a process and chose a new purpose statement: Moving our world forward by delivering what matters. ‘Our world’ includes those 220 countries and territories and we feel a huge responsibility to these communities. And ‘deliver’ … obviously we deliver. And then, what matters, we left somewhat open, because it means delivering your favorite packages, it means delivering in the communities, and it means – we’re proud to say we’re on track to deliver 1 billion vaccines at 99.9% reliability.

“That new purpose statement really cleared our focus and it led to a number of things as to how we’re going to invest.”

Integrating purpose into everyday business decisions

You have a brand-new purpose statement, now what? How does the statement help you make daily decisions?

“If you come up with even the best purpose statement, then you push it to the side and it’s not integrated into your business, then it really won’t be that useful.

“When you hear our CEO Carol Tome on earnings calls, in her script you’ll hear our purpose. When we talk to investors, it starts with the purpose statement. When we have to make key decisions or tough calls, we go to our purpose statement.

“Our purpose statement sits at the top of our strategy. And then the three pillars of our strategy are Customer First, People Led and Innovation Driven. So, we focus on our customers, our people, and our shareholders; and the purpose is our commitment to the world. So, these four actually work hand in hand. If our drivers aren’t taken care of, then obviously we can’t take care of our customers and we’re not going to drive shareholder returns or be able to take care of communities.

“So, it really is integrated in, and I will tell you it has crystallized some good decisions that have really helped our business. 

“For example, we have over 5,000 UPS Store franchisees. When we looked at our representation of diverse owners, we knew that was an area of opportunity. So, part of our reaction to social unrest was to give a 50% discount on the fee for diverse entrepreneurs. By the way, that’s good for us, because we can extend our footprint with some very talented folks. It was the right thing to do on both counts. We’re seeing the purpose help us drive 1+1=3.

“Another example is in the small and medium sized business (SMB) segment, which is the most profitable segment in our industry. We leaned into these SMBs, because they were really affected by this pandemic, particularly the diverse ones. We created a number of specific campaigns to reach out and help them.  We did webinars to teach them how to leverage E-commerce. We invested in different Chambers of Commerce to help them survive. We donated forgivable loans to different funds.

“We ended up growing share and had the best SMB performance we ever had in the history of the company. We delivered record profits. And shareholder returns: we almost doubled the stock price.

“Doing good and moving goods. What’s good for growth and good for the community. Those things go hand in hand.” 

While we have you. . .

Employee retention is so key right now, do you find retention benefits based on your purpose?

“Our employees see this as a good part of the value proposition of being employed by UPS.

“The UPS Foundation has a long history of philanthropy, and our employees want to be part of it as well, so it’s not just about writing a check. We committed to 20 million volunteer hours and — given recent events — we pledged another one million volunteer hours for at-risk communities.

“We have an employee measurement that is their likelihood to recommend that somebody come and work for UPS. We’ve seen a 10-percentage point jump because of incorporating our philanthropic approach as part of the employee value proposition. 

“Particularly for millennials and diverse employees, this is really important. So, we’re listening to their feedback to help form our future direction.”

How do you think the role of the Chief Executive has evolved?

“The CEO used to be more focused on one stakeholder, the shareholder. By the way, that stakeholder is still very, very important, but there are others.

“Communities and people now have even higher trust for corporations than they used to, compared to NGOs or the press or others. Now that they trust corporations more, their expectations of corporations to do the right thing are higher. 

“That means the CEO has to be a good, responsible corporate citizen.  They have to make Diversity, Equity & Inclusion really, really important because, by the way, shareholders care about that, too.

“Also, it’s not just having a good board but a diverse board. I think those two go hand in hand. We feel really good that over 40% of our board are women, and over 30% are ethnically diverse.

“And CEOs have to be engaged with employees as well.

“So, it’s more complicated now. But if CEOs do all those things, and do them the right way, the shareholders are going to be really happy as well.”

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