A Strong Purpose Can Make Your Company a Magnet for Talent

Author: Claudio Fernández-Aráoz

I was sitting in an elegant bar in one of Switzerland’s finest hotels, watching the snow fall peacefully against the lights of Zürich and agonizing over a professional predicament that could change the course of my career.

A few months earlier, I had left a promising career with McKinsey in Europe to return to my native Argentina and join the local office of the executive search firm Egon Zehnder. Impressed by a five-day tour of its offices in London, Paris, Brussels, Copenhagen, and Zürich; its three pillars of purpose (“clients first, quality in all we do, and a unique partnership spirit”); and my final meeting with Egon Zehnder himself, who outlined his vision of making the world a better place by bringing the best leaders to the most influential roles in organizations around the globe, I had made the decision easily.

However, shortly after starting the new job, I was confronted with a situation that openly violated many of the principles the firm purportedly espoused. I didn’t know what to do. Leave—assuming that those proclaimed principles were just empty words—or candidly take my concerns to the firm’s leadership?

Though I was a newcomer in a small outpost far from headquarters, I decided to talk to Egon directly, share very openly what I had found, explain how I felt about it, and ask him to fix the problem. If he wouldn’t or couldn’t, I would resign. That’s why I was sitting in the hotel bar.

After I presented my case, Egon asked me to wait for a few minutes while he considered what to do. Then he came back, looked me in the eyes, and said: “I thank you, and I congratulate you. . . . The situation you have shared is totally unacceptable and will immediately be corrected. I am proud to have you as my colleague. You have all my support.”

Trembling with relief and emotion, I was surprised to hear my equally unequivocal response: “Thank you. You will have the best of me . . . forever.”

Well, it wasn’t forever. But it was an exceptionally fruitful and meaningful 34 years.

Why did I stay for so long when I had many opportunities to join other companies or launch my own firm? What made me travel the world on countless speaking tours (in some cases delivering up to 25 speeches across four cities in just a week) to enhance the firm’s brand, relationships, and business? What makes me write this testimony to the great man and his legacy, years after ending my formal relationship with the firm?

Because, from my first introduction to Egon, through that moment in that hotel bar and my entire career at the firm, I felt an extraordinary alignment between his and the company’s purpose and my personal values and priorities. Because I identified so strongly with the mission of uncovering the potential in people and placing them in positions to both achieve personal and professional growth and drive business success, I was fully committed to my job. In my time at Egon Zehnder, I led its global professional development, its people processes, and its intellectual capital development; founded and led its assessment and development practice; and served on its global executive committee for more than a decade.

My story might seem unique. But it is not. Employees around the world stay with organizations—and work hard for them—when they feel that same connection to purpose that I experienced.

Consider Patagonia, the apparel manufacturer known for making reliable products and encouraging responsible consumption and environmental preservation. Years ago, when my former colleague Christoph Lueneburger (author of A Culture of Purpose) asked its founder Yvon Chouinard about his talent strategy, Chouinard explained that he’d once brought in an industrial psychologist to assess his team. The expert’s conclusion was: “These people are really unemployable anywhere else.” What he meant was that they were so enamored with the organization’s purpose and the empowerment they felt in their jobs that they wouldn’t ever want—or even be able—to work for another employer.

It’s true that organizations must also offer flexibility, autonomy, growth opportunities, great management, and fair pay. But purpose is one of the most powerful magnets for talent. And if you hire and develop the right people in the right way, you create a virtuous circle of mission-driven growth. This can be achieved with five specific disciplines.

Strategic hiring

Research shows that there is a huge gap between the performance of the best knowledge worker and the average one in complex jobs: 240% for an insurance salesperson, 1,200% for a partner at a professional services firm. It’s therefore critically important to invest enough time and effort in hiring, and to assess candidates not just on their intelligence, skills, experience, and potential but also on their values.

Egon not only encouraged his clients to do so; he practiced what he preached, looking for only the strongest candidates and carefully vetting them. Before I joined the firm, I was interviewed by 35 partners, including all executive committee members, over a single week, and Egon checked my references personally. Until he retired, he personally met with and approved every new consultant hire at some 70 offices around the world—for 36 years—and his successors have continued the tradition, no exceptions allowed.

You can’t preserve and grow a culture of purpose unless your people share common values. So, while looking for exceptional people (double degrees from top schools, international expertise, high emotional intelligence, and so on), Egon would also check that they were keen to work in a highly professional, ethical, and collaborative firm.

Zero tolerance for unacceptable behaviors

Egon’s response to what I shared at the hotel bar was, of course, a prime example of this discipline. But all the great, purpose-driven leaders I’ve encountered over the years and around the world have the same moral clarity. As the late General Electric CEO Jack Welch often said, it’s easy to deal with the people who are high performers with good values or low performers with questionable ones: You promote the former and fire the latter. But the best leaders and organizations also have the courage to get rid of unethical stars since research shows that one bad apple can corrupt a whole team, which will have knock-on negative effects, changing the culture and undermining your collective purpose. As Peter Drucker put it so well, “Whenever you see a successful organization, someone once made a courageous decision.”

A focus on people’s potential

Once you have hired strategically and dealt with the bad apples, how do you handle underperformers with the right values? Here’s where leaders must dig deep to understand individual potential profiles because these people are diamonds in the rough—incredibly committed players who can become much better versions of themselves to drive organizational performance. Twenty-first-century talent spotting—a research-based strategy for hiring well I helped to develop at Egon Zehnder and which we deployed both within our firm and in client work—involves looking beyond experience, past performance, and even current competence to the key indicators of potential (the right motivation plus curiosity, insight, engagement, and determination) and then offering tailored opportunities and developmental support to unlock professional growth. In today’s extreme VUCA world—volatile, uncertain, complex, and ambiguous—this is the only way to ensure a dynamic, purpose-aligned workforce.

Alignment of key HR processes

To ensure that an organization’s purpose and its people stay in sync, leaders must pay close attention to two people processes in particular: compensation and performance reviews.

For example, because Egon believed that collaboration was critical to achieving his mission of improving the world by placing the right people in the right positions of power, he eschewed the traditional “eat-what-you-kill” compensation model used by most professional service firms to reward individual generation and execution. Instead, he went for a pure “lockstep” approach, where your pay reflected your tenure and the company’s global profits, so consultants were incentivized to plan long-term careers at the firm and share their accumulated knowledge of candidates, sources, and references across offices, which generated better solutions for clients, allowing us to charge higher fees while also reinforcing the desired company culture.

Our people review process was also carefully aligned with our purpose. Back in 2000, I was tasked with designing a “contribution, performance, and development review process” for the firm’s consultants. We did look at client generation and successful search execution, but equally important was living the firm’s values and displaying the desired behaviors, like information- and advice-sharing. We also discussed how to maximize not just performance but growth based on each person’s potential profile and personal passions and purpose.

Values-based succession at the top

Too often, charismatic leaders, often founders, are seen as such standard bearers for the company’s purpose that it falls away when they depart. Values-based succession protects against that risk and ensures that the virtuous circle can continue in perpetuity.

At Egon’s last partners’ meeting before he retired from working full-time in 2000, he quoted Thomas Jefferson: “In matters of style, swim with the current; in matters of principle, stand like a rock.” He encouraged us to ensure that, even as new partners arrived, leadership roles shifted, and new challenges arose, we would stay true to our three core pillars of purpose. And he helped us do so by setting the precedent for how to carefully choose one’s successor.

Every three years, all Egon Zehnder partners used to vote to elect a chair, who then decided whether to split the role with a CEO. Egon was always reelected as chair and acted as well as CEO. However, a few years before he knew he wanted to retire, he chose to split the role and appointed Dan Meiland as CEO. This was a partner who had been carefully assessed and developed and was a true guardian of the firm’s purpose and values. When Egon decided to step down as chair, Dan was naturally elected to replace him. Several years later, Dan followed a very similar process to cede to his successor, John Grumbar, who in turn did the same with Damien O’Brien. While there have been some minor changes in the firm’s governance since then, all further successors until today were hired strategically many years before, later elected partners, then properly exposed to the firm’s global challenges and opportunities, and finally chosen as chairs or CEOs by the partnership with a clear focus on values.

Of course, this is a succession process unique to Egon Zehnder. But the lesson holds. Every company should plan succession in a way that ensures those in line for the top job fully live for the organization’s purpose.

More than ever before, we want to find meaning in what we do. At times when employees are becoming as skeptical as they are choosy, leaders and organizations who truly live in their purpose will always attract and retain the best talent.

Claudio Fernández-Aráoz is an adviser on talent and family businesses, a frequent lecturer at Harvard Business School, and the author of It’s Not the How or the What but the Who (Harvard Business Review Press, 2014).