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This year’s Richard Beckhard Memorial Prize goes to the spring 2014 MIT SMR article by Julian Birkinshaw, Nicolai J. Foss, and Siegwart Lindenberg, entitled “Combining Purpose With Profits.”
In this article, the authors examine a familiar and important question for managers: How can the tension between purpose and profits be best managed? The authors explore the kinds of structures companies need to put in place to provide clarity and direction for employees while also serving to both motivate individuals and draw people together in a common pursuit.
As the judges for the prize pointed out, the tension between purpose and profit is well-known, and many companies claiming to have “pro-social goals” have difficulty backing up their claims. However, the judges were impressed with the examples the authors presented of companies that have actually been able to balance purpose and profit. Some were familiar (such as Whole Foods Market and Tata Group), but others were less so (such as the Swedish bank Svenska Handelsbanken and HCL Technologies, an India-based IT-services company).
The pro-social goals the companies emphasize — for example, putting employees first or investing in local communities — are hardly elaborate or surprising. What is important is that companies put systems in place to meet these goals. For instance, at Tata, where the pro-social goal is “to improve the quality of life in the communities we serve,” the supporting systems include charitable trusts that own the majority of the equity capital of the Tata Sons holding company. Pro-social goals require what the authors call a “counterweight,” such as an employee council or a measuring system, to ensure that the pro-social goals continue to have influence.
The judges thought the article was well aligned with the beliefs of Richard Beckhard, who insisted that what truly motivates employees is the sense that what they do matters and serves a purpose that goes beyond organizational profitability or personal gain. As the judges observed, “What engages people is the broader, value-centered question of why we do what we do — precisely what the three authors of this year’s winning article make evident.”
This year’s panel of judges consisted of distinguished members of the MIT Sloan School faculty: Schussel Family Professor and chairman of the MIT Sloan Management Review managing board Erik Brynjolfsson, retired senior lecturer Cyrus Gibson, and Erwin H. Schell Professor of Management John Van Maanen.