Trust, people, diversity amongst pillars of a purpose-led business

Inclusive workplaces are innovative, resilient and profitable, says EY Partner

Max Loh is the Ernst & Young Managing Partner for Singapore and Brunei as well as its IPO Leader for ASEAN. 

In his capacity, he leads and manages the Singapore and Brunei business and operations, providing strategic leadership on market and people development, as well as audit and business advisory services to clients in industries such as technology, food and beverage, construction, manufacturing, trading, hospitality, finance and government.

He is currently Chairman of the Competition & Consumer Commission of Singapore; Board Member and Audit Committee Chair of Enterprise Singapore, Building & Construction Authority and SPH Media; and President of the Singapore Council of CPA Australia.

Having been invited to be a judge in the SBR International Business Awards and National Business Awards 2022, Loh sat with the Singapore Business Review to share insights on the five pillars of a purpose-led growth strategy and the important role that the right talent and mindset play in growing a business.

We have heard a lot about the need for purpose-led leadership, especially over the past year. Why is purpose important to a business?
The purpose is the raison d’etre of a business, its North Star and its reason for being. At EY, we’ve long talked about “Building a better working world” as our purpose. We believe that our focus on creating, protecting and measuring long-term value has been critical to purposeful growth, with Building a better working world as our guide. It is through this lens that we conduct audits, drive sustainability, reshape strategy, enable innovation and transformation, and help companies address the tax and regulatory requirements. It keeps us focused on developing the services and solutions that help clients deliver better outcomes for their stakeholders; investing in EY people in ways that help them acquire new skills, and giving back to the communities in which we live and work. It keeps us aligned and focused on our stakeholders’ needs every time and all the time.

As part of our purpose, we are focused on creating long-term value and helping our clients do so. In a global survey amongst 474 executives conducted by the Harvard Business Review, 90% said that purpose matters and their company is aware of its significance, yet only 46% believe it meaningfully informs their decisions. As well, for leaders who believe a purpose-led strategy aimed at long-term value creation for all stakeholders is the bedrock of a successful business, there is one thing lacking – a common set of standards to benchmark themselves. Accordingly, when helping clients on this front, we look at it from strategy to implementation to outcomes measurement. 

What are the key characteristics of a purpose-led strategy?
There are certain things that every business must focus on if they want to be both sustainable and profitable in the long term. Following discussions with a wide range of CEOs, we have identified five critical constituents that are fundamental to a purpose-led growth strategy: trust, sustainability, tech, trade, and people.

Trust is a key asset for any transaction or relationship. The importance of trust highlights that companies need to find more strategic ways to measure their performance as CEOs is under greater pressure to increase disclosure around stakeholder impact and environmental, social and governance issues. Hence, it is crucial to be robust about measuring performance against targets that are connected to the strategy. By ensuring that these targets are defined with a purpose-led strategy in mind, management can articulate the value they create for stakeholders and elevate the business above adherence to minimum regulatory compliance. It also provides the mechanism for scrutinising internal behaviours and holding the management team to account.

In terms of sustainability, companies can be a driving force in addressing global societal and environmental challenges. According to EY's 2021 CEO Imperative Study, 80% of CEOs believe it is likely “companies will take significant new steps to be responsible for the social and environmental impacts of their operations” over the next five years. Sustainability can offer companies a chance to create long-term financial, consumer, human and societal value for all stakeholders. Hence, CEOs are increasingly embracing the business case for sustainability, wherein they protect and create value by accelerating their business toward a more sustainable future. The initiatives they choose to prioritise must closely align with the purpose of their business, the context in which it operates and their ambition for competitive advantage for the long term.

Technology has experienced increased focus in line with business needs to be more agile and resilient. A majority of CEOs (68%) surveyed for the EY CEO Imperative survey are planning a major investment in data and technology over the next year. As more traditional B2B businesses are looking at B2C models, a significant investment to build the technology infrastructure will be required. For this, business leaders should carefully consider how a fully digital enterprise works; tech and people transformation needed, and look beyond efficiency by reassessing the potential social impact of adopted technologies.

New trade flows are developing on a regional basis all the time, given the evolution of globalisation, and many companies are reconfiguring their supply chains accordingly. Barriers around trade and foreign direct investments (FDI) may also encourage the development of fragmented and geographically dispersed supply chains, rather than globally integrated ones. As economies reopen and take off at different rates, companies focused on their purpose-led growth strategies will adapt both their organic and inorganic strategies to capture emerging opportunities.

Lastly, the four cornerstones of sustainable, purpose-led growth – trust, trade, technology, and sustainability – are connected by people. Businesses and markets cannot be disassociated from the individuals who are their employees, customers, partners, consumers, and other stakeholders. The best-laid strategies will come to nothing without the right talent and mindset to execute them. And the most advanced innovations, or cutting-edge technologies, can fail if they lose sight of human values.

As an advocate of diversity and inclusion, what key measures do you recommend to eliminate prejudice in the workplace?
Diversity is about differences. At EY, we think broadly about differences, which include nationality, background, education, gender, ethnicity, generation, age, working and thinking styles, religious background, sexual orientation, abilities, experiences, and technical skills. There are also differences according to geography, service line, sector and function. Inclusiveness is about leveraging these differences to achieve better business outcomes.

In today’s globalised world, it is more important than ever for organisations to create an environment where people feel that they belong whilst also celebrating and recognising unicity. It is fundamental to building an inclusive environment where all thrive and relationships and innovation flourish. It is well-documented that organisations with diverse workforces are more innovative, resilient and profitable. However, many companies face the question of how — rather than whether — to embrace diversity.

For example, the gender issue has been well discussed in Singapore but it will need more work to achieve the gender parity goals desired. The World Economic Forum’s Global Gender Gap Report 2021 revealed that in Singapore, only 69.7% of females were participating in the labour force compared with 84.2% of males. As of September 2021, the Council for Board Diversity in Singapore reported that amongst the SGX-listed companies, just 13.2% of them had women on boards. A barrier to tackling the gender parity issue is that companies do not have concrete gender parity targets and the necessary systems and technologies to measure progress. Most businesses still use superficial metrics, such as simply measuring the proportion of female employees in the company. Instead, organisations should seek to answer questions such as that below to gain more insights:

·        When and why do women leave?

·        How does the company culture support diversity and inclusion?

·        How effective have investments in talent programs been in addressing diversity and inclusion?

Whilst it can be challenging to collect, manage and interpret data on areas relating to diversity and inclusiveness – including gender parity – in a meaningful way, data analytics can help businesses to measure the effectiveness of their initiatives, providing valuable input to diversity and inclusion strategies. Data analytics tools can also be applied to identify and address the unconscious bias that may exist in talent policies, as well as forecast possible attrition patterns.

To effect change in the issues identified by such tools, the board and management need to develop and operationalise a talent strategy attuned to driving diversity and inclusion. Beyond that, the board must empower the management to define, embrace and report on diversity and inclusion as well as align these to business purpose and strategy.

Boards also need to hold management teams accountable for their performance in driving the above to sustain a critical level of transparency that exposes non-inclusive practices. To that end, boards will do well to institute a rolling dashboard of diversity metrics relating to recruitment, training, progression and pay. This can be further scaled to include analytical insights on patterns, trends and discrepancies between how male and female employees are treated in terms of progression, pay and opportunities.

Whilst metrics are useful, organisations should not be overly preoccupied with chasing diversity and inclusiveness targets, as the true value of a diverse workforce can only be unlocked after building a culture of belonging and inclusiveness. Cultural transformation and behavioural change will be disruptive and will require leaders across the organisation to set the tone at the top by building a workplace based on trust, respect and freedom of expression. As a start, board members can regularly evaluate how the CEO and other senior executives are modelling behaviours and communicating the desired culture.

As with any cultural transformation process, building an inclusive culture will be a unique journey for each organisation. Therefore, companies need to be flexible and transparent in executing their diversity and inclusion initiatives.

As a judge in the SBR International Business Awards & National Business Awards, what are the criteria you are looking for in selecting the winners?

In evaluating the companies, imperative criteria would include entrepreneurial spirit, innovative growth, purpose and long-term value, strategic and competitive intent and sustainability and resilience. This goes beyond being currently successful to being a resilient business, well-positioned for the future