The McKinsey Group conducted a global survey of businesses that reported that consumers believe businesses should help society more, but only one in five of the participating businesses feel they actually meet those expectations. Those few companies have found ways to meet their community’s needs in a way that fits their corporate philosophy, often by collaborating with other businesses. Organizations must look at their social goals as more than good public relations, and realize their intrinsic value in maintaining the viability of their business.
In reviewing the classic, conventional roles of business as it operates within society, you can interpret three basic functions as social goals already, based on securing and improving a community’s quality of life. 1. Employment: provide occupations for people to produce goods and services the community needs more efficiently than any one person could do alone, plus supply income for people to procure what they need. 2. Taxes: grant revenue for government to direct and maintain defense, infrastructure and social services on a scale no individual business could provide. 3. Wealth creation: done responsibly, people can invest in business to ensure a relatively stable future and enjoy dividend income from business profits.
People recognize the interplay between businesses and society, how each side impacts the other: business consumes capital and produces goods and services for a community; the community provides capital through labor and materials and consumes the finished product. Customs and rules regulate the affair. Until recently, most of society has focused on two facets: safety of employees on the job and consumers as they use products, and the environment as resources get used up and waste gets dumped out. Secondary aspects have been philanthropic efforts and support of community volunteer activities by employees.
Launched in the Seattle area in the late 1980s, the community indicators movement helps business and communities dialog to answer questions of general direction, current quality of life and long-term viability. A community indicator is defined as any quantifiable metric to represent the condition of a community. Examples include percent of the population in poverty, graduation rates, income disparity between top-tier and bottom-tier and home ownership and affordability. Organizations can then link community indicators to business practices, such as executive compensation relative to general labor wages, personal days or family leave, support of volunteer efforts, health benefits or labor diversity or discrimination.
A newer trend in business today is social businesses, companies created primarily for social causes, such as micro-lending ventures, such as Muhammad Yunus’ Grameen Bank. These ventures target developing regions with the express purpose of alleviating poverty. Muhammad Yunus himself defines a social business as ‘a non-loss, non-dividend company with a social objective.’ While it acts as a traditional business to earn money and cover costs, the profits help the business grow, and does not revert back to the owner as surplus. The business exists to serve those in need and its customers, not for the owners.
Double Bottom Line
More businesses today look to serve a double bottom line. Entrepreneurs and investors both have begun searching for ways to find essentially self-sufficient philanthropies, rather than solely for-profit businesses who give a portion of the profits, ad-hoc, to charity. This new breed wants to exploit the speed and adaptability of free enterprise while recognize the symbiotic relationship between a single business and the social context it operates within, emphasizing reciprocity and raising the standard of living over taking resources and concentrating wealth.
- Prayer image by Alexey Stiop from Fotolia.com