Profit Vs. Company Social Responsibility Conflicts
As a business owner or manager, your responsibilities used to be fairly simple. Earning a profit for your business, you and any other owners was your primary responsibility. In the early 21st century, however, you must commonly accept responsibilities of other stakeholder groups if you operate a business with a public presence that relies on customer and community support.
Businesses large and small have typically considered maximizing owner or shareholder profits their singular focus. At the turn of the century, more emphasis was placed on social responsibilities in business. Major corporate scandals, such as the accounting fraud that led to Enron's infamous bankruptcy in 2001, make consumer watch groups more focused on demanding business accountability. While bottom line impact on assuming these responsibilities is hard to measure, businesses in 2012 have obliged in most cases to avoid backlash and to keep up with competitive standards.
Nonprofit responsibilities businesses normally take on include social and environmental standards. From a social perspective, customers, communities, business suppliers and partners and employees are all stakeholder groups that hold companies to a higher standard. Providing fair and honest marketing and service to customers, actively participating in communities and philanthropy programs, meeting ethical standards in supplier and partner interactions and treating employees as a core asset free from discrimination are all socially responsible activities.
Simultaneously, environmental watch groups and government regulators have ramped up pressure on businesses to operate in a green-friendly manner. This includes maintaining strict environmental preservation policies such as replacing trees used in manufacturing, making products that don't harm the environment, establishing employee and customer recycling programs and reusing materials as much as possible. In the early stages of the green movement, your business could promote its responsibility through proactive marketing. Now, if you fail to meet public standards, you face negative publicity and customer ridicule.
Some business owners view social responsibility as a necessary evil. Detractors point to the expense of keeping up with expectations and the intangible effects on bottom line results. An August 2010 NewsObserver.com report noted that while profit metrics are challenging with social responsibility initiatives, research supports the fact that customers prefer to buy from and employees prefer to work for socially responsible companies if given the choice. At a minimum, taking on social and environmental responsibilities gives you an advantageous position with these core stakeholder groups.