Socially Responsible Businesses

Rubber Hits the Road Moments

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In a recent survey, 74% of business executives said that good corporate citizenship helped to increase profits, with 25% rating it as very important. Offered as evidence of an encouraging shift in outlook, these results probably overstate the “good news” they purport to offer since some number of respondents undoubtedly said yes, not because they’re fully on board, but instead because it’s the politically correct answer.

But my concern with the survey goes deeper. If we hope to create better lives and a better world, business – the driving force in our culture – the sector that funds almost everything else – needs to be as serious about its social bottom line as it is about its financial one. 

Notice, however, that this supposedly hopeful survey only deals with the universe of social initiatives that are “win/wins;” that also increase profitability. Doing so, it implicitly endorses an outlook – premised on the absence of any difficult trade-offs – that is a major roadblock standing in the way of a serious and sustained commitment to good citizenship in the business sector.

Saying this in no way means that I am against win/win strategies. They are great outcomes when we can pull them off. But there are many situations in which it just isn’t possible. As a result, if a business’ commitment to good corporate citizenship is limited to these scenarios, a meaningful shift toward social responsibility will never happen. 

So as I see it, the crucial unasked question that this survey studiously avoids is this: How many of the executives who said “yes” to this win/win question would continue to say yes if good corporate citizenship’s impact on profitability was neutral or, perhaps, mildly but manageably negative?

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Note, importantly, that attending to social impact with the same seriousness of purpose as profitability is an entirely viable business strategy. Indeed, there are a good number of situations in which social enlightened initiatives really are win/wins; leading, for example, to a highly motivated workforce and fiercely loyal customers. In addition, in a decent number of cases, social investments that have an immediate negative impact on the bottom-line will predictably lead to improved financial performance over a longer term. 

But these happy, win/win outcomes are not the full story. If you’re running a company fully committed to social responsibility, there will inevitably, and regularly be “rubber hits the road” moments when you’ll need to make policy choices whose impact on profitability is negative. Indeed, how could it be otherwise? It will never be the case that every environmentally sound decision or serious investment in a business’ communities will be “win/wins.” 

Understanding this, the perspective that needs to be embraced by businesses truly committed to their social bottom line is this: Yes, be very focused on the financial bottom-line since, after all, you are running a business. Make it Priority 1A, vitally important but, in those “rubber hits the road moments,” clearly subordinate to Priority 1: Choices that are socially responsible.

Note, crucially, that this not an exercise in self-immolation. My reasonably optimistic estimate is that 80-90% of more socially enlightened choices will work out in win/win ways. In addition, consistent with financial viability, everything can’t be implemented at once. Instead, the measure of success should be the focus, persistence, guts, and creativity with which a business moves toward its goal of increased social responsibility. 

But in that 10-20% zone, you need to be clearheaded and decisive, leaning hard toward making the socially responsible choice. Otherwise, the centrifugal pull of mainstream business’ single-minded focus on profit will, inexorably, pull you back to its norm, choice by “unfortunate but necessary” choice: Overpromising to make a much-needed sale; overlooking the indecencies of a key employee; allowing (in the name of efficiency) authoritarian habits to erode collegiality and shared decision-making; cutting funds allocated to community projects when profits fall below expectations for a couple of quarters.

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So why, you may ask, should business leaders commit to elevating social responsibility to a level co-equal in importance with profitability? 

Because the world in which we live is very different than the world that existed just 40 years ago. In these years, our size and interconnectedness have grown at warp speed – with no sign of a let up. And with that, business has assumed a position of outsized importance and influence. 

Given these realities, businesspeople can longer pursue their private ambitions and just let the world take care of itself. While never neglecting their responsibility to the businesses they lead, they need to understand that they are people first and, in addition, people whose collective choices are having an enormous, future defining influence.

Embracing this perspective, they need to cultivate an ever deeper understanding of the world in which they want to live, share with their fellow humans, and bequeath to future generations. And then, rejecting the cynical and false belief that “success” and a full-throttled commitment to social responsibility are incompatible, they need to operationalize their best and highest values into all that they do – even, and especially, at work. 

They and people they lead deserve no less.

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