A company is in business to make money. While it is refreshing to hear of the good deeds businesses do for the well-being of society, the bottom line is without achieving profitability everyone loses if a company goes under. When businesses fail, this impacts everyone because the failure ripples through the economy, as jobs are lost and the consumer loses too because there is less competition. Business closures often even have a direct effect on other businesses (i.e. a large company shuts down and the surrounding smaller businesses lose their primary customer bases). A stream of incoming revenue has to be a goal of any business in order for it to survive.
However, this doesn't mean businesses can't integrate social responsibility and still succeed. No one wants a company to fail, yet it is not uncommon to hear phrases such as "greedy corporations" and "businesses only care about profit". And perhaps a lot of the time this might be true.
But can’t there be a good balance?
What is Corporate Social Responsibility (CSR)?
There are a number of ways organizations can integrate good corporate social responsibility (sometimes referred to as "CSR"). Investopedia defines this concept as a:
"Corporate initiative to assess and take responsibility for the company's effects on the environment and impact on social welfare. The term generally applies to company efforts that go beyond what may be required by regulators or environmental protection groups." 3
While businesses do need to make money in order to survive, there is something to be said for good corporate social responsibility. In fact, there are many good reasons why businesses who recognize an awareness towards societal needs tend to thrive. Here are some ways businesses can integrate corporate social responsibility and still achieve profitability:
Conduct Business in an Ethical Fashion
Enron is forever etched upon the minds of many. If any lessons should be learned by businesses from this fiasco, it is to always be transparent and honest when it comes to financial reporting. Fudging numbers and misleading stakeholders and the general public is absolutely not the way to go.
Fair marketing practices is another ethical area needing consideration. While there are laws to protect consumers about misleading advertising and marketing, unfortunately there are businesses who do promote products that are deceptive and potentially dangerous - all solely designed with profitability in mind. Socially conscious businesses do not engage in this kind of behavior, but instead focus more on quality and achieving customer satisfaction and acting in a more altruistic fashion. As Business News Daily puts it, "One thing that may tip the scales in your favor is using your profits to do good in the world." 2
Act With the Environment in Mind
Today's lifestyles are reflecting a go-green approach and philosophy. Businesses can do their part by making strides to reduce their negative impact on the environment, leaving less of a negative footprint.
By promoting green policies that are within reason to still be able to profit, along with abiding by local and federal laws, these businesses will win the respect of the communities they reside in. Additionally, they'll achieve global respect if they achieve a reputation for being environmentally conscious and not destroying the environment or working to skirt laws in order to turn a buck.
Operate With Fair Employment Practices
Businesses that profit off injuring others aren't going to do society or themselves any good. The best way to achieve societal respect and still profit is to operate within established laws and promote an ethical organizational foundation. By operating under fair employment practices and treating employees decently, this goes a long way in promoting social awareness.
Many people hear the word "outsourcing" and cry foul, but the reality is in the global environment outsourcing has become a necessity for several reasons; economical, political, financial and even social. Companies should not forgo outsourcing if it makes feasible sense to do so, but they should be aware of the ways they do it. Operating sweat shops, child labor and other practices is definitely in bad form; if businesses want to profit and have a positive impact, this is not the way to go.
On the other hand, businesses that outsource and help other global communities build their suffering economies can turn out to be a win-win. Of course, there is something to be said for keeping things local as well. Businesses that can serve their local economies and provide jobs, as well as outsource certain processes, can often achieve a good balance.
Achieving a Good Balance
Businesses have a responsibility to anyone with a stake in the company to try and flourish, if they do not meet this objective, the business is acting irresponsibly to those who have invested them both financially and with trust. That can be viewed upon as unethical in itself. However, this doesn’t mean achieving these goals should hurt those who are external to the company either. That being the case, businesses sometimes find themselves stuck between a rock and a hard wall because they have a responsibility to stakeholders to grow and profit. If they do not take corporate social responsibility seriously, any company runs the risk of looking bad to society which may impact that coveted healthy bottom line over the long-term.
Once upon a time capitalism was viewed as "business is business" and people were more accepting of ruthless behavior by companies. However, today it is far less socially acceptable for businesses to operate with such ruthlessness because, ultimately, they will lose respect and, as a result, likely to lose the ability to prosper too.
There are many facets that equate to success in today’s world. One of the keys to success in today's business climate is to discover an effective way to balance profitability with social responsibility and reap the benefits of both worlds. Many, many businesses have successfully achieved this and have based their business plans on different themes that are socially conscious. (But is it always this way? The short video below raises some interesting points about CSR).
Ultimately, serving with society's well-being in mind along with providing a steady income can be profitable if done strategically and ethically. Under these conditions, everyone wins.