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Why Your Business’s Purpose Should Extend Beyond Profit
Most companies focus on making a profit to expand and satisfy shareholders. However, there is a shift towards intrinsic motivation for businesses and employees alike. Instead of solely valuing financial gain, companies now recognize the importance of being valuable to society.
The rise of socially responsible business models raises concerns about the financial sustainability of dedicating resources to doing good. Some argue that such efforts should be left to individuals, not businesses.
Nevertheless, consumers expect businesses to benefit society and the planet. Embracing this model has proven to have numerous advantages, including financial benefits.
The History of Social Responsibility in Business
Henry Ford believed that a business focused solely on making money is a poor business. By paying workers fair wages and employing women, people of color, and individuals with disabilities when it was uncommon, he helped create the American middle class. Other business leaders, like Harvard Business School dean Edwin Francis Gay, shared a similar belief that businesses should make a decent profit.
At the beginning of the 20th century, this was an uncommon perspective. Many business owners, including economist Milton Friedman, believed that the business of business is solely business, with no responsibility beyond making a profit.
In the 21st century, however, there has been a significant shift in the way companies view their role in society. Focusing solely on making money is now considered detrimental to business. Customers now show loyalty to companies that contribute positively to society, attracting talented employees. Businesses are realizing the value of doing more.
In 2013, India was the first country to require corporate social responsibility, and the European Union began demanding annual reports on social and environmental impacts. While no such requirements exist in the United States, businesses there are eager to be transparent about their contributions to sustainability and society.
Additionally, in 2019, 181 CEOs of some of the world’s wealthiest companies, including Apple, Amazon, and Citigroup, signed a document affirming their commitment to benefiting not only shareholders but also customers, employees, and society as a whole.
How to Approach Social Responsibility in Business
The recent COVID-19 pandemic has highlighted the need for companies to view themselves as participants in society. Businesses are realizing that prioritizing humanity and purpose leads to long-term profitability and longevity.
Begin with leadership
Research shows that a company’s success depends on the energy and engagement of its employees. Leaders who focus solely on maximizing profits see less dedication from employees. On the other hand, employees who feel their work has a deeper purpose give their full effort to the company.
Leaders who frame profit as an outcome, rather than the primary goal, see increases in revenue and employee satisfaction. This win-win scenario leads to a better quality of life for everyone.
A shared passion for social good boosts profitability
American Standard, a manufacturer of plumbing-related products, partnered with the Bill & Melinda Gates Foundation in 2013 for the Flush for Good campaign. For every Champion brand toilet sold, the company donated sanitation equipment to stop the spread of disease in developing countries. This purpose-driven initiative increased earnings, employee engagement, and optimism.
While not every company can change the world like American Standard did, having a team committed to doing the right thing creates a culture of purpose. This benefits the employee experience, customer experience, and the company’s bottom line.
Today’s customer is socially conscious and expects respect
Customers value companies with a clearly communicated social mission. Numerous studies show that consumers are willing to pay higher prices for sustainable goods, and millennials prioritize brands associated with social or environmental causes. Customers also expect superior service and care from businesses, so prioritizing profit over their needs could harm a business’s success.
Corporate social responsibility is important for your company’s future
Creating a social legacy that employees rally around benefits all aspects of a business. Retaining talented employees, earning customer loyalty, strengthening communities, and generating revenue are all outcomes of prioritizing social responsibility.
If your business does not have a designated cause, involving employees in the decision-making process can be beneficial. Task forces can identify where the company’s efforts are most needed, whether it be ending poverty, fighting racism, or protecting the environment.
Companies can create programs like annual donation drives, volunteer initiatives, and product donations to foster a culture of purpose, happiness, and belonging.
Develop a framework for social responsibility
To make doing good a norm, business leaders should provide employees with a framework for participating in social and environmental initiatives. By consistently celebrating employees’ achievements, businesses can become stronger in the long run.
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