Why Your Business’s Purpose Should Be More Than Just Making Money

Many companies focus solely on the intrinsic motivation to make a profit to expand operations and satisfy shareholders. However, we are now witnessing a shift towards inherent cause for employees and companies. They were once united by the commitment they made to their customers and their businesses, but now they are united in their desire to benefit society. It is becoming more common for business models to embrace social responsibility to raise questions about the financial viability of putting resources and employees into doing good worldwide. However, others may argue that these efforts should be left to individuals and not businesses.

Consumers expect more from the businesses they purchase to be good for the environment and society. This model is proving to be a great option for firms, both financially and socially.

 

Social responsibility and business: The past

Henry Ford said it well: “A business that only makes money is a bad business.” He was firm in his belief in the right to pay workers a decent wage and in hiring people with disabilities and people of color for high-paying jobs, even though this was not a common practice. We can confidently say that Ford lived up to his promise. Edwin Francis Gay was a contemporary of Ford and the first dean at Harvard Business School. He stated the same view, saying that business was about “making a decent profit, decently.”

This belief was unique for business leaders at the beginning of the 20th Century. The majority of owners of large businesses at that time, and for decades after that, held views closer to Milton Friedman’s: “The business is business.” He meant that everything other than making a profit was not their business.

“We have become accustomed to treating each other as a means to our vested interest, thus threatening the essential humanitarian value of mutual ethics and love. Profit becomes a mirage that promises answers and convinces us that it will fulfill our depravity in worth. In a world increasingly gripped by existentialist dilemmas, we must as humans try to rethink our individual, collective, and shared ends and find each other’s way back.

Promising Employees

However, the 21st Century has seen a shift in how companies see their roles in society. It is no longer acceptable to focus on money alone. Because customers today are more loyal to businesses that do good for the community. These businesses attract the best and most promising employees. As a result, companies realize the importance of doing more.

India was the first country to require corporate social responsibility in 2013. In 2013, the European Union demanded that all companies submit annual reports detailing their environmental and social impacts. Although the United States does not require such reporting requirements, businesses in this country are willing and eager to share their contributions to sustainability and a stable community.

In 2019, 181 CEOs from some of the most successful companies globally, such as Apple, Amazon, and Citigroup, signed a document declaring that they will work to benefit all stakeholders, customers, employees, and the society that provides them with their wealth.

How to approach social responsibility within your business

Companies’ need to see themselves as part of society has been shifted sharper focus by the recent COVID-19 epidemic. It has accelerated what was already a tsunami of socially-oriented change. As a result, businesses realize that the key to long-term success and sustainability is making humanity and their purpose central to their operations.

Start with leadership

Research has shown that employees’ engagement and energy are key factors in a company’s ability to generate profit. Therefore, it is a false economy to focus on revenue and not invest in a productive and happy work environment. Leaders looking to improve team member engagement need to understand that it is their responsibility to set the tone for the company’s energy.

A study of 520 companies in 17 countries revealed that employees are less willing to make sacrifices for their profits if their CEO is solely focused on maximizing their profit. Employees who believe their work serves a greater purpose than their paycheck are more likely to be happy to give 100% to their company and its customers.

Despite the cultural building efforts involved, leaders who view profit as an outcome and not a goal can simultaneously increase revenue and team member satisfaction. It is a win-win situation that leads to a better quality of living for all.

A shared passion for social causes enhances profitability

American Standard is a good example of such a purpose-driven outcome. American Standard, a manufacturer of toilets and plumbing-related products, launched Flush for Good in collaboration with the Bill & Melinda Gates Foundation. The campaign was designed to prevent diseases and save lives by donating sanitation equipment for every Champion toilet sold.

Even though the company produces a modest product, the positive impact that the initiative had on employees and the poor worldwide was remarkable. American Standard saw its earnings increase fourfold while simultaneously improving team member engagement and optimism.

Employees gave the CEO a standing ovation when the initiative was announced at an all-hands meeting. This kind of purpose makes great companies great and great places to work.

Although your company might make a difference in the world, it may not be able to do so with the same product or service that American Standard did. However, a team united by a shared commitment to doing right can create a “culture of purpose” that enriches the customer experience and enhances the bottom line even if the common goal is making people’s lives better.

The customer of today is socially aware and expects respect

Keep in mind that your company’s social contribution can be aligned with profitability. Customers will be passionate about supporting companies with a clear social mission.

Numerous studies have shown that consumers today are willing to pay 50% more for sustainable goods. In addition, a large majority of millennials are open to choosing brands that support a social cause or the environment.

This trend is complemented by the fact that customers, especially millennials, are raising standards for service and care from businesses they patronize. Customers today are more concerned about being treated as human beings than being revenue targets. They can tell when they are being treated in a way that is not intuitively suited for them.

Companies that provide a better customer experience earn 5.7x more than businesses that don’t. Yet another proof that profit-focused companies are not financially profitable. Your customers are your lifeline. If you don’t listen to them, your profits could disappear.

Your company’s future depends on your corporate social responsibility

Companies benefit from a strong social legacy that employees can rally behind. It is evident in all evidence. Companies benefit from retaining the most skilled and motivated employees, strengthening their communities, and generating revenue. So how can your company do good?

Set up task forces to help you identify the most important causes in your area of interest. Are you ending poverty?

Your organization’s ability to help the most important cause depends on what kind of product or services you offer.

Companies can create many types of programs to provide employees with a sense of purpose and satisfaction from helping others. For example, to develop a culture of purpose, happiness, and belonging, philanthropic programs like annual donation drives.

Establish a framework to promote social responsibility

A business leader must provide a framework to its workforce for taking part in environmental and social initiatives. They should also celebrate their employees’ accomplishments. It will make your organization more resilient over the long term.

Disclaimer. The opinions and views expressed in this article are the authors Andrew Napolitano.

Exit mobile version