What Does it Mean to be a Good Company?
By Bob Chrismas
Historically, being a “good” company meant only to turn a profit for shareholders. I have written in previous articles about good corporate citizenship and social responsibility. Here I explore some ideas about the changing social landscape and how companies can adapt to stay relevant and profitable.
Corporations were created for big business (originally the railroads) to gather many investors’ resources together under one legal entity. In law, a corporation is a person. Yet, you cannot put a corporation in jail for polluting the environment or exploiting children. So, the corporation created a level of protection for directors (managers) who were compelled by law to only seek profit, even if the social good was often not so well protected. Indeed, doing anything other than seeking profit for the shareholders was technically illegal.
As social awareness among consumers has grown, the cheapest way of providing services and making products does not necessarily equate to greater profit. Research has shown that people will often pay more and go to great trouble to do business with a socially responsible company. Many people will pay more for a pair of shoes if they know that the company has committed to providing a pair of shoes to a child in need in a developing country for every pair that you buy for yourself. Many people will go out of their way to patronize a company committed to leaving less environmental footprint.
Forty-nine percent of Americans have said, in some research, that it is more important for a company to “make the world a better place” than “make money for its shareholders.” One 2019 corporate social responsibility survey found that 77 per cent of consumers surveyed reported they are “motivated to purchase from companies committed to making the world better.” Many will prefer to use a social enterprise business that employs people who would otherwise have trouble finding employment.
While many measures that promote environmental sustainability and social responsibility add cost to products and services, it can be an economic paradox. Saving money can cost a company profits in the long run. Inversely spending money on socially responsible initiatives can drive up a company’s cost and result in increased profit. Why? Because people are willing to pay more for some services and products.
The key seems to be in branding. People have to know that a company uses only products known to be manufactured by adults and not exploited children offshore. People need to understand that a company has committed to leaving a zero carbon imprint for them to take their business there. A high percentage of Fortune 500 companies have come to this realization and have capitalized on it.
Some of the most successful and profitable properties have remained so by aligning with changing societal values. The social consciences around many companies are no longer content to do well. Today, many businesses also make it their mission to do good. I would argue that doing good pushes some companies beyond being profitable into the category of being supported by their customers, their employees, their boards and directors. Even if being socially responsible is profit neutral, I would argue it is worth it. People will be happier working there. Consumers will feel more loyal to the service/product. And it is bound to be more profitable in the long run.
Many people nowadays are concerned with the community. Companies, like carwashes and convenience stores, have great opportunities to put their good citizenship on display. In my last article, I talked about convenience stores being safe havens for people in a crisis. There are many ways this could be achieved, depending on your store. For example, at the Women in Carwash Conference a few months ago, I talked about the findings of my doctoral research into sex trafficking and sexual exploitation. One of my findings, which I highlighted, was that trafficked people are often among us and not recognized. Traffickers are often nearby and restricting a child’s ability to escape. Brenda Johnstone astutely suggested, why not put a message box in the washroom in these places, so a person could at least leave a note asking for help while in the safety of a secure bathroom? We are only limited by our imagination in the ways we can be good citizens.
The opportunities to be socially responsible are endless. It could mean adding to your mission statement to be environmentally friendly, carbon-neutral, and not employing exploited labour. Specific things that could be easily bragged about might include shutting the lights and computers off when the business is closed, purchasing goods from socially responsible distributors, and the list goes on. Simply putting up signage indicating this mission, and advertising the charitable donations you’ve made, could begin to build a brand to take your company or store to the next level.
Bob Chrismas, Ph. D. is president of Bob Chrismas Consulting Inc. He draws on over 35 years of law enforcement experience, writing on justice issues.
Visit Bob at https://bchrismas.com