Why every business owner has a moral responsibility to be stable and successful
This is a guest post by Obi Orgnot, the CEO of OrgNot Ltd. His social enterprise works through social responsibility to reduce poverty in communities by strengthening the local businesses.
Obi believes there is not much that can’t be achieved if local businesses are helped to be profitable and ethical.
“Send just $5 a month and you can put a roof over little Jimmy’s head…”
Classic charity for a lot of business owners is a simple transaction, a tax write off and a public relations exercise. Giving a large sum is simply a gesture that makes them look good and feel better about themselves. However when it comes to actually putting in some effort, most CEOs will look the other way: it’s rare to see a company actively involved in the local (or wider) community, or working behind the scenes to improve society.
If the goal were to do the maximum good there would be a lot more Bill & Melinda Gates Foundations.
The fact is many businesses still give with one hand and rudely snatch with the other.
The Institute of Policy studies released a report that found that the 50 companies that laid off the most workers last year did so amidst profit increases above the market average. This isn’t a huge shock to the more jaded among us.
CEOs such as Fred Hassan of Schering-Plough earned up to an extra 42% than the average CEO, picking up almost 50 million dollars last year. This included a 33 million dollar bonus for overseeing a merger that guaranteed the loss of 16,000 jobs.
Add to that SEC fines for falsifying charitable contributions and it is clear that a lot of big firms have lost touch with their social responsibility in the quest for perpetual growth.
So what’s the answer?
As cathartic as it is to launch into a populist rant about executive excess, the fact remains that it wouldn’t do a jot of good. That’s because you can’t force cultural change, at least not legally in Western economies.
Is sloth better than greed?
It’s easy to get drawn into the sabre rattling when these large companies do things that rub us the wrong way, but is a small or medium business owner who is negligent to the health of his business any more pious?
Smaller businesses employ the majority of the population, but for a few exceptions, no matter where you are in the world. This means that poor business practices that destabilize smaller businesses put far more jobs at risk when taken as a whole.
If instead of demonizing corporate executives we concentrated on creating a grass-roots business culture that placed a premium, not just on treating employees respectfully, but also on making sure the business that these people rely on is stable and set for growth. If you find that your business is unstable, then something must be done about it immediately.
Is Your Business Harming the Community?
Free market principles that guide western economies will certainly stop short of requiring businesses to submit to regular checks in the way that we must safety check our cars. But just as any prudent motorist checks the oil and tires before setting off on a long journey, business owners ought to give more attention to measuring and tracking key business metrics.
If you’re running a business it’s important to realize that your actions have a powerful effect on your local community, you can either be a force for good or a destabilizing element.
Simple, but not Easy Solutions
Take the time to assess your business: to extend the analogy, if you failed to check that your tires had tread and your brakes were in good order and these faults resulted in a fatal accident there would be very little sympathy for your poor broken car and you’ll always know that the devastation could have been averted with a little prudence.
We are often detached to the societal effects of our business actions, but taking the time to understand the effects of unemployment on a society (e.g. Flint, Michigan) can help us do the right thing for our community, and we can do it without having to make a big show of charity with empty donations.
Your cash donations will never have as much impact as giving someone a livelihood and is one form of social responsibility.