How So­cial Pur­pose Makes Good Busi­ness Sense

Con­sumers and em­ploy­ees pre­fer cor­po­ra­tions that cre­ate so­cial good

BC Business Magazine - - United Way Of The Lower Mainland - In­ter­ested in learn­ing more? Con­tact so­cialpur­pose@uwlm.ca

The key to suc­cess for the mod­ern busi­ness is about more than dol­lars and cents; it’s about defin­ing and adopt­ing a so­cial pur­pose that tran­scends the bot­tom line. Some of the most suc­cess­ful and pro­gres­sive Lower Main­land en­ter­prises and or­ga­ni­za­tions such as Van City Credit Union and Moun­tain Equip­ment Co-op have adopted so­cial pur­poses as a key pil­lar of their busi­ness strate­gies.

A cou­ple of years ago United Way of the Lower Main­land ( UWLM) re­al­ized that it could har­ness its vast net­work of re­la­tion­ships with so­cial ser­vice agen­cies, cor­po­ra­tions, labour and gov­ern­ment to help make the shift from pure profit fo­cus to­ward a greater over­ar­ch­ing so­cial pur­pose that not only helps build stronger, health­ier com­mu­ni­ties but also builds bet­ter busi­nesses.

“A lot of com­pa­nies have iden­ti­fied so­cial pur­pose as a goal but don’t know how to get there. We are giv­ing them the tools and help them make that tran­si­tion,” says Mary Ellen Schaaf­sma, UWLM’S di­rec­tor of so­cial in­no­va­tion and re­search, who has been lead­ing out­reach ef­forts with Lower Main­land busi­nesses and or­ga­ni­za­tions want­ing to make this shift.

These ef­forts be­gan with a work­shop in 2016 that brought to­gether a wide spec­trum of busi­ness lead­ers from the con­struc­tion, fi­nan­cial, re­tail and other sec­tors.

“By noon, ev­ery­one was say­ing, yes, so­cial pur­pose is the next big fo­cus for busi­ness,” Schaaf­sma says.

The next step was to build the busi­ness case. Why adopt so­cial pur­pose today when the profit mo­tive and bot­tom line have his­tor­i­cally been the guid­ing prin­ci­ples for busi­ness? Over the past year UWLM dove into the topic, work­ing with Strand­berg Con­sult­ing. The re­sult is the work­ing doc­u­ment So­cial Pur­pose Busi­ness Case — “By fu­ture-proof­ing our com­mu­ni­ties, we’re fu­ture-proof­ing our busi­ness.”

The big pic­ture take­away is that com­pa­nies fo­cused on solv­ing so­ci­etal prob­lems are per­form­ing well in terms of mar­ket growth, meet­ing chang­ing cus­tomer needs and in­spir­ing their em­ploy­ees. In other words, in today’s dy­namic busi­ness world, hav­ing a so­cial con­science also makes sense for the bot­tom line. When Schaaf­sma drilled deeper into the topic, she dis­cov- ered that firms and or­ga­ni­za­tions that em­brace so­cial pur­pose as a guid­ing phi­los­o­phy typ­i­cally re­al­ize six key ben­e­fits. First, a com­pany with so­cial pur­pose strength­ens its cus­tomer base: con­sumers in­creas­ingly want more value for their dol­lar than sim­ply the ac­qui­si­tion of prod­ucts and ser­vices and they favour com­pa­nies that make a pos­i­tive so­cial and en­vi­ron­men­tal im­pact.

In­creased em­ployee en­gage­ment is an­other ben­e­fit. Put sim­ply, busi­nesses with so­cial pur­pose at­tract tal­ent: em­ploy­ees across the age spec­trum are view­ing so­cial pur­pose at the work­place as be­ing on par with fi­nan­cial re­mu­ner­a­tion and other tra­di­tional mea­sures of job sat­is­fac­tion. In re­cent years some of the world’s largest com­pa­nies have blazed a trail in so­cial pur­pose. For ex­am­ple, in 2009 Unilever, a mas­sive transna­tional cor­po­ra­tion that pro­duces food, bev­er­age, clean­ing agents and per­sonal-care prod­ucts, shifted course when it adopted its Sus­tain­able Liv­ing Plan: em­ployee en­gage­ment rose from the low 50s to the high 80s on a scale of 100.

A ful­filled em­ployee—one who feels they are help­ing ad­dress so­ci­etal is­sues—tends to bring more to the of­fice or shop floor in terms of pro­duc­tiv­ity and cre­ativ­ity.

“Many em­ploy­ees—and not just mil­len­ni­als—want more than just a pay­cheque,” Schaaf­sma says.

Re­la­tion­ships with stake­hold­ers also can be en­hanced through so­cial pur­pose, cre­at­ing ad­vo­cates for a busi­ness or brand, gen­er­at­ing loy­alty and fos­ter­ing new part­ner­ship op­por­tu­ni­ties. So­cial pur­pose also builds so­cial cap­i­tal. Com­mu­ni­ties with strong so­cial bonds are health­ier and com­pa­nies that con­trib­ute to com­mu­nity health also cre­ate “a strong rip­ple ef­fect for this busi­ness,” Schaaf­sma says.

Then there’s en­hanced fi­nan­cial per­for­mance. A 2015 study by the Har­vard Busi­ness Re­view demon­strated that over a three-year pe­riod 42 per cent of non-pur­pose led com­pa­nies showed a drop in rev­enue ver­sus 58 per cent of pur­pose-led com­pa­nies that showed pos­i­tive growth. And along with im­proved fi­nan­cial per­for­mance, com­pa­nies that build the trust that in­evitably flows from a cor­po­rate cul­ture grounded in so­cial pur­pose en­joy eas­ier ac­cess and of­ten lower costs of cap­i­tal.

“That was sur­pris­ing me but we are see­ing more and more in­vestors look­ing for com­pa­nies that em­body so­cial pur­pose,” Schaaf­sma says.

An­other less ob­vi­ous ben­e­fit of so­cial pur­pose is its ten­dency to in­spire in­no­va­tion. As UWLM ar­tic­u­lates in its busi­ness case: “So­cial pur­pose sets the pa­ram­e­ters on how a com­pany wishes to op­er­ate and grow, which en­cour­ages staff to be in­no­va­tive and think out­side the box to re­al­ize those broader aims.”

But how does a com­pany get from A to B, from a phi­los­o­phy fo­cused on profit and share­holder re­turn to one of so­cial pur­pose that not only builds a stronger com­pany, but also bet­ter en­gages em­ploy­ees, the com­mu­nity, s take­hold­ers and part­ners in ad­dress­ing so­ci­ety’s so­cial and en­vi­ron­men­tal chal­lenges?

It starts with de­cid­ing to make a cor­po­rate shift fol­lowed by education and train­ing across the com­pany and iden­ti­fy­ing what your so­cial pur­pose is. “Mak­ing this shift doesn’t hap­pen overnight. It takes lead­er­ship, com­mit­ment and sup­port.” Last June, UWLM signed a mem­o­ran­dum of un­der­stand­ing with the City of Van­cou­ver that is aimed at en­gag­ing lo­cal gov­ern­ments to mo­bi­lize busi­nesses to em­brace so­cial pur­pose within their ju­ris­dic­tions.

“As the City of Van­cou­ver grows and at­tracts more busi­ness—in­clud­ing head of­fices and star­tups, we strive to evolve and strate­gize to em­bed so­cial pur­pose from the start. We are work­ing to build in a sense of re­spon­si­bil­ity and work to­ward build­ing re­silient com­mu­ni­ties. If a com­mu­nity is thriv­ing, we all thrive,” said Sadhu John­ston, city man­ager, City of Van­cou­ver.

Schaaf­sma is ex­cited about the role UWLM is play­ing in shift­ing busi­nesses to­ward so­cial pur­pose, and sees the po­ten­tial for new so­lu­tions to so­cial is­sues that have evaded an­swers so far.

“And this isn’t just al­tru­ism, it’s also good for busi­ness,” Schaaf­sma says.

Mary Ellen Schaaf­sma, United Way Lower Main­land’s di­rec­tor of so­cial in­no­va­tion and re­search (far left), leads out­reach ef­forts with busi­nesses and or­ga­ni­za­tions want­ing to shift to­ward a greater so­cial pur­pose

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