Business Profitability & Social Responsibility

All of us understand that the primary motive of every business is to generate profits & then strive to maximize the profits in the interest of all the stakeholders involved.

The business owners, over the period, therefore, tend to imbibe a ‘Profitability Mindset’. However, there is a need to change the mindset from SP i.e. Simply Profitability to SRP i.e. Socially Responsible Profitability.

Like individuals, businesses also live & operate in the communities & societies. When we utilize the resources of the society for our convenience & benefits, we also have an obligation towards society. To fulfill that obligation towards society is what is termed as being socially responsible. And this term is equally applicable to all the people including individuals, employees as well as the business owners.

Society expects businesses to operate within certain social norms. The businesses are expected to conform to the local laws & follow ethical practices while offering quality goods & services to the consumers. The business, therefore, has to do much more than this to deserve to be recognized as ‘socially responsible’.

The goods & services were earlier promoted on a pedestal of ‘functional benefits’. Later, marketers heralded the shift to ‘emotional benefits’. With further evolution of society, smart marketers have been quick to redirect this promotion from ‘emotional benefits’ to ‘social benefits’. Nevertheless, business as a whole has a long way to go in that direction. Businesses need to carefully nurture a mindset of Socially Responsible Profitability.

It is, therefore, imperative for a business to operate in a manner that its own goal of making profits does in no way harm the welfare of the society, rather it needs to be oriented towards boosting up the welfare of the society.

The moment we talk of socially responsible profitability, businessmen begin to shudder that it would involve expenditure & that would affect profitability. But mind you, once the mindset tunes in to SRP, the business acumen would always find ways to be socially responsible without losing on the profits.

On the other hand, in the changing social scenario the tougher poser would be whether business can continue & sustain without being socially responsible?

Those who spend on brand promotion can always re-allocate their budgets to promote their brands through social welfare activities. Those who operate on a little lower scale can still find ways to be responsive to social wellness through such activities which do not entail much expenditure.

Business owners, in addition to being internally responsible for watching the interest of stakeholders & employees, also need to take responsibility to develop a culture down the line so that the whole organization transforms to become socially responsible.

The enterprise can begin by focusing on seemingly trivial activities, like checking wastage & reducing consumption of water, electric power, fuel and other useful resources to contribute to lowering water & carbon footprints. Internal campaigns can be carried out to reduce garbage & waste generation & promote use of eco friendly materials to lessen the burden of waste disposal on the society. Such activities would, in fact, contribute to improving the profits. Organizations can also pay attention to inclusiveness for a greater benefit to the society.             

Being Socially Responsible means working towards solving the problems of the society and helping to raise the level of happiness of the people. We must realize and accept that given the proportions of geographical, cultural & population size, it would be grossly unwise to depend solely on the State for changing the happiness quotient of the society. Since businesses are deemed to have bigger resources than individuals, the people expect businesses too to work for greater social welfare.

Budgets permitting, businesses can take up many other activities like beautification of surroundings, environment protection & conservation, imparting education & awareness to the less privileged, improving employability skills, promoting self –employability, improving quality of manpower, strengthening social & cultural values; popularizing sports & fitness activities; improving hygiene & sanitation, bringing medical facilities to the doorsteps of those who do not have enough resources to access good medical facilities etc.. By doing so, the business owners, in fact, would be making an investment for the future to reap the benefits of availability of a huge reservoir of healthy, talented & efficient manpower. Such talented & efficient people, whenever hired as employees, would help in cutting costs & increasing productivity, which in turn would improve the profitability.

Businesses can also align their business goals with social requirements. A social problem could also give very good leads for innovation. Many of the companies have been known to come out with innovative products & services with the aim of eradicating social problems. Such cases fit the classic examples of profitability with social responsibility.

The mindset of measuring success in terms of only profits has to be altered. Being socially responsible earns a business a good public image that attracts large number of potential customers and also the smart & efficient employees. Both have the potential to substantially contribute to the profitability of the business.

Businesses should also not forget that they would be dealing more & more with a generation that is very well connected with one another through high speed modes like mobile phones, e-mails, text & multimedia messaging and social networking etc. The communications within this generation are strikingly fast. And this segment of consumers expects much more from the organizations, not merely good quality products & services, which in any case is their right.

An act of social irresponsibility can seriously damage a brand. As per reports, one such act cost very dearly to a company when consumers chose to vent their anger online. Its share price went tumbling down by a massive 10% in just one single day only because a negative video clip was posted on the YouTube.

It is high time the business owners realized that with the right to operate profitably, there is also a duty to act with social responsibility. A business organization must place a very high priority to social responsibility to ensure its long term viability and sustainability. And this may even mean sacrificing short term profits for long term gains.