Know-How Exchange : Student Questions

Nantariga, this is a general question for all businesses -- how do you maximize your positive impact on society and minimize the negative impact?

First, academics and other corporate management experts will tell you there are four levels of social responsibility. They form a pyramid in terms of application, and from the base to top of the pyramid, they are (1) Economic (be profitable), (2) Legal (obey the law), (3) Ethical (do what is right, just and fair), and (4) Philanthropic (be a good corporate citizen, contribut resources to the community, imporove the quality of life, etc.)

As an entrepreneur and consultant, my company (2 partners) practice the first three without thinking.

Economic -- We strive to be profitable and are; we watch our budgets, pay on time, and save a percentage of revenue for marketing and other expected and unforeseen expenditures.

Legal -- we started our business on sound legal footing, following the law on setting up our LLC. One partner is the legal and accounting partner, and we have an attorney and CPA to ensure legal coverage.

Ethical -- As a service business, selling an intangible (our expertise and knowledge), CONSISTENT ethical behavior is required. To us, this means doing what is right -- for the client as well as for the broad circle of our community. It also involves a personal ethic which transfers to the way we do business -- and why as the lead co-founder, I was enormously carefully in entering into a partnership with someone I know to be of high ethic standards and integrity. In business, for example, ethical activity could mean "eating" a printing cost if there is an error even vaguely attributable to your company; it could mean informing a client of his own ill-advised business or marketing practices that paint a false picture or could negatively impact clients or the community -- and doing so even though the client may be unhappy or end the relationship with you; or it could mean NOT hiring another person because the company could not support that salary for a minimum of, say 18 months, and you need to "avoid harm." (Better to contract.)

Philanthropic -- This is an area than can be difficult for entrepreneurs just starting, but can be addressed through offering time and expertise to worthy or beneficial causes. For example, we set aside a certain number of hours for "pro bono" work each year, and do so for organizations not only that meet our standard for philanthropy, but also where we can add value, make a difference, AND perhaps see some networking benefit as well. At this time, we are not making charity contributions of cash; we feel our personal involvement is often more needed in that we are disciplined strategic do-ers and thinkers and can make things happen (something needed more than money, sometimes!). I suspect we will continue in this way, and make any monetary contributions on a personal basis for the next 2-3 years.

Overall, corporations see their social responsibilities or their need to be involved in cause-related marketing from two angles -- first, it is a cultural or personal connection with the people or executives (say, the Ronald McDonald houses), or second, it is a mutually beneficial cause (American Express donating a percentage of $$ to the Statue of Liberty restoration when their card was used). In either case, there was a connection to the organization, and the company took a very strategic approach that benefited others as well as their own brand.

Hope this helps.

Environmental protection and conservation is probably the biggest area that businesses focus on when it comes to social responsibility.

Think for a moment about British Petroleum's efforts to re-brand themselves as BP, or "Beyond Petroleum." They're spending huge amounts on marketing and PR to cultivate an earth-conscious image... when in reality, BP should probably stand for Big Polluter.   ;]