The corporate world is slowly changing its perceptions and purpose. The Business Roundtable, which is a corporate-friendly lobby, recently began emphasizing the social responsibility of business practices, according to a Quartz at Work article. While this organization previously emphasized maximizing profits as the main goal of a company, the Business Roundtable is now focusing on the importance of serving other stakeholders.
In this article, we will discuss the following issues to learn more about the social responsibility of business practices.
- Companies Should Focus on the Social Responsibility of Business Strategies
- More than 100 CEOs Agree with Creating a Social Purpose for Businesses
- How a Business Purpose Leads to Success
- How to Track Your Purpose-Driven Initiatives
- How Social Business Tools Benefit Strategic Planning and Purpose-Driven Initiatives
- Runrun.it Project Management Software is Beneficial for Purpose-Driven Strategies
Companies Should Focus on the Social Responsibility of Business Strategies
Essentially, the lobby group Business Roundtable has moved away from economist Milton Friedman’s perception that companies are required to focus solely on shareholders and maximizing profits in favor of being more responsible toward workers, customers, suppliers, and their community. In fact, the lobby group now addresses the interests of shareholders below the interest of the other stakeholders.
Friedman theorized that generating profits for shareholders would strengthen the economy, employ workers, and allow businesses to grow. However, the Business Roundtable has rejected this idea.
There are groups such as the Council of Institutional Investors (CII) that are criticizing this move and are not in favor of placing shareholders last on the list. The problem this organization finds is that the language used by the Business Roundtable no longer considers shareholders as primary owners of the company. CII emphasized that companies should keep their emphasis on shareholder value.
“Accountability to everyone means accountability to no one,” according to a statement from CII. “It is government, not companies, that should shoulder the responsibility of defining and addressing societal objectives with limited or no connection to long-term shareholder value.”
Yet, when it comes to the issues of communities and global problems, should companies be the ones to address these factors if the government is failing at or refusing to take on these issues? CII executive director Ken Bertsch was asked this question and he did explain that businesses “dedicated to building long-term, sustainable shareholder value do need to gain confidence of various stakeholders, which means they must strive to do right by employees and communities.”
While there will always be critics, more company leaders are beginning to understand the importance of focusing on the social responsibility of business strategies. Whether it relates to environmental justice, workers’ rights, or treating customers with respect, companies that align with a social purpose are more likely to prosper long-term.
More than 100 CEOs Agree with Creating a Social Purpose for Businesses
According to an August 2019 article from Quartz at Work, more chief executive officers (CEOs) over the last decade have begun emphasizing the concept of a company serving all stakeholders when making business decisions. In fact, Jamie Dimon, the CEO and chairman of JPMorgan Chase, claimed that the Business Roundtable is merely catching up to the way many business leaders have already been running their companies in recent years.
“The American dream is alive, but fraying,” Dimon stated in a press release. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
More importantly, the new statement from the Business Roundtable defining the purpose of a corporation has been signed by 181 CEOs, which shows that business leaders are rethinking their strategy on serving a social purpose.
According to a Fortune article, the way company leaders are approaching their jobs has been fundamentally changing in recent years. Currently, more executives are looking to serve their communities. These changes began occurring after the financial crisis of the late 2000s as a greater gulf began growing between the ultra-rich and the working poor across the globe. Whether it was with the Brexit vote or the popularization of Democratic candidate Bernie Sanders in 2016, business executives were hearing from their communities how capitalism needed to change.
Social activists and workers should feel heartened that more corporate leaders are beginning to emphasize the social responsibility of business practices including addressing climate change and moving beyond next quarter’s profits. The statement from the Business Roundtable group emphasizes how businesses need to work fairly and ethically with customers, employees, suppliers, the communities in which they’re stationed, and, lastly, their shareholders.
Why do more CEOs and company leaders in favor of having a social purpose for their company? What do they get out of this strategy? You will find that having a social purpose actually leads to more success for most companies.
How a Business Purpose Leads to Success
There are a number of different reasons showing how a business purpose leads to greater success for companies. A business purpose leads to better outcomes and success because:
- It offers more direction for a company
- It helps decision-makers better understand the goals of the business and create better strategies
- It provides a positive impact on the brand’s relationship with workers and customers
- It can make a global difference and serve a large mission
- It motivates employees lacking purpose in their job and drives workers to improve productivity
- Workers who feel a sense of purpose are more dedicated and stay long-term with a company
- Employees have more job satisfaction and are more engaged in the workplace
- Companies with a purpose spend less on recruiting talent as well as hiring and training costs
- Customers and investors are more satisfied with companies that have a business purpose
Now that you, as a manager or company leader, understand why it is beneficial to run a purpose-driven organization and focus on the social responsibility of business practices, it is time to learn how to properly track purpose-driven strategies at your company.
How to Track Your Purpose-Driven Initiatives
In order to measure how effective your purpose-driven strategies are, you may want to receive anonymous feedback from your employees in order to boost operational efficiency. Anonymous surveys regarding engagement will help managers see whether their staff is satisfied and engaged with their jobs.
Along with employee engagement, tracking the turnover rate at your company will help you see whether your purpose-driven initiatives are retaining talent and whether your workplace culture is satisfying employees.
Another great method for measuring the effectiveness of your purpose-driven initiatives is through customer surveys. Ask your customers how likely they are to recommend your products or services to their family and friends. You can survey clients using a scale from one to ten.
In order to implement and measure the purpose-driven strategies and social responsibility of business practices at your company, it is imperative to adopt the right social business tools and data analytics software.
How Social Business Tools Benefit Strategic Planning and Purpose-Driven Initiatives
Social business tools can play an important role in helping a company maintain their social responsibility of business initiatives. You’ll find that social business tools can improve organization and strategic planning including plans for serving stakeholders such as customers, employees, and the community.
These tools can create more collaboration between workers and improve customer relations as well. For instance, social networking tools like LinkedIn, Facebook, Twitter, and Yammer have enhanced both customer and employee relations among many companies worldwide. Marketing strategies have been implemented through social networking tools to increase sales and gain a larger customer base.
Along with these benefits, social business tools can provide more organizational support when planning purpose-driven initiatives. Once you have defined your goals and objectives for a particular strategy, you’ll need to pick the right tools to support the organizational change that comes with new projects.
For example, if you want to gather more information from your customers, you can adopt tools that can send and gather surveys as well as analyze data from your clients. Clearly, there are multiple benefits that social business tools provide for companies seeking to take on social responsibility of business strategies. If you are looking for software products to help meet your goals, project management software such as the Runrun.it tool may be the right fit for your organization.
Runrun.it Project Management Software is Beneficial for Purpose-Driven Strategies
You will find that Runrun.it project management software is a great tool for tracking, measuring, and completing purpose-driven initiatives. If you’re looking to better serve your employees, you’ll find that they will be more engaged and invested in your company if they have a user-friendly platform to communicate with their team.
Project management software may help you retain talent and ensure productivity is superior among your staff. Along with keeping your team motivated and communication more transparent, project management software can help you analyze customer data and ensure your clients are being served effectively. Even community-based initiatives will be better measured with the use of project management software such as the Runrun.it tool.
To check out if Runrun.it software is right for your organization, click here for a free trial.