Corporate social responsibility (CSR) comes in many forms, from disaster-relief efforts to environmental protection to human rights initiatives. Various studies have shown that consumers tend to be more loyal to businesses who adopt causes that they care about. In addition, many employees, especially the younger generations who have recently entered the workforce, prefer to work for companies who are socially responsible. Yet, social responsibility can sometimes have a negative impact on a company’s bottom line and compromise its overall success. Consider the case study of Digital Data Divide (DDD).
DDD is a social initiative that hires disadvantaged individuals in the third world to perform outsourced IT roles. Their initial approach of hiring people without a sufficiently rigorous vetting process was well-intentioned but resulted in high costs and a diminishing revenue.
The question then becomes: can a business fulfill its obligations to shareholders as well as to its corporate social responsibility plan? Likewise, is it possible for a “social” organization to implement a viable business strategy? In both cases, there is inevitable pushback in defense of the primary goal when the fine line between the two objectives is compromised. The key to overcoming these “strategic paradoxes” is a three-dimensional combination of reactive guardrails, proactive decision-making, and collaborative leadership.
Reactive Guardrails
Reactive guardrails are checks built into an organization that flag any shift which has the potential to endanger the balance between opposing objectives. Guardrails saved Digital Divide Data (DDD) from bankruptcy. The company’s guardrails came in the form of board members chosen specifically for their business acumen rather than their non-profit motivations. These executives were able to recognize the telltale signs of impending failure and immediately put in place revised policies that averted disaster.
Proactive Decision-Making
The actions of the DDD board are also characteristic of the second key to managing strategic paradoxes – proactive decision-making. When the company was launched with its mission that ultimately proved overly-altruistic, concerned board members kept an eye on its progress. When their fears – that DDD would go out of business without a revised hiring policy – were confirmed, they stepped in and righted the ship. Proactive leadership allowed the company to stave off bankruptcy while continuing to make a difference in the lives of the people they wanted to help.
Collaborative Leadership
Digital Divide Data is now thriving because its board members put the interests of the company before those of factions with very different priorities. Those that emphasized the humanitarian aspect of their mission conceded that good intentions alone were not enough. Others, who were business-minded, appreciated that the social aspect of their business model had to be modified but retained in essence.
Each side’s willingness to compromise was the foundation on which DDD was able to keep from careening into insolvency. Leaders who are willing to embrace a divergent mission bring harmony to diverse teams whose individual motivations might be radically different from one another.
These three key elements of harmonious business leadership work best in unison and are invaluable to any enterprise that wants to be both financially viable and use their resources for positive social change. To succeed in an increasingly competitive business environment, organizations must find a way to bridge the gap between their desire for social responsibility and the need for a solid business foundation. Please contact me today if you have any questions about your organization’s social responsibility goals.
