Can Companies Do Good While Doing Well?

Marketing Viewpoint by Ruth Winett

Can Companies "Do Good" While "Doing Well"?

Does your business struggle to do good while being profitable? Does your non-profit struggle to achieve financial stability while achieving social goals? Organizations that juggle conflicting goals of all kinds are ensnared in a "Strategic Paradox," according to a recent HBR Blog. *

Businesses and non-profits must make trade-offs while trying to balance conflicting goals. A business may decide to reduce its carbon footprint with a resulting small, but controlled, decrease in profits. A non-profit may have to reduce services in order to cover expenses and continue to operate.

Managing the Strategic Paradox

The authors suggest three strategies for balancing conflicting priorities:

Construct "organizational guardrails": If an organization leans more towards social goals, it could compensate by adding board members with strong financial backgrounds. For example, when Ben Cohen and Jerry Greenfield sold Ben and Jerry's, they stipulated that the new owners appoint board members who supported the company's social values.*

Implementing specific policies is another way to build a guardrail. Every year Bose Corporation gives employees time off to volunteer at local non-profits. Bose also hires people to manage and promote this program. Some banks match employees' charitable donations. Another strategy to protect the more vulnerable of conflicting values is to hire someone to champion this value. Non-profits could engage a part-time CPA, and a business could hire a Community Outreach Manager or a Diversity Officer.

Encourage "dynamic decision making": Adhere to the organization's values, but be flexible. A company had to modify its decision to hire disadvantaged people without screening them as some new hires were unable to do the work. The company added an initial screening process.* "Dynamic decision making" is important because a policy that works at one point may not work later in the year or in a subsequent year. Circumstances change.

Engage "both/and leader[s]": To ensure that the organization will achieve both fiscal and social goals--or any conflicting goals--organizations must hire leaders who value all of the conflicting goals and have a vision for achieving these goals.*

Delineating conflicting goals in a mission statement is not enough. Organizations must combine good business practices with idealism. First, they must anticipate problems. Then they should establish guardrails, be flexible, and hire leaders who promote the conflicting goals. Of course, the goals cannot be too far out of alignment.

M. Besharov, W.K. Smith, and M.L. Tushman in "How Companies Can Balance Social Impact and Financial Goals," in the HBR Blog, 3/5/19.

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