Does making profit make you a unethical business?
Businesses should exist to make the world a better place. Each with their own sphere of impact, they should focus always on their principles and never on their profit.
Or should they?
The fact is that most of us make the assumption that profit and principles are mutually exclusive. Research shows that people strongly associate high profits with negative value to society. They don’t just apply this thinking to individual brands, either; they also apply it to entire industries.
However, it’s a factually incorrect assumption. When analysed and cross-referenced, research showed that there was a clear correlation between higher profits and better social impact.
So why does this view that profit is bad for society prevail?
Well, it seems that profit is perceived as something that somebody must pay for, whether that’s the environment, underpaid workers or the consumer themselves.
But there is also logic in the fact that good practice equates to good profits. Logically, we know that if you are a business who over charges, provides poor quality and does not value customer service you are likely to impact your revenue negatively, while if you invest in quality and service you give your business a better chance of financial survival.
For social enterprises, it follows logically that profit equals social impact, because without profit we wouldn’t be able to donate to good causes, invest in more opportunities for our beneficiaries or fund life-changing projects.
This is why social enterprises should not shy away from making profit.
Of course, you don’t want to make profits at the cost of your ethics and impact, because that’s not your reason for existing as an organisation. However, it’s important to remember that taking a principled stance and making money are not mutually exclusive and, in fact, business gain is often a direct result of positive social impact.
Last year at Clear Voice Interpreting, we put that theory to the test. One aspect of the work of our parent charity, Migrant Help, is supporting Syrian refugees who have recently been resettled in the UK. For many of these families, their arrival to the UK is the punctuation to what is oftentimes an arduous and lengthy journey. After years of uncertainty, it marks the beginning of a return to normality. It means a safe and warm home. Food security. Predictability. And most importantly, a sense of agency. But finding that agency can be difficult at first, especially when trying to resume work or enter the labour market with training or qualifications that aren’t recognised.
So, we chose to support a group of Syrian refugees through the training necessary for them to become interpreters and enter the UK workforce, hoping to become a small part in their journey back to normality and agency. As a social enterprise whose profits all go to supporting victims of displacement and trafficking, this was a project in line with our core values and which had clear positive impact, but that wasn’t the only benefit.
“I have to tell you something about that lovely course I had this summer… that course meant a lot to me. Even though I am experienced with many careers – building, carpentry, and construction – I gained the first certificate which I can work with in the UK. Also, I made new friends in my area.” – Khaled, Clear Voice Interpreter
Having completed the course, the trainees joined the ranks of the Clear Voice interpreters, adding value to the organisation, enabling us to better serve our clients and – yes, you guessed it – helping us to increase our profit.
Our support – financial and in the form of mentoring – wasn’t just an investment in the people we exist to serve, it was also an investment in the business itself. While it seems our brains are wired to automatically think that this business gain makes the actions ‘wrong’ or unethical, it simply isn’t so.
Ask yourself, who suffers and who gains? In this situation no one suffers, but the trainees gained qualifications and entry into the UK workplace and our beneficiaries will gain from an increase in profits due to having a varied and effective workforce.
So, what do we take from this? Firstly, that we don’t need to shy away from making profit as social enterprises. Secondly, that we should embrace the business benefits of being ethical organisations. Doing both these things does not make us evil corporations, but actually just makes us more successful social ones.
The trick is simply to ensure that you are communicating your ethics with customers. Research shows that simply communicating profits results in the perception of harmful outcomes, but as a social enterprise built to achieve social impact, you have the perfect stories and evidence at your fingertips to communicate in a different way. Break through this narrative that what’s good for business is bad for society by demonstrating the impact made possible by being a successful business. We are, after all, social enterprises as oppose to charities – we are businesses that seek to achieve positive social impact, and that means we must run like businesses. What’s wrong with that?