No Rule CSR
October 8, 2020
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Milton Friedman may not have won the popularity stakes when he advocated that business was about making profit and making profit alone and the shareholders could do what they want with it. Give it away or give it to charity if that was their inclination. He writes that it is not the company’s responsibility to spend money on anything other than delivering profit for its owners. He gave three reasons against CSR – firstly it goes against the role of an employee or corporate executive which is to deliver increased returns to it’s owners, secondly executives are not public employees or civil servants and not responsible for the distribution of wealth, and finally he or she has no experience in knowing how to spend it. Sadly, there is some logic. He was not alone either. It built on the thinking of Ayn Rand and the growth of neo liberalism advocated first of all by Alan Greenspan, chairman of the Federal Reserve and subsequently Reagan and Thatcher.
CSR was an attempt to soften the blow and to encourage companies to play the role of responsible citizens. It never really worked. It never connected with the commercial activities of an organisation. It would often be pushed into the annals of a business and left to its own devices. It rarely reached the heady hights of a discussion at the boardroom table. It never stood a chance.
To be socially responsible should and must come from the heart. It must be real. It has real purpose. It is to improve the world. That is the focus. It so happens that it will also improve your business if it is done properly and with belief. Too often when we develop initiatives, we shroud them in rules and regulations and bureaucracy. We create charters and declarations to guide a firm in its activities. The new B Corp being a case in point. A great idea with an amazing sentiment with a collection of truths which are undeniable but its codes of conduct and statements of action and approvals lead to both a cost and an unnecessary bureaucracy. Consultants and HR professionals create businesses out of the complex web that is weaved. Great sentiments are strangled at birth. Its sheer complexity can challenge the will to live. The outcomes are diluted and the impact is lost.
Social responsibility should be driven by the leadership and yes that must include the owner stakeholders. It won’t happen without them and their nod. But we are living in a more enlightened age and convincing owners to take the right and moral purpose road is no longer the difficult task it once was. Millennials and generation Z will soon account for 75% of the population. They are the new customer. And they want more. Those who are prepared to give more will be the winners, the leaders and the more profitable businesses. The doctrine of Friedman in that moment withers on the vine.
We all know of the benefits of social responsibility to employee engagement and to nourishing the work culture or to the increasing social demands of customers and even suppliers. But the most important benefit is to the leadership group and their development. Leadership is everything. It drives the whole business. With good leaders you need less rules not more. The whole business takes its steer from the leadership team. Everyone in the leadership team should have a growth mindset. Bringing them together to focus on a common and worthwhile goal that will grow them into better people will bring your team together like nothing else will. They will learn to care and look out for each other like never before. It will grow their characters, realise how fortunate they are, change their mindset and will encourage them to want to make a difference – everywhere. Leadership is about caring. They will become better and more caring leaders.
The World Bank predicts that due to Covid-19, the number of extremely poor people (less than $1.90 per day) will grow by 70m to 100m this year. The issues of mental health, of poverty, of unemployment and of inequality because of Covid will become even greater just in the square mile around your business. The goal of standing up for equality in all its forms, working with your customers and your employees alike to eradicate it will grow your leadership team into better more informed leaders with stronger and more caring characters.
And leadership is all about caring.