Doing Well By Doing Good

The most common misconception about businesses is that they are selfish and greedy.  I submit that only very weak businesses possess those characteristics.

No man and no business is an island.  Businesses are part of a larger system that requires nourishment.  Businesses need communities because employees live there.  Communities include customers in the same way.  So too for suppliers and other supporting groups.  To be greedy and selfish can easily become counter-productive.

Henry Ford once said that a business that made nothing but money was a poor business.  From one of the all-time great capitalists, that seems wrong.  But it is not.  Henry was no fool and he liked his money, but he foresaw that well paid workers were strong customers and while he might have been able to make a little more from each worker, he enjoyed economies of scale if there were more customers.  Ergo, pay them better.

Many other things fall under the same thinking.  Employee benefits like group insurance are extremely difficult and costly to duplicate at the individual level.  In some ways group insurance is like an airport.  No one could afford one, but collectively, they are possible.  Pension plans turn a difficult problem into a process with the end result being security.

How many businesses sponsor minor hockey, baseball, and football teams.  Most cultural events have  corporate sponsorship.  Few could do without it and communities are better for having the money to do things they would have difficulty doing without the money.

Peter Foster, writing in the National Post recently pointed out “Almost half a century ago, Milton Friedman noted that “Corporate Social Responsibility,” CSR, was a subversive concept designed to facilitate open-ended political interference in business.”  While many have tried to use the idea of social responsibility to further their own aims, that has not reduced the level of corporate involvement in communities. Later in the same article we find the reason.

“None of this is contrary to Professor Friedman’s case, which has been comprehensively misrepresented. He didn’t recommend flinty-eyed commitment to the bottom line at the expense of workers, suppliers and communities. What he said was that community activities or charitable contributions might well make sense to generate valuable goodwill, but that these actions are not then “social responsibility,” they are part of the normal profit-seeking function of the corporation.”

Corporations can take the lead here, but viewed with suspicion throughout the proceedings, many avoid the issues entirely

So long as interest groups want to treat corporations as their adversaries, they should not be surprised when the corporations respond in kind.  Perhaps developing partnership that address common issues and concerns would be better.

You get more of what you make easy and less of what you make difficult.

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: don@moneyfyi.com  

This entry was posted in Communication, Insight to Business, Personal Finance and tagged , , . Bookmark the permalink.

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