Leadership Development

“SOCIAL RESPONSIBILITY” & “INCLUSION”….which is more profitable?

The one thing the Black Panther movie has taught us ALL is that inclusion can be very profitable. Smart business people have preached for some time that the only color acceptable to everyone on the planet is the color of currency…and depending on the country you’re in that’s many hues. So, yes I was proud that an entire cast of beautiful black people have “I guess” shocked the world in putting forth a tremendous product but forgive me for not screaming hallelujah. If you include us we will DELIVER.

Now my message:

We’ve all seen the commercials on TV that tug at your heart asking for money, yet I’m sure some of you either change the channel or revert your attention quickly to something else to avoid guilt. “Guilt” is a powerful tool but it’s not sustaining. I’ve grown unfortunately or fortunately a sense of “reality thick skin” when it comes to asking others to do something for me when there’s always a passive return of…..”What’s in it for me”? I choose to believe most people aren’t always thinking what they should get back in return when giving something, but I’m NOT naïve to those who expect a return. Recently, helping a nonprofit company fortify its value proposition I mentioned that there should be some tangibility on how they can deliver value to prospecting donors and not just rely on a heartwarming story. While the name nonprofit elicits a perception of wholesome good….it’s still a BUSINESS based on social good. The buzz statement in today’s corporate giving; “Social Responsibility” code for “Let’s do something good that makes us look good” reiterates that there are too few instances in business when something is given without the expectation of getting something back in return. Thus while my recommendation to my nonprofit client appeared to be a little insensitive to the overall good, the reality is in most cases “GOOD” comes with a price.

There are arguments however against “Social Responsibility” as it relates to business. For example take the thoughts of Milton Friedman (Nobel Prize winning Economist) who asserts that the task of business is to maximize stockholder (owner) profit by the wise use of scarce organizational resources, as long as the activities of the business are within the letter of the law (excerpt from: Barron’s Business Review-“Management”). WOW. However, Mr. Friedman based his assertion that business should not assume direct social responsibility on both practical and theoretical grounds:

Theoretical Arguments Against Social Responsibility

  • Business needs to measure performance, and social action programs often cannot measure success rates. There is often an inherent conflict between the way business works and social programs work.
  • The function of business is profit maximization, and to require that resources be devoted to social action programs violates this business goal since it reduces profits.
  • There is no reason to suppose that business leaders have the ability to determine what is in the social interest. Social scientists and government administrators often cannot agree among themselves about social interest goals. Why assume business leaders can do a better job defining the social interest?


Practical Arguments Against Social Responsibility

  • Managers have the fiduciary (trust) responsibility to stockholders to maximize equity value, and using business funds to accomplish social goals may be a violation of that responsibility, hence illegal.
  • The cost of social programs would be a burden to business and have to be passed along to consumers in the form of higher prices.
  • The public may want government to have social programs, but there is little support for business to have these programs
  • There is no reason to believe that business leaders have specialized skills necessary to achieve social interest goals.[1]


Thank goodness there are strong arguments against the assertion that business and social responsibility can’t co-mingle. Keith Davis (Ph.D-Ohio State University) is Professor of Management, Arizona State University, Tempe argues that social responsibility goes hand in hand with social power, and since business is the most powerful force in contemporary life, it has the obligation to assume corresponding social responsibility. Society, in turn, having given power to business, can call business to account for the use of that power:


Theoretical Arguments For Social Responsibility

  • It is theoretically in the best interest of business to improve the communities in which it is located and in which it does business. Improvement in the community environments will ultimately benefit business.
  • Social responsibility programs help prevent small problems from becoming large. Ultimately this will be of benefit to society and business.
  • Being socially responsible is the ethical or “right” thing to do.


Practical Arguments For Social Responsibility

  • Actions that demonstrate social responsiveness may actually be profitable to the company. For example, new machines that control pollution may be more efficient and cost effective.
  • Being socially responsible improves the public relations image of the company as a good citizen.
  • If we do not do it ourselves, either public opinion or government will require us to do so.
  • It may be good for the stockholders since such actions will earn public approval, lead to the company being viewed by professional financial analysts as less open to social criticism, and produce a higher stock price.[2]

No matter where you stand either against or for business to be involved in social responsibility or inclusion, it’s clear that EVERYONE wants $value for their participation. The expectation for a “return” is present in all of business and life regardless if the overall objective is good will. All of us want and expect value from our investment and while that seems insensitive it’s part of our human fabric and should be considered anytime there’s a request for time or money.


Andre’ Harrell

AH2 & Beyond Consulting

[1] Barron’s Business Review Series (“Management”)

[2] Barron’s Business Review Series (“Management”)


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