The social enterprise concept has regained momentum. In 2018, Deloitte published their Global Human Capital Trends stressing the importance of corporate citizenship. It is time we take a closer look at this concept.
What does ‘social enterprise’ mean?
The core of a social enterprise is defined by the term ‘citizenship’. Citizenship in its original sense grants an individual the rights of a person that is “born in a particular country” whilst fulfilling moral obligations that result from being a member of a society. So, in a business context, enterprises – as a member of society – are expected to behave in a responsible manner. Increasing stakeholder expectations, regarding the support of critical societal problems, demonstrate this trend quite clearly.
A social enterprise uses its influence on society in a positive way by addressing issues, such as global warming, diversity or gender equal pay. As you can see, topics that are usually tackled in the political domain are being transferred to a business context as well.
And how does it work?
According to Josh Bersin, who is part of the team that researched and published the Deloitte Human Capital Trends 2018, there are two main characteristics of a social enterprise: being a ‘networked organisation’ internally whilst having a high focus on the impact each member of the company has on its external environment.
This sounds all very well, but what are the benefits of a social enterprise, especially when a CSR program is already in place?
The difference between those two terms can already be found in their wording: a social enterprise incorporates responsible behaviour in all its actions throughout the entire organisation – from interns to C-suite. A CSR program on the other hand, is a plan that is put into place and does not necessarily impact the behaviour throughout the entire organisation.
Well, what are the benefits?
In the beginning a number of issues has been mentioned that are expected to be tackled by social enterprises, e.g. gender equal pay. The fact that these problems have become a matter of public discussion shows a trend towards transparency. A company acting with integrity can only benefit from being transparent.
Closely related to the trend towards transparency is the growing economic importance of the Generation Y. Millennials are informed and aware consumers that show a strong tendency to define corporate citizenship as a decisive factor in their decision-making process before purchasing a product. With millennials representing 35% of the workforce until 2020 and a spending power of nearly $15tn by 2020, this is a competitive advantage which shows great potential for future growth. A social enterprise serves customer and employer branding at the same time. Amongst others, this is a reason why an increased financial performance appears to be linked to corporate citizenship.
How can all this be put into practice?
A social enterprise focusses internally on supporting the well-being of its employees and reward systems can be put in place, for example. By allowing employees to further develop their skills, and thereby encouraging them to reinvent themselves, a pool of unstopped talent can be created. To serve the external world, company goals and projects targeting social problems do not exclude each other. All in all remembering that we are living in a connected world in which all technological advances cannot replace a human touch.