I did a little catching up on my reading a while back and I ripped out an article from Business Week that I thought raised an interesting question. The subject is sort of dry on the surface – “benefit corporations” – but the discussion is definitely one worth having and I’d love to hear what you all think.
In a nutshell, the article highlights the emotional, intellectual and , eventually, financial battle that some companies have over their instincts to do good versus the financial obligations they might have to shareholders. In some states, they’re creating a new class of company to insulate the firm from actions by shareholders if the firm chooses to do socially responsible things over courses of action that might be better for them financially.
I find the discussion kind of depressing. It implies that the two roads are at odds with one another and I don’t know that I believe that. In fact, I think it’s highly irresponsible to behave in a manner which you, as a corporate officer, know is at odds with being a good member of society. That sort of decision is a big contributor to the Wall Street mess – profits over people – as well as the mortgage meltdown. Still, as the article says, there are over 30,000 US companies that consider themselves “socially responsible” (I wonder about the others) that are looking for some sort of protection from the short-term financial pressures that so seem to dominate these days.
How can you serve two masters? Is it impossible to do well while doing good? I don’t think so and yet that choice is exactly where lots of firms find themselves. Some would argue that unless you are a philanthropy there is no choice here: your obligation is to generate the best financial return to your investors. I disagree. I think you can’t generate the best returns over time unless you are focused on making the world a better place even in a small way for your employees, your customers, your partners, and your investors.
What do you think?