Social Responsibility Part 1 (aka Nice Guys Finish Wealthy)

As the Holidays wrap up, and the proverbial “season of giving” is over, I cannot help but think of all the times I have debated the merits of social programs, higher taxes for the wealthy, and general social responsibility.  Unfortunately, said debates are rarely constructive since these issues are often attached to deep-seeded politics, bloated egos, and misinformed sentiments of self-entitlement.  Some people believe you are only allowed to what you earn through your own labor, while others feel they deserve just as much as everyone else regardless of their own successes, and others still think we should all work together for the greater good of the species.  Regardless of your own thoughts on the subject, I will now present why social responsibility is a good thing from a simple business perspective.

 Makes every topic more exciting!

Social responsibility is a popular cornerstone of modern business, but it is not really a new concept.  Adam Smith—considered by many to be the father of capitalism and modern economics—observed the idea in action way back in 1776 in his quintessential socioeconomic study An Inquiry into the Nature and Causes of the Wealth of Nations (or The Wealth of Nations, for short), wherein he introduced the world to his famous concept of the “Invisible Hand.”  Simply put, the concept states businesspeople, as agents of the creation of wealth, usually promote the best interest of the community they operate in, regardless of whether or not they intend to, as if some benevolent “invisible hand” was secretly guiding their actions.  In other words, even the greediest business owner/operator serves the community with his successes, if only because his success creates jobs, which, in turn, create wealth for those workers to spend elsewhere in the market.  Of course, what they spend creates wealth for others who get to go spend it and create wealth for others, and so on, thus creating the endless cycle which drives our economy.  On a side note, this is exactly why you should never be afraid to spend money during a recession, as this only serves to exacerbate the issue.

Now, you are probably thinking to yourself the default positive side effects of some jerk’s narcissistic actions do not seem much like any sort of social responsibility, and you would be right.  The fact is, though, you can only really be a jerk for so long before the people rise up to smite thee, or, worse yet, wallop your brand image.  I know it seems like sometimes there is no justice for those who take advantage, but we live in the glorious Information Age.  People tend to take notice more of when businesses do wrong than when they do right, and with the advent of social media these wrongs will become public knowledge faster than the best PR department would even know something is amiss, which is why successful companies know it is much more profitable in the long run to invest in and protect their image than it is to repair it.  More so, if you treat your employees poorly, their morale will plummet and they will perform poorly.  Poor performance leads to low product quality and lackluster customer service, both of which leads to consumers going elsewhere and the downfall of your business.  The same result is yielded from cheating your customers, destroying the environment, or taking advantage of citizens of developing nations.  Sooner or later, the truth will hit the Internet and the aforementioned smiting will commence.  No matter what, the jerk businessperson will not last.

 Although merely looking like a pompous jerk makes you unstoppable, apparently.

Smith’s “invisible hand” theory alludes to the importance of social responsibility in business.  It points out how the two concepts naturally go hand-in-hand.  Even when a business is operated in a selfish manner, it still does the community well.  However, since society and business essentially feed each other, it makes sense to purposefully incorporate social responsibility into your business strategy to keep the cycle going strong.  Successful companies recognize this connection, and this is why we see multimillion dollar campaigns by corporations to increase education and literacy, fund charities for the sick and research cures for diseases, develop infrastructure in budding industrialized nations, keep kids off the streets, or even to simply provide some entertainment for families.  You can argue until you are blue in the face about whether or not these companies have altruistic motives, but either way they know it is in their best interest to increase the quality of life of the people living in the markets they service and plan to expand into.  Education leads to more productive members of society, both as employees and as consumers (because unemployed people have little money to spend).  Healthy people are also more productive, and have fewer bills (particularly medical bills) to worry about, again leaving them with more money to spend on consumer goods and services.  Humanitarian programs serve as positive public relations, and a strong brand image leads to more sales.  Developing the infrastructure of nations opens the doors for whole new markets of consumers.  It all leads to more revenue, regardless of more “noble” intentions.  It just so happens it also leads to a higher quality of life for everyone involved, again regardless of intent, much like Adam Smith noticed some 235 or so years ago.  Maybe it is just me, but I could always use a little bit of improvement in the Quality of Life department.

Seriously, I should hire this guy to run my QoL department.

Now, to bring this back to my original point, it really does not matter what your personal politics are; as members of society, we are all businesspeople.  We all depend on the successes of those who comprise our communities, both small and large, because we all use each other to reach our success.  Subsequently, it makes good business sense to support social programs which help put those in your community in the position to help ensure your personal long-term success.  We need to stop thinking of these programs as handouts, and look at them as what they really are:  investments into our collective, personally successful futures.