Post independence we were cast in a socialist mould and so 'profit' became a taboo word. We failed to realize that profit in a business should not be condemned as greed but applauded as development. If companies do not make profit then how will they reinvest and grow and thereby create jobs for the society and prosperity for the country? This realization is gradually sinking in with globalization.
As the World Economic Forum in Davos completes a golden jubilee we
are now understanding a very vital point - companies do not do well because
they make a profit, they make a profit because they do the right things. They
don't work for only their shareholders but for all stakeholders including the
employees, suppliers, communities, environment and of course the consumers.
Successful businesses are not just patronized by consumers but are loved by the
communities and are an object of pride for the nation.
How many times has your driver or your maid
complained that it is becoming exceedingly difficult to make both end meet and
they will have to pull their children out of school? And how many times have
you interjected and reassured them that they need not do anything so stupid and
you will take care of the schooling of their children? This is individual
social responsibility. No, you are not doing it because of milk of human
kindness but because you realize that if your employees are not
satisfied your work will suffer. Your comfort and your growth is simply not
sustainable otherwise.
Companies which are smart also think along similar lines, justifiably at a higher scale. Starbucks takes care of the health benefits and college tuition funding of its employees. Apple has a larger goal, it is committed to environmental protection. Unilever has adopted a Sustainable Living Plan for developing countries. Tata has invested heavily into fundamental research and cancer care. They have all realized that profit should come with a higher purpose than just boosting the bottom line.
Capitalism has resulted in 26 richest people of the world
acquiring as much wealth as 3.8 billion of the poorest and so quite naturally
it has fallen into disrepute. Add to this the carbon insult to the environment
and capitalism appears even more villainous. This is neither fair nor equal and
certainly not sustainable. And that is why their focus should change from
shareholders to all stakeholders.
Will having a purpose beyond the profit hurt the bottom line? This
is what mediocrity teaches us and keeps us in a cesspool. Companies that
embrace a broader mission and integrate that purpose into their corporate
culture invariably outperform and punch above their weight. To them there is no
difference between doing well and doing good. Klaus Schwab, the founder and
executive chairman of the World Economic Forum has very aptly stated that 'A
public listed corporation is not just a profit seeking entity but also a social
organism'. Profit with a purpose is the new mantra of capitalism.
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