Can a for-profit business organization that also pursues a social purpose be authentic?

by cv harquail on April 24, 2008

trap-chinese-finger.jpg

There are so many examples of for-profit organizations whose for-purpose actions are suspect that it’s a little scary to bring up the subject. Where do we even begin?

We should probably start by acknowledging that the questionable relationship between a ‘for-profit’ organizational identity and ‘for-purpose’ actions (aka: non-profit, socially responsible, charitable, philanthropic, etc.) is one of the most pervasive and endemic genres of organizational inauthenticity . Let’s jump straight to the question of why this particular form of inauthenticity is a problem.

For-Profit Identity + For-Purpose Actions
=> Authenticity Dilemma

For-profit organizations face an inherent contradiction between pursuing a social purpose and remaining authentic. While the organization’s identity is ‘for-profit’, some of the organization’s actions are ‘for-purpose ‘. Thus, the identity and action of ‘for-profit organizations that are also for-purpose’ are not congruent. Simply put, for-profit organizations that spend their intellectual and financial resources to pursue social benefits can be seen as being inauthentic.

It may seem unfair that a business intending to do good can be so easily criticized for being inauthentic. But authenticity isn’t about being "good" , it’s about having an organizational identity, an organizational image and pattern of organizational actions that are aligned and mutually reinforcing.

Despite their good intentions, for-profit organizations that also pursue social purposes can twist themselves into knots trying to get their identity, image and actions aligned. These organizations feel pressure to change their actions, change their identities, or manipulate their public images to achieve some kind of alignment.

Justification Gymnastics

tangled-soccer-goalie.jpg Consider the psychological, semantic and accounting-related gymnastics that for-profit organizations have to go through to explain why they spend their hard earned money pursuing social purposes.

To their stockholders, for-profit organizations have to justify how their social purpose efforts somehow contribute to their corporate profitability. Justification strategies include:

  • — Labling any spending on social purposes as "charitable contributions". Because these charitable contributions earn tax credits that offset much of their cost, they can be justified as financially prudent actions.
  • — Categorizing social purpose spending as public relations efforts. PR efforts earn goodwill and contribute to a positive corporate reputation, both of which can be monetized.
  • — Thinking of social spending as support for "marketing". Organizations that present themselves and/or their products as being ‘good for’ a social purpose (e.g., good for the environment, for fair trade, etc.) might spend to support these claims to add heft to their marketing.

When these and other justification strategies are used, it’s understood that the organization’s for-purpose efforts are really ‘for-profit’ efforts in disguise. With this understanding, the for-purpose actions are aligned (sort of) with the organization’s for-profit identity.

To other audiences, the organization may explain its for-purpose efforts as valuable for itself. Often, these social efforts are described as being motivated by (non-financial) corporate values or by the values of the organizations leader(s). In these situations there may seem to be a surface-level alignment between the for-purpose actions and the organization’s values, because values are presumed to be part of the organization’s identity. But some values are more central and fundamental to an organization’s identity than other values, and in times of stress central values trump peripheral ones.

What is really true?

push and pull on dollar sign For-purpose actions based in values that are not central to the for-profit organizations’ identity can be unreliable. So, even when organization members and the for-profit organization itself truly do hold these values, people may wonder whether the for-profit organization is (or will) stay committed to the social purpose. When we know that an organization’s identity is for-profit, we interpret their for-purpose efforts with a grain of cynicism.

With for-profit organizations, it’s never quite clear whether the organization’s for-purpose actions are instrumental attempts to gain public approval, ploys for reducing the corporate tax bill, or genuine expressions of the values in the organization’s identity. The social purpose actions of most for-profit organizations are ultimately suspect, because for-purpose actions just aren’t authentic to ‘who they are’.

What to do?

So what are for-profit organizations to do, if they want to pursue social purposes and be authentic? Presenting /explaining /justifying the organization’s actions by describing them as value-based to one audience and instrumental to profit to another can only take the organization so far. To really resolve the authenticity dilemma, something in the authenticity relationship has to give.

The organization can either revise its identity or change its actions.

This might be the moment to release a sigh. I might actually be suggesting that the best way to address this authenticity dilemma is to ask the organization to give up on any purpose other than profits.

Authenticity dilemma trap between organizational identity and organizational actions But, have you ever asked a business that was committed to a social purpose despite feeling the sting of inauthenticity to give up that purpose?

On the other hand, have you ever asked a business that was committed to a social purpose despite feeling the sting of inauthenticity to give up trying to make a profit? So you see the dilemma.

What can a for-profit business engaged in for-purpose actions do, so that it can be authentic?

Here is a hint:

honeybee2.jpg

{ 1 comment }

curtis December 21, 2011 at 9:51 pm

I have a for profit organization in which I hold at-risk teen workshops and teen talk forums. I teach youth how to live and be productive citizens in their communites, by using peer motivational interveiwing, and other research base stradgies. I guess my question to you is how can I continue my services and not be caught up in this Authenticity Dilemma, because I do charge and look to add some sponsor ships in the near furture am I cover to continue to serve this purpose?

Comments on this entry are closed.