Up Until A Decade Or Two Ago, The Way To Measure The Success Of A Company Was On The Basis Of Traditional Metrics Such As Financial Performance Or The Quality Of Products And Services.
This perception has seen a massive shift. Today, organizations are assessed on the basis of their relationship with their employees, customers and their contribution to the community and their overall impact on society at large. This is what we refer to as the transformation of organizations from strictly business enterprises to social enterprises.
The reason for this massive shift in the last decade has been attributed to a variety of social, economic and political changes that have come about since the global financial crisis of 2007. According to the Global Human Capital Trends Report, 2018, people are frustrated that financial gains have failed to improve individual lives, offer political stability or address social issues. People have less trust in their political and social institutions which is why they are turning to business leaders to fill the void.
The rise of the social enterprise can be attributed as a result of the following causes:
1. The Millennials Won’t Have It
The rising demography of the millennials has a huge role to play in bringing about this awareness and demand for social enterprises. A whopping 86% of millennials think that business success should be measured in terms of more than just financial performance. They are a major part of the workforce now and their views cannot be ignored.
Young people are openly questioning and challenging the traditional ways that organizations have been functioning for decades. A stream of changes has been seen within organizations as a way to address these questions. Be it performance management, hiring practices, relationship with employees or career growth, each and every aspect of the workplace is under scrutiny and the millennials will not rest till they get answers or situations improve.
2. The Rise Of A Hyper-Connected World
With technology making our lives so much easier and making access to information a matter of seconds, the power has shifted to the individual. Anyone can track information about companies, their culture, products, reviews and express their opinions accessible to hundreds of more people out there. Organizations can no longer showcase only what they want. Technology has given rise to a greater transparency, and autonomy for individuals to connect with each other.
3. More Trust In Businesses And Leaders
People are increasingly turning to the private sector and asking that companies respond to broader societal challenges and demanding that organizations serve a social purpose.
~ Laurence Fink, CEO – BlackRock
The 2018 Edelman Trust Barometer reported that people worldwide place 52 percent trust in businesses to do what is right. The same trust placed on the government is 43 percent. People are increasingly losing faith in their political systems, and shifting their focus to business leaders. Large organizations are expected to do them but and contribute towards social causes such as income inequality, health care, diversity, gender disparity and the like.
Such expectations are causing tremendous pressure on organizations, but also creating opportunities. Large organizations are focusing towards their contribution towards creating a positive relationship with their internal and external environment and tackling social issues that need pressing attention.
The hyper-connected nature of workplace presents the opportunity to analyze the data related to interactions among workers and the outside world. It also means treating the workers and everyone outside the system in a fair and just manner. Expectations are no longer just about financial growth, but also in the physical and mental spheres of employees.