Socially responsible business is part of the common sense approach that characterises small companies whose dealings with staff, customers and suppliers are often up-close and personal. Valuing these relationships comes naturally and so it‘s hardly surprising that can they teach their bigger business brethren a lesson or two. "Small businesses tend not to talk about it much but to actually do a lot more," says Henry Stewart, founder of training services firm Happy Computers.
Research by the Department of Trade and Industry into the behaviour of small firms backs up this hunch: 60% of SMEs work with schools and colleges to develop skills and training; 52% work with charities and the voluntary sector; while a further 53% say they are active in the local community. Benefits gained by participating companies include better staff satisfaction, development opportunities and cost savings and there are a host of tools and information to help companies get started.
Research shows that 60% of SMEs work with schools and colleges; 52% work with
charities and 53% say they are active in the local community. Benefits include
better staff satisfaction, development opportunities and cost savings
Putting it into practice
Family Investments, a financial services firm, has been busily involved with its local community in Brighton and Hove for the past 15 years. Activities include Sunday tea-dances for the elderly, environmental clean-up projects and support for local nurseries. The company now employs a programme director three days a week to manage the community activities and also donates staff time to projects.
However, Family Investments doesn‘t worry too much about totting up the cost of other indirect costs because the benefits flow both ways, says chief executive John Reeve. "It‘s a two-way thing," he explains. "Staff have the opportunity to meet people they wouldn‘t otherwise come into contact with and it improves their confidence and leadership skills." These skills can be very expensive to acquire through traditional training courses, he adds.
Reeve has experienced the value of these extra curricular relationships himself by mentoring a headmaster. A school is run like a business nowadays and talking to a head about finances provides strong support. "His difficulty is that his income is fixed by the local authority and he can‘t count on any new plan to bring in new revenue," says Reeve. "The discipline of working within a strict budget is like an art form and some of this has fed back to me."
Nonetheless, the perception that CSR is exclusively the preserve of the bigger boys remains widespread, even within the government. The suggestion at a recent Treasury seminar that corporate business leads the way in community investment programmes was greeted with indignation by the SMEs present. And yet perhaps big corporations can offer small companies a few vital lessons about communicating good connections and sound practices.
Many managing directors, like Reeves, regard it as a duty to support their local community and would not do charitable work purely as a promotional exercise. However, even an internal communication can be a valuable feel-good exercise for staff, suggests Gavin Dollin, head of Business Link‘s National Partnerships. "Today‘s job-seekers are asking whether companies are in tune with their own beliefs. Promoting community initiatives can attract, retain and motivate employees."
Everybody‘s happy
For Stewart of Happy Computers, having a great place to work is the starting point for building an ethical and socially responsible business. Like the maxim, 'charity begins at home‘ suggests, the knock-on effect of living the ethos can be broad. Happy has won a host of accolades and awards during its short life, which recognise the positive impact the training services company has played on the community.
"CSR is not about giving 1% of your profits to charity and thinking 'we‘re fine‘," says Stewart. "The issues companies need to fix first are their business practices: do I pay my suppliers on time; do working mums get time to care for their children as well as work?" With these practices in place, a company is likely to be a more successful and profitable environment.
Stewart learned this at first hand after a painful venture in the 1980s when he launched a newspaper: "It was an awful place to work with lots of backstabbing. The venture failed." He realised the two were linked and determined that creating "a great place to work" would be the focus for his next venture. Happy Computers was the outcome and work/life balance is at the heart of Happy‘s working philosophy.
Staff fit their working hours around their lifestyle and the company trusts them to choose the hours and schedule that will suit them best. "We had one guy who consistently took Mondays off so we talked to him about it," recalls Stewart. It turned out that the best gay club in town was on a Sunday night. "Now he does all his working hours in four days, and as a result he‘s very motivated," adds Stewart.
Public image
A recent financial services start-up has found that making its investor customers feel good about themselves is also good for profits. Zopa is an online exchange for lenders and borrowers and the business fosters a sense of community between these two types of members. The benefits of having a strong community spirit were not learned along the way but defined the products and business model from the outset.
"Before we launched we hired a group of ethnographers to do some research around the behaviour of financial services consumers," says James Alexander, chief financial officer at Zopa. "They told us that there is a sea-change going on and that a group of people no longer are looking to institutions or the government to make financial decisions for them. They want a more personal experience and want to do business on their own terms."
Zopa operates by making bringing borrowers and lenders together and brokers transparent deals between them. So lenders can choose not only the rate of risk and interest but the kind of project they invest money in, be it a new roof or a wedding. Borrowers who would otherwise be excluded from the high street get access to loans, for example Zopa has recently lent to housing association tenants with good history of paying rent.
Bulletin boards and blogs help the flow of information between members and lenders enjoy seeing how their money is being spent, as well as the monetary return. "The word 'ethical‘ can mean different things to different people, so we don‘t try to define it," says Alexander. "Instead we make business transparent so people can make their own choices."
The motivational aspect of community connections is echoed by Reeve of Family Investments. The company offers staff ways of donating efficiently to charities through payroll-giving (see box) but admits that take-up is very small, at just 2%. "Not all staff can afford to donate money, but they can donate time," explains Reeve. "We recently conducted a staff survey about our community programme and our employees were very strongly in favour."
But it‘s not only the feel-good factor that can help companies keep staff and boost profits. Environmentally sound practices also make financial sense. Ormiston Wire, a 16-staff strong wire manufacturer, saves £10,000 a year by cutting down its fuel consumption. Light bulbs with motion sensors, plastic skylights and a high efficiency condensing gas boiler all play their part in plus in cutting bills. Plus, Ormiston Wire avoids the climate change levy by sourcing power from a renewable energy supplier, giving it an annual saving of £1,100.
As these diverse small businesses all report, socially responsible business is not about 'being nice‘ but about sound business practice. "I‘m in the business to make money," says Happy Computers‘s Stewart. "But I want to make a difference too."
