Purpose, Values, and Action: Corporate Responsibility in SMEs

Multinational Corporations have been at the center of the discussion surrounding corporate responsibility.  This has occurred for two main reasons:

1. Multinationals have received a significant amount of “bad press” in recent years – from oil spills, to child labor scandals, to world financial meltdowns – pressuring them to “shape up”

2. Multinationals maintain significant power and influence over the global economy, providing “quick, meaningful wins” for environmental and social activists when they decide to “do better”.

Large multinational companies have the power to make a significant, individual impact in improving the conditions of communities and promoting environmental preservation. Although Large Enterprises (with 500 employees or more) totaled only 2% of companies that exported products in 2010 in the US, they accounted for 68% of the total value of exports – making them very powerful in terms of the amount of resources and products they manage.

However, we must not ignore the achievements of America’s Small and Medium Enterprises.

Small and Medium Enterprises (SMEs for short) have a much larger impact on society and the environment than most realize.

According to the US Census Bureau, in 2009, 99.6% of all firms in the US were SMEs.

75.7% of US firms were Micro Enterprises (with 1 to 9 employees)

22.2% were Small Enterprises (with 10 to 99 employees)

1.7% were Medium Enterprises (with 100 to 499 employees)

Only 0.4% of all firms in the US were considered Large Enterprises (with over 500 employees).

That same year, these more than 5 million SMEs in the US employed slightly over half of the employees working in private sector firms. They contributed to about 44% of the total private sector payroll and created about 65% of the new private sector jobs. In terms of US GDP, SMEs accounted for “more than half of the nonfarm private Gross Domestic Product”.

Needless to say, SMEs in America have a large collective influence on our environmental impact and what values we promote within society.

SMEs and Corporate Responsibility

So, how can SMEs act responsibly?

SMEs have several advantages over large corporations when it comes to acting as a responsible member of society. Given their small size, relationships between the owners and the employees are often closer and more personal than those in Large Enterprises, which facilitates the filtration of the company’s values throughout the company.  Also, SMEs tend to be less-bureaucratic, allowing them to more easily adapt to social and environmental demands from civil society.

What SMEs need in order to be able to act responsibly is a core set of values, and a clear purpose that focuses on responsible practices (not just sales and profit). A clear purpose can motivate the entire team to work toward the company’s common goals. Clearly defined values allow employees to understand the company’s principles and strategy in order to obtain these goals.

This Ted Talk given by Simon Sinek explains the power of having a clear purpose:

 But actions speak louder than words.

Once the company’s purpose and values have been laid out, management will need to be the first to turn these values into behavior.

Providing employees with space to voice their opinions, ideas, and concerns regarding business activity shows them that they are vital to the company’s success. Offering employees work flexibility, when possible, and understanding their family and health responsibilities keeps employees happy and productive.  When they feel that they are appreciated and that their personal lives are being respected, they will be more committed to the company’s purpose.

Environmental concerns should also be part of an SMEs’ values – and can save the company significant expenses.  SMEs can take small steps toward creating awareness around environmental concerns related to business activities. They can also work with employees to discuss ways in which waste, electricity, water, etc. can be minimized. Employees know the daily activities of the business better than anyone. They are a business owner’s best source of ideas and innovationThere are thousands of examples in which employees have been the source of new ideas for product changes, streamlining processes, or even successful marketing strategies. They can be your best asset in order to promote a company’s “green” transformation.

Sounds Great! Easy! Right?

It is, as long as you remember: Purpose, Values, and then Actions.

Remember to clearly define the why.

(And it is not profit…)

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