Marian Evans, director at Elevate BC Ltd.
getty
Recently, I was delighted to be a guest speaker at the annual conference of financial institutions and it got me thinking about how best to defend the benefits of reciprocity as a model. I’ve found that doing the right things, community and values ​​are more important in business than ever before.
We are often given the cliché that you have to be ruthless to run a great business, but the reality, at least in my experience, is that such an approach is usually more of a hindrance than a help. With that in mind, I’m going to look at a few basics of reciprocity before going into why reciprocity as a model can be a beneficial approach for many companies and become a competitive advantage.
What is reciprocity as a business model? A good working definition of reciprocity is: “Creating shared and lasting positive benefits for all stakeholders through an organization’s activities.”
Reciprocity is a business model that aims to put the interests of all business stakeholders – employees, suppliers, customers, communities and society at large – above profit maximization. The best mutual societies can generate more value for the stakeholders and the company, which can make them stronger and more sustainable than those who are only focused on profit.
We know that many companies, especially public companies, have historically focused on maximizing their short-term profits for the benefit of their shareholders. Reciprocity aims to shift that focus to the longer term by including broader goals and taking into account the human, social and environmental benefits the business can generate.
There is a connection between reciprocity and meaning.
With the constant talk of economic growth, productivity and shareholder value, it’s not surprising that work feels meaningless to many modern workers. Working long hours and making long commutes just to generate returns for shareholders and business owners doesn’t motivate many employees — and frankly, it’s a wonder it ever did.
A 2015 YouGov survey found that: 37% of UK workers said their work has not made a meaningful contribution to the world. A more recent study by McKinsey just found: 15% of frontline managers and frontline employees said they lived up to their goal in their day-to-day work. These attitudes have increased companies’ interest in the meaning of work and how a connection to a worthy cause can increase employee engagement.
The mutuality business model was born from that search for meaning. It can unlock meaning by giving stakeholders a set of positive goals that can add value to their work and private lives. Companies that want to share and give meaning to their work must promote existing mutual values ​​or discover new ones. This process requires the cooperation of all stakeholders.
However, what often happens in this scenario is that senior managers typically develop the values, usually through CSR initiatives, and then try to impose them on stakeholders. This goes against the principles of reciprocity, where the true meaning is to be found, the goals must be agreed as one.
There is no reciprocity without trust.
Putting stakeholders first and acting ethically is a cornerstone of the reciprocity model. This is one of the reasons why trust, which is such an important currency for today’s businesses, remains high among mutuals. This confidence is based on the fact that without regard to the short-term goals of shareholders, more pragmatic and long-term decisions can be made that focus on the right results for customers, employees, suppliers and communities.
Since mutuals are managed in the best interest of their stakeholders, it is they who attend the annual general meetings and decide on the future strategy of the company and ensure that it is in line with their interests. This is in stark contrast to traditional companies, where shareholders put their interests first.
But it’s not just about doing the right thing. With no shareholders to consider, mutual societies can also build trust and engage their stakeholders through profit sharing through various initiatives. Mutuals also reinvest profits back into the business to build a stronger and more sustainable business that will benefit members for years to come.
Don’t you have to be ruthless to succeed in business? I’ve found that the idea that in business you have to be single-minded and ruthless to succeed is a harmful misconception. If you want to grow a business, earn employee trust and commitment, and make sustainable profits over time, it’s critical to value your community, help others, and not see how much you spend. get away with it until everything collapses. In fact, it is often the case that caring for a good cause can become a competitive advantage for companies.
If you make a genuine effort to treat your employees, suppliers, customers, and community right, you’re likely to have a more loyal customer base, more engaged employees, and a more sustainable business, which is the perfect recipe for healthy profits and growth.
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Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.