Last week Ashton Kutcher caused a bit of a stir when he got into a Twitter debate with Walmart over the company’s low wages and huge profits. Kutcher’s initial tweet was in reaction to Walmart’s food drive for its own struggling workers:
Walmart is your profit margin so important you can’t Pay Your Employees enough to be above the poverty line?
Walmart retorted:
It’s unfortunate that an act of human kindness has been taken so out of context. We’re proud of our associates in Canton.
The conversation continued with Kutcher calling out Walmart’s $17 billion in profit, and Walmart defending itself and tweeting a video, “Opportunity and Benefits at Walmart.” And of course the story of the back and forth flew
all over the social channels. Kutcher has gotten himself into Twitter arguments before, but this conversation interested me as it relates to ArCompany’s Social Justice series and how Walmart compares to many of the businesses we’ve featured recently. My initial thought process was: “well, that’s one of the reasons I choose not to shop at Walmart.” This series has informed me of companies I didn’t know existed who are doing good while doing business, and has made me consider the fact that I have other options and can ‘vote with my pocketbook’ as I consume. In the midst of the current political divisiveness in the US, and feeling that government can’t do anything right, I became quite hopeless about our society and how uncivil we’ve become. Writing this series has restored my hope – the rise of social good companies tells me that there is a movement afoot among consumers to change the way the world works by the way they spend their dollars. I thought it was something that the majority of people could get on board with no matter their political alignment.
Is There a Backlash Against Social Good Companies?
When I shared the Kutcher story on my wall, a conversation I did not expect developed: Two friends of mine were disgusted with the idea that businesses should be doing social good at all. I was slightly blindsided by that; since no one is forced to buy from Social Good companies, how could anyone object? In the conversation I pointed out businesses that were 100% transparent, and successful or taking off because of both their products and their missions. The companies I used as examples, Nisolo and Sword & Plough, are very clear about their business models. Nisolo has applied for B-Corp status and Sword & Plough was founded as a Quadruple Bottom Line company. When you shop on their websites stories of living wages and social good are part and parcel of what each company stands for. The products are all hand made by people making living wages – Sword & Plough employs out of work Veterans as well as using recycled material that was destined for a landfill. It’s a win/win, right? Not to my two friends – who each come from totally different sides of the political spectrum by the way. They both felt strongly that it was businesses’ JOB to provide products at the best possible price, period. There was a lot of back and forth, but the stance against social good companies was most succinctly summed up in these two quotes:
Business is just business out to make a profit and to expand. They give a very small portion to a worthy cause is nice, but to use that to drive their business isn’t kosher in my book. and Every business is in it for profit. What they do with their profit is their business, but don’t try this social justice [stuff] to increase your profits and try and make it like you are a socially conscious person for buying our product. Just another ploy
My viewpoint in the discussion was primarily one of incredulous disbelief: the two people most ardently against businesses charging more to be able to do social good were against it in the name of Capitalism. My answer was – this IS Capitalism; no one is forcing anyone to pay more – you can still choose not to buy the higher priced, socially responsible product.
Business Doing Government’s Job?
Nisolo
Yes, I realize that even USING that subtitle is a hot potato, but it is a question that recurs in so many conversations about social responsibility. When I wrote about Toms Shoes and the controversy their One for One program was experiencing, Sam Fiorella reacted with this dead on comment:
“Is it fair to put the fate of developing countries on a business? Can a business truly effect ‘the root cause of poverty” that’s often rooted in history, culture, politics, geography etc.? Such solutions require a willingness of the people that live in that country and the support (or pressure) of other countries. So the criticisms of Toms is a bit harsh. However, any business that makes a profit by linking its product or brand to supporting those in need, should expect that it will be questioned by the same medium it used to build its business. I agree that helping employ locals would be a better service than giving away product; however, at least their doing something. They cared. More than I can say about most of those criticizing Toms.”
Sam’s stance that ‘at least they’re doing something’ sums up how I see all companies doing real social good as part of their mission. But it does get a bit hairy, as this comment in that conversation pushing back over Ashton Kutcher’s tweets shows:
“Living minimum wage has become a government issue the same way stopping child labor, requiring safe work environments and other “private business issues” became government issues, because the people are speaking up for fair treatment against companies that have proven over and over again that they will NOT take care of their employees until they are forced to do so.”
“Uggg… ” I think, “can’t we all just celebrate a business doing good?” But I get it – these are tricky societal issues, and when businesses blur the line and become something more, really business activists, well, they have to be ready for the push back. Some people may choose not to do business with them because of their social good stance, or, more likely, their programs may come under scrutiny; it can be a slippery slope.
What is the Future of Social Good Businesses?
One criticism of Sword & Plough in my Facebook discussion was that it had not yet turned a profit, and the critic suggested it never would. My instant thought was, “well, neither has Twitter,” but that really is off point. The reality is that socially responsible companies have been around for a long time – Starbucks is a prime example of a very successful business that makes no bones about the fact that they charge a lot for their coffee so that their employees receive a decent pay and health benefits. Toms Shoes, despite the recent discussion of its One for One challenges, appears to be thriving – and their new Toms Marketplace is showcasing a lot of smaller social good companies and has been met with a roar of positive coverage. The companies I’ve been covering in this series in recent weeks: Warby Parker, Nisolo, Sword & Plough – all are growing at rapid fire pace because they have found both a receptive audience and easily motivated brand advocates to share their stories. The rise of a new class of B Corps speaks to the seriousness with which consumers appear to be taking social responsibility – if a company has passed the rigorous application process their customers can be assured that their purchases are going to help do social good. Social Media has changed the marketing playing field as well, meaning companies with a contagious story to tell can ride its wave for a fraction of the cost of old school PR campaigns. Small businesses doing real social good can become bigger a lot quicker. Will consumers tire of the stories of good and become immune to them? That is yet to be seen, but for the foreseeable future I’d bet that this new type of business structure is going to have a large impact on how consumers purchase, and how traditional, established companies view social responsibility.
VP of Content & Strategy at ArCompany. She has an extensive background in Sales, and focuses on generational marketing and content. With Hessie Jones she founded ArCompany’s Millnnnial, GenX and Boomer Think Tanks and writes and speaks on those topics from an insights/strategy perspective.
Thank you for the invite. I will start by saying the term “SOCIAL JUSTICE” has many different interpretations. I feel it is an oxymoron.
So lets go to the Social Good statement. Government has taken this to new heights that are ruining the very fabric of our nation. Birth to grave handouts are obsurd. Religious groups of all faiths, charity groups and corporate activism are more then competent to deal with this long term problem. I have no problem with government giving a hand up so long as it is temporary. Welfare breeds welfare and there are millions of examples in our population to prove this fact. In 1996, when workfare was introduced, the welfare rolls were cut in half the first year. Where did they go? Back o work is the answer.
Real full employment is the answer (under 5% U6). I grew up in a time when you couldn’t live to your standards by your job, you found a second job while continuing your education and improving your primary employment through promotions or other employment. People felt ashamed to collect off the government. That mindset is no more, it doesn’t exist. 1/2 of our population collects some type of handout from government.
Social Good in corporations has existed for generations. It is nice that Toms shoes gives one pair of shoes to the needy when 1 pair is bought. The problem is they charge $60 for inferior shoes (by the price) produced off our soil that cost $5 to make. Swords and Ploughs do the same thing, price wise, but at least their overcharged products are made here. Come on, $269 for a back pack. Look out Coach bags, you are next.
My opinion is that government should help the country to stimulate the economy by getting out of the way, balancing their budget, lowering taxes to spur the economy and less regulations that stifle growth.
Lawrence W Garner But I think that you Coach bag comparison is one that swordnplough would welcome, because for the same type of bag you’ll pay FAR more for a Coach bag that is made in CHINA.
The fashion industry in particular has been guilty of selling high priced designer duds made by underpaid workers in sweat shop like conditions – remember the building collapse in Bangladesh? So NisoloShoes is making high quality, hand made shoes and paying their workers fair wages. WarbyParker is making glasses AT THE SAME factories as designer brands but skipping the insane mark up – passing the savings onto consumers AND giving away glasses to those in need.
Making somewhat less as far as margin goes AND paying fair wages AND doing social good is a great combination – it gives socially conscious consumers something to get behind, and it’s a really share-able story. And profits can still be made – again – LOOK AT STARBUCKS.
However, I think that your points should be heeded by all companies working to do social good and using it as part of their brand message – Toms Shoes has already been through some pretty serious criticism along the lines of what you are saying AND because their giveaways damaged local economies, as well as leaving them open to accusations that they did no long term good.
AmyMccTobin
SwordnPlough hasn’t been in business for 6 months. Who knows if they will be a success? My Couch bag line was satire, a joke. These companies you mention will be gone in 10 years when people finally realize they are wasting their money on overpriced items. Starbucks has to keep building to keep corporate profits. They are almost at their sales limit and they definitely will be gone just like Blockbuster. Only an idiot would pay $5 for a jazzed up coffee.
Why can’t these companies pay a fair wage in the USA? That would be a social good.
Lawrence W Garner AmyMccTobin Sword & Plough has been in business for a year, but yes, it’s early days. Nisolo is growing rapidly. Starbucks is showing no signs of fading – and lots of ‘idiots,’ including me, pay the $5 willingly.
Toms Shoes has been around for 6. I think you’re off the mark, but we’ll see. Companies rise and fall much more quickly these days.
My friend Ian asked me to put this on here from FB – he’s not blog experienced yet:
Corporations should at the minimum be good citizens and that includes acting on be
half of social justice. There’s a sometimes hard to discern line between being open about supporting justice – fair wages, fair trade, green tech, charitable giving or whatever – and using that as a sort of cheap advertising, a line enthusiastically blurred by some charities as they attempt to entice corporate sponsors.
I think it’s fair to know about and show support for businesses that also do good works. I also think it’s fair to scorn companies that, like certain crass padrones, show off their largess as a way of enhancing themselves. It’s a judgement call.
But there’s a useful way to make that judgement call: look at the total corporate behavior, especially the corporate attitude towards profitability, whether narrowly or broadly drawn.,
Profit. What and whose profit? Some of the push-back against corporate social responsibility, against the notion of ethical investments since the idea was formalized forty years ago, is spawned by the Harvard Business School mythos that the business’s primary obligation is to the investors. I believe that view is as short sighted and false as the notion that humans have only a selfishness gene and that selflessness is somehow a maladaption. Folk confused about that should read some current evolutionary biology.
Workers, consumers and the community at large are at the minimum equal partners with management and investors. Maxing stock ROR for the next quarter and for top exec insane salaries is utterly destructive to the company and the economy at large.
AmyMccTobin Lawrence W Garner Lawrence, as someone who has worked for big banks, I’ve been on divergent ends of the spectrum. Big banks are all about profit. Individual compensation continues to drive to increased revenue, reduced customer church and increased revenue per customer. I was in the marketing department and we had long discussions about how we could “milk” the customer to drive more revenue for the bank. At that time we knew that the customer was “shackled” to us especially if they had multiple accounts. It would take more time and hassle to move banks.
That very same bank has seen increases in customer churn in recent years. Though it probably won’t admit it, the rise of the negative mentions in forums and on their FB wall eventually contribute to this churn. They have adopted more active listening and are more sensitive to mentions about them than ever before.
Are they riding the social good bandwagon? More than ever! And yes, they try to promote and beef up their social currency more often through their PR and advertising — whatever keeps the customer in their favour.
AND that’s the difference between what’s changed from less than a decade ago to now. Everyone, including corporations, are realizing that their reputations precede them. YES social good may help but NOW can come under extreme scrutiny as the public and customers will question the intent.
Lawrence, the reason Blockbuster went bankrupt is because it didn’t keep up with the times and the way individuals, and their social networks influenced the consumption of content. Same with Borders and Newscorp.
Its a different world out there — even the biggest (as Amy alluded to) will fall much more quickly these days.
Totally disagree that the government should maintain the “invisible hand”. It’s obvious this isn’t working out — but that’s a disagreement for another time.
By the way, I am one of those “idiots” that would pay $5 for a jazzed up coffee. The experience at Starbucks is awesome and it keeps me coming back.
As for Nisolo, Tom Shoes and Warby Parker, I wouldn’t assume they will die a premature death yet. I think they’re doing all the right things right out of the gate. They’re smart and right now the consumer is on their side.
I appreciate the invite to post on you blog Amy.
Social medias rapid growth and mass voice is here to stay and it does and will continue to effect business decisions.
Are these businesses doing social good or have they developed social good as a marketing ploy? Lawrence is correct that businesses have done social good for generations. A small local grocer in Westernport, MD, near where I grew up, carried many families through the tough times of the great depression by allowing them to run tabs and his son continued the practice until the day he retired and closed the market. McKinney’s market earned a loyalty from the community that lasted for generations for kind deeds of Mr. McKinney and his son Bill. They never used their good deeds as a marketing ploy. No sales add ever said “shop at McKinney’s Market, the place that had your back in hard times.” or anything of that nature. People in the community knew what they did and responded by doing business there. I am very happy to see some businesses continue doing good for others, but the issue of using it as the face of your business makes it a marketing ploy either in whole or in part depending motives of the business and I am not so comfortable with good deeds becoming a business plan.
Ian makes a strong point about investors. A business who is and open about their intent to use some portion of profits for social good is in the clear. Investors know what they are putting their money behind and have no grounds to gripe about the reduction in their dividends. Established companies who try to add social good spending to their bottom line are going to have a battle from stock holders. That’s not what they put money into and they will make their voices known on the topic. People selling off stock over such a change can make a business vulnerable to a take over or it could cause a battle among stock holders and the proxy war is on. Either way it will be bad for the business, its customers, employees and stock holders. Steven Covey in speaking on things people will react to uses the example of someone touching a mans rice bowl and in this context the someone is a business. If a business does anything that affects an investors, customers or employees ability to feed and care for their family (their rice bowl) they will react. A business in these days of instant social media momentum has to walk a razors edge while keeping a balance between these needs. This makes changes in business practices a tenuous problem be they socially good or not.
Another problem for social good business to get past is product cost. As Lawrence mentioned, most of these business have a significant mark up on their products because of their social activities. No one is making us buy their products, and certainly many simply do not have the fungible cash to spend $269 for a back pack. And the budget conscious will have a hard time choosing the $269 back pack over the $15 one at a department store. Now add the pressures of social media and “keeping up with the Joneses” to the equation and we create a growing culture of the “social good consumer” and the “social evil consumer”. Leaving any kid in school not carrying the “social good back pack” a potential out cast or target of ridiculed. If you think this is an over reach on my part think of all the other items that are status symbols in schools and communities. Good intentioned people or business don’t always think through all the results of their actions. Social pressure often has unintentioned results and victims.
As to Starbucks, they are my choice of last resort. Not because of their social choices or cost, but because they’ve never met a coffee bean they didn’t scorch. I love dark rich coffee, but I don’t like drinking charcoal.
AmyMccTobin, hessiej, BobJonesArC, ajenkins
I should preface my following comments by identifying that I am a member of the ArCompany Executive Team (twitter: @BobJonesArC). However, this does not influence my comments below.
In my opinion, the decision to buy from a “socially responsible” company, or not, is a matter of personal choice. And when it comes to personal choice, there is no right or wrong answer. What I find more intriguing is that this conversation around “buying based on social” seems to miss the fact that often “socially responsible” companies act this way because it supports a long term successful business model.
If I properly understand the Nisolo business model, they believe that the cobblers / shoemakers in Peru are artisans and are a valuable asset in the creation of Nisolo’s beautiful shoes. In fact, these attributes of the hand made craftsmanship and the artistic beauty are some of the key reasons Nisolo customers buy their product.
We don’t have to go to a “third world” country to see a comparative story about “socially responsible” versus “social is not an important focus”. Just compare Costco to Walmart. Costco’s CEO http://www.brainyquote.com/quotes/authors/j/james_sinegal.html, was once quoted as saying, “The emphasis on employees at http://www.costco.com/is the key to the company’s success and ability to consistently provide a better shopping experience for its members.” I shop at both Costco and Walmart and I would be lying if I said that price was not a key factor. And while prices at both are typically low and comparable, it has been my experience that Costco seems to be better organized, have more selection, is easier to find things, faster through the cash out, and looks less like a bomb exploded at the end of a “maniacal weekend of shopping madness”. So I would have to say that I prefer to shop at Costco.
I don’t know whether the above perspective of Costco can be directly related to their approach to paying and nurturing their employees, but I would say its probably a good assumption. It’s been my experience in the Telecom and IT sector that motivated employees make for high performance teams (with little or no turnover), and this can make all the difference with long term customer relationships. Further, it has been my experience that strong customer relationships lead to revenue and usually higher margins because price is not the only deciding factor. Perhaps “social responsibility” is just good long term business practice, with other benefits!
Have a look at the article on i-Sight.com ( http://i-sight.com/employee-relations/employee-relations-best-practices-costco/ ) for more information on Costco’s HR practices and why being “socially responsible” may be a smart business model.
Is being “socially responsible” demonstrating smart asset management? I invite others to comment both pro and con so we can put some hard measurables on this issue of being “socially responsible”.
Bob Jones
BobJonesArC AmyMccTobin hessiej ajenkins NisoloShoes
Yes Bob! Nisolo sees itself as part of the fashion industry, bringing high quality shoes at actually affordable prices WHILE doing social good.
And interesting that you brought us back to Costco/Walmart, because of course that is how the conversation began…
I don’t believe in telling anyone where they should spend their money – it is a personal choice – but B Corps and Quadruple Bottom Line companies are on the rise. Both they AND traditional companies with Corporate Responsibility companies need to beware the PR risks involved in their endeavors.
I need to read this series. You need to take this theme and run with it. None of the jerks pushing Social Business mention good for anyone but owners and upper management. When I bring up better wages they all stay quiet.
But as with some of this discussion people matter too. The VermontCoffeeCo only sells Fair Trade Organic Coffee. But when I met with them I was surprised those two things weren’t as impactful a motivation for customers. It is important to me. And I am glad they have a social mission and won’t change based on any earnings reasoning. But people should care. I see Chobani attacked for GMO’s in the US (not all milk comes from grassfed cows) but they donate 10% of profits to charity. You don’t see Nabisco doing this and they use GMO’s like they are a drunkard with a keg of beer tapped and no one but them to drink it.
There are lots of case studies showing do good companies do well financially. But first we have to get rid of the hypocrisy of our Democracy. Walmart needs Government Provided Social Safety Net help: Food Stamps. Healthcare. Etc for both employees and customers. But they pump money into Christian Small Government Groups. And there is nothing Christian about promoting poverty. Nor will Walmart get help for their business from those politicians they support who are cutting everything that allows Walmart to pay low wages.
I like McDonald’s ‘We are only in it for the money’. At least they are honest.
Howie Goldfarb VermontCoffeeCo Chobani Well tell us how you really feel Howie! 🙂
Yes, this series has opened a new world of business for us here at ArCompany and these social good companies are on the rise for a reason. Perhaps it’s because society has become frustrated with our government’s inability to fix societal problems, or perhaps it’s because younger generations – who are driving most of these companies – have different priorities and are looking for more meaning in life.
Whatever it is, we are enjoying focusing on them every Sunday.
Howie Goldfarb VermontCoffeeCo Chobani Howie, I remember when it didn’t matter to me to go to Walmart despite their questionable business practices. Eventually i started listening to the staunch anti-Walmart supporters, who made so much sense. I read a lot about sustainability and what companies have done that have contributed to the unhealthiness of our food, the high incidence of cancer, the plight of endangered species, the slow destruction of our planet, and the impact on society as a whole. More people that I know care about how their dollar contributes to this vicious cycle. There is more information out there. This millenial generation has a much different mindset than we do, and they think this way in greater numbers. I think government will be needed develop policy that puts more stringent measures into place that scrutinize a company’s move into this space — especially determining the impacts of their efforts on those areas I’ve mentioned. Europe is much more advanced in this regard and only approve e.g. cosmetic products, for example, that have ave a tolerable level of “ingredients” that increase toxicity with may lead to certain health risks. Suffice it to say, there is strength in numbers. I pray we begin to weed out those who do it for money vs. those who do it to help society.
Profit, Capitalism and Corporations are all dirty words to the left, socialists and the preachers of Social justice. Without these 3 things we would be a third world country. Corp. give more to charity then anyone.
This is a great conversation, and I am thrilled to be a part! At our house this discussion has been going on for a couple of years. Perhaps because we are in the midst of our parenting years, our dialogue has not been framed in the can and should business replace government for social good, but, rather, in the context of taking every opportunity to teach individual responsibility and battle against the culture of entitlement.
The driving forces in our conversations and decisions have been that people matter and have value, our dollars can work harder in and for our community, and that we want to always be participants in social justice issues.
I find the arguments against TOMS thoughtful, but I am encouraged by them and am a proud owner of their products. I also admire the vision and passion of Nisolo. With so many needs being unmet, I think there is currently room for both models to coexist. For TOMs “failings” by some standards to not have had a long-sighted view of things, they make up for it with their passion to make something a little more right. They are failing at the right things, and strike me as a company with a wildly compassionate and teachable culture. (We also love MinnetonkaMoccs BWBooks NoondayStyle and WarbyParker )
We are also conscious of shopping at home with companies that treat people well. We are not WalMart shoppers. How companies treat their employees matters.
Just like this conversation has been framed in a “business vs government” format I think that there has been a mistaken profit vs. social good mentality. I am pro-profit; that is how business (and family) is run. One commenter stated that he believes these companies will be out of business in 10 years when people realize that they are paying high prices for overpriced items. I think the question may be, are we willing to continue to endure the human cost of our massively sold underpriced items?
And a little more food for thought, what do y’all think of this:
(see Bono: http://www.inquisitr.com/428836/bono-only-capitalism-can-end-poverty-video/)
BrandsofJustice TOMS Nisolo MinnetonkaMoccs BWBooks NoondayStyle WarbyParker
Thanks for stopping by Katy! You have been a great conduit for social good companies.
Also, in fairness to TOMS , they have responded to the criticism AND changed their model. Also, their Tom’s Marketplace is highlighting a lot of smaller companies.
Yes, I think you’re right – it’s about responsibility, both personally and in business.
Lawrence W Garner These companies ARE making money. No one is saying they shouldn’t make a profit.
Think the Bono link I posted would be a breathe of fresh air for @Lawrence W Garner. Profit is essential in business. Actually, this is part of the reason I am a Ford girl as they didn’t take govt bailout money. How great it is therefore when a company can make a profit while benefitting others and potentially offering others the same opportunity for profit. It doesn’t mean that all companies should match this newly emerging pattern. However, I love the focus on how business can impact people and impact social justice issues. Business is a powerful vehicle, and those who use it responsibly have the opportunity to again make business about humanity and to do immense good.