Every business a social enterprise

April 23, 2012

Managing For Society, The Manila Times

I was recently in a seminar at De La Salle University where Tony Meloto of Gawad Kalinga (GK) shared the vision and activities of their new Center for Social Innovation (CSI). I have to admit that I’m quite inspired by what GK and CSI are doing -- especially their audacity to call on everyone, especially the young, to build businesses of hope that will serve and empower the country’s large sector of poor. GK’s recent recognition for outstanding social entrepreneurship from the Skoll Foundation is well-deserved. They have made the process of caring for the poor, and helping them help themselves, understandable and doable. They are strengthening the social fabric of the country and inspiring a new generation to believe that they can make a positive difference in their country through business activity.

But therein lays a potential problem. The more that GK and CSI succeed in the public’s and the world’s eyes as a wonderful approach to civic participation in empowering the poor, the more people might get the wrong message that the new breed of social enterprises alone is the solution to the country’s poverty situation. Poverty will not be solved without addressing a more fundamental problem: that many business organizations are benefiting from exploiting the poor and are, therefore, institutionalizing poverty in the country. What I mean is that many companies have reconfigured their labor profile so that they are using more temporary workers with low pay and no long-term benefits. This is often called by many related names -- contractualization, outsourcing, contingent employees, etc.

The central feature of this so-called “best practice” is that companies secure their short-term profit through work arrangements which keep their low-level employees in insecure and relatively dead-end jobs. This is the one feature in Philippine business which retards the formation of a larger middle class in the country. Given the country’s continuing economic growth, it isn’t surprising that the sharing of this growth remains a huge problem.

Businesses are supposed to be sharing the fruits of productive activity with workers but it’s just not happening. It’s encouraging that social enterprises are moving in to fill the gap and I wish them more power. But I don’t think we should be jumping for joy just as yet. To do so would be like throwing a party because we have active citizens clearing a river of trash while factories and homes beside the river continue to throw trash into it. Businesses that help people get out of poverty simply do not make up for the many other businesses that benefit from keeping people poor.

What I hope businesses will learn from GK and CSI is that every Philippine business should be a social enterprise. What this means is that every business must contribute to the common good by finding some ways to address the needs of the poor through their products and services and, secondly, by sharing the fruits of business activity with its employees. To be fair, there are many companies who do provide products and services within the reach of the poor. Fast-food chains and malls immediately come to mind. The problem is that many of these companies provide cheap products and services to customers at the expense of their employees. This isn’t going to make a dent on our poverty problem.

For most of the poor, their only asset is their capacity to work. This is what they bring into the business mix. If the poor can be engaged and developed to create more value for the business and then be justly compensated for the value they help create, they stand a better chance of living decent lives. Then businesses can be the carriers of hope that our country always meant them to be.

Dr. Benito Teehankee is Chairman of the Management and Organization Department of De La Salle University. He may be emailed at benito.teehankee@dlsu.edu.ph. The views expressed above are the author's and do not necessarily reflect the official position of De La Salle University, its faculty and administrators.