There’s been a lot of positive talk about social enterprises recently. No, not dating agencies, but companies that are run with ethical objectives or structures. They are more resilient than private sector companies, apparently, and the public trusts them more.
One example is Welsh Water, which distributes
a dividend to its customers. Managing director
Nigel Annett was a key speaker at the Voice 10
social enterprise conference in February, under
the slogan “No more business as usual”. He said
the absence of shareholders allowed Welsh Water
to be more efficient and reinvest more of its income.
But it does not have magical powers. A week after taking the stand at Voice 10, Annett announced Welsh Water was cutting 300 jobs to meet the tough price limits imposed by Ofwat.
When the news broke, some of the 300 staff may well have wished they were working for a traditional business such as Admiral Group or First Hydro, which lead our Profit 50 ranking this month. Many of these supposedly hard-nosed companies treat their workers well and invest a lot in their wider communities.
That’s not to say the social enterprise model is broken. Companies in the private sector have laid off thousands of employees in the past year. Welsh Water’s price cuts, although made under pressure, should benefit consumers and businesses across Wales.
Some social enterprises are more like charities, with explicitly social goals such as helping the homeless. They are different. But the gap between Welsh Water and typical companies is pretty thin. It’s more about where the money comes from and how profits are distributed. After all, which retailer helps the poor more: social enterprise John Lewis with its upmarket products, or non-social Peacocks with its affordable clobber?
Welsh Water’s decision may signal a coming of age for social enterprises. As they move into the mainstream, they will have to make tough decisions. Customers will judge them by the goods and services they provide, and employees by their terms and conditions. Perhaps, after all, it’s just business as usual.
Douglas Friedli, editor
Also in: March 2010
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Up and away
After 18 months in the doldrums, the Alternative Investment Market is starting to look more welcoming for companies in certain sectors, finds John Sanders.
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Dramatic times
There’s a mood of optimism in the media world as the BBC prepares to crank up its drama output from Cardiff. But, finds Douglas Friedli, the rest of the industry is wrestling with unprecedented challenges.