June/July 2019

A fresh look at social business

In the second of our specialist speed lectures from the University of Salford’s Business School, GM Business Connect visited with Associate Lecturer Martyn Willcock – Co-Director for the School’s Centre for Social Business. We asked Martyn to share with us his views on the definitions and role of Social Business within the wider business community, and how Salford Business School can help Greater Manchester businesses apply the attributes of Social Business to their own culture.

Martyn – please define what social business is?
“It covers a wide range of organisations but effectively it is any that are motivated by helping people or the environment. It covers many legal structures and formats such as (in the main) charities, social enterprises and co-operatives; these can be Community Interest Companies (CICs) and many other business structures. It also covers other mainstream businesses that are actively concerned about their role in their local community and environment.”

Is there one thing that would sum up a social business?
“For a business to be wholly described as a social business it would be profit for purpose, not for the shareholders. These organisations will have an article written into their governing documents stating that the profits must be retained for the benefit of the community or purpose it serves.”

How do they differ from charities?
“They differ because they rely on trading income including contracts with local authorities – they are with a business mindset and not operating on donations alone. Business models like CICs are run as limited companies, but there is a distinction that makes them a social business. They are limited by guarantee rather than have shareholders. The profits need to be retained within the organisation.”

Is there a role for traditional businesses to be social businesses or, is this strictly down to how they are set up rather than what they do? What about philanthropy?
“It’s about a state of mind. There are many small private businesses that operate on a social model for example: small family businesses who operate like a small co-operative. Social Business tends to be purpose driven by the creator’s passion. Areas of business operation can typically include homelessness, the arts, concern about poverty, educational and environmental issues. I define philanthropic as someone making a donation to a good cause, whereas this is more about someone identifying a gap or failure within the market or immediate community and setting up a business with a social model  to address it. A traditional business would make profits that would go to the shareholders, but a social enterprise would try to generate profits and then reinvest those profits back in to the business – to do more of the good work it was set up to do.”

How does Corporate Social Responsibility (CSR) fit in?
“Many corporate businesses work hand in hand with social enterprises as part of their CSR. There is more engagement as the profile of CSR increases and there are compliance issues where organisations of over 500 people now have to produce a CSR report. They need to engage with sustainability and be good ‘corporate citizens’. The result is that larger businesses are engaging much more closely with social enterprises, charities and other charitable concerns. So, CSR could support a charity, or the corporation could interact with a social business through its CSR policy, but, a social business is effectively a standalone business operating with socially motivated aims and objectives.”

Tell us more about your role within the University?
“My role is within the Centre for Social Business. We look at research within socially motivated organisations and we look at supporting students to set up such businesses. We also look at engaging with social enterprises in the local area (Salford and Greater Manchester) and look at how the university can collaborate with them. There are a number of research projects that we are doing in collaboration with social enterprises and charity organisations. It’s a great opportunity for students to work in placements within those organisations. For example, Masters students need to do an industrial collaboration project as part of their dissertation, and charities and social enterprises tend to be lacking in resources and have skills shortages, so we can join the two together and provide a great experience for all parties. In fact, all businesses can benefit from our Business School students’ wide range of skills including accounting and finance, operations and project management, digital marketing and so on. It is essentially a short consultancy project that is done for the business. It involves a brief for the student for what is required, and from there they work within the organisation for a set period helping with presentations, guiding activities and reporting on CSR activity as part of an organisation’s requirements and compliance needs.”

What sort of businesses do you work with?
“So far this year we have taken students on visits to 20 different social enterprises across the region where they experience why the organisation was set up, what need was identified, its history, operational issues, a tour round the business and a chance to question the owners and managers about any topic (sustainability, marketing, finance, etc) and their issues. It also forms part of the University’s CSR commitments too. The engagements produce great partnerships with students taking part in many more projects. One of the core modules for final year students is Business Ethics and Sustainability, so the visits to these businesses link in with the curriculum. Overall though it’s about nurturing well rounded students who take an ethical approach when they join a business in the future.”

How do traditional businesses engage with you?
“We have an employability engagement team that links businesses projects and placements with suitable students. I tend to focus on the social enterprises in the area. As a business school we are involved with Salford as a social enterprise place, recognised by Social Enterprise UK. We are part of their network and we promote them by hosting their networking meetings, giving students the chance to go on those and engage the local business community directly.”

If I was a small business looking to take on staff or employees, what benefit would I have in approaching you?
“We are looking to engage our students with any kind of business looking to give them a positive experience. It also gives small businesses opportunity to gain knowledge and insight into the latest approaches to areas like technology and finance because of our students’ fresh approach to the modern business world.”

How would you define the third sector?
“It’s a grey area as to what the term means. There are a variety of terms used now for ‘third sector’ which was really the government’s original term for a particular business sector. It now tends to cover every aspect of social businesses, including areas like voluntary community social enterprises and co-operatives. The term seems to be an over-arching description of the whole sector.”

Tell us about your area of research?
“My current research is into ‘Graduate recruitment into third sector/social enterprise’. Approximately 7% of the population work for this sector but when you survey students, anything between 70 – 85% want to work for ethical organisations, however, less than 2% of students end up working there after they graduate. There are many reasons for this, including perceptions of poor pay, lack of opportunities, lack of awareness and how to get involved. People tend to migrate to it later in their careers, probably after experiencing the commercial world and wanting to help others.

Tell us about the ethically oriented aspect of your remit?
“There is a core module for most students on ethics and sustainability looking at ethical leadership and environmental issues (plastic, waste, water consumption, renewable energies, etc), however, ethical principles are embedded in all the modules. The students can take this in to mainstream business. Our role is to plant a seed that may take a number of years to germinate. However, we make a real difference and produce a much more rounded graduate going into the business community.”

Do you define the social awareness of students as crucial?
“Yes. Their responsibility to community and environment is crucial to long-term business sustainability. The students are also clued into many more current issues like global warming for example. There are actually a number of alumni coming back to the university for support in setting up socially motivated businesses, and we help them with documentation, aims and objectives, as well as every aspect of making a successful start for their business. Approximately 50% of the start-up businesses that the university support are socially motivated. The other 50% should also have a more socially responsible approach to business too.”

Can you elaborate on the different business models?
“There are about 15 different legal structures and formats in the UK – about 7 of which could be classified specifically as a social enterprise.”

What is Social Value?
“There is the Social Value Act which was introduced in 2013. It requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits. Before they start the procurement process, commissioners should think about whether the services they are going to buy, or the way they are going to buy them, could secure these benefits for their area or stakeholders. The Act is a tool to help commissioners get more value for money out of procurement. It also encourages commissioners to talk to their local provider market or community to design better services, often finding new and innovative solutions to difficult problems. This relates to the number of local people they employ, the number of apprenticeships they will take on, the impact on local community, and so on. It’s about retaining the money in the local area and adding social value to it. It reduces things like the need for benefits and other support from the public sector. It’s a procurement process, and as a case in point the University of Salford is part of the Salford Social Alliance.”

Find out more about your opportunities to work with Salford Business School; contact Sam Wood on 0161 295 5361, or email s.e.wood@salford.ac.uk  www.salford.ac.uk/business-school