By Kai Lyla
Many people start businesses for reasons other than making money. In fact, thousands of business leaders who are already solvent start enterprises with the key aim of giving back to the wider community.
In this article, we’ll explore some of the most effective leadership styles that support socially minded enterprises, and what opportunities you might take to integrate social impact into your business model.
Where do you start learning about how to run a purpose-focused business?
One of the best ways to learn more about leading a purpose-driven business is to study successful leaders and consider the steps they took to get to where they are, and why they are so committed.
Business leader Ehsan Bayat, for example, is an entrepreneur who is deeply concerned about developing and revitalizing communities in Afghanistan, his home nation. His inspiration for this comes from having had to relocate from Afghanistan to the US during the 1979 Soviet invasion.
Alongside learning from such stories, it’s worth studying business leadership styles that complement socially motivated enterprises.
What are some effective social business leadership styles?
Some of the most effective social business leadership styles include the laissez-faire, the transformational and the servant. Let’s briefly explore each of these styles and how they can lend themselves to social enterprises.
Laissez-faire
Laissez-faire leaders are very hands-off. They typically focus on delegating tasks and avoid micromanagement. This means that they can split their time working on personal projects and social efforts while trusting their employees to take care of the day-to-day running of the business.
These leaders also do a great job of encouraging accountability and ownership – meaning that many people under their management will feel empowered to get behind certain causes.
Transformational
Transformational leaders, meanwhile, really get behind their people. They believe that creativity is a virtue, and do all that they can to engage closely with employees. Working with a transformational leader can be highly inspiring and rewarding, though there is always a risk of burnout and potentially losing sight of the bigger picture.
Transformational leaders are fantastic ambassadors for social causes because they encourage their people to think creatively and to innovate as much as possible to solve difficult challenges. Investing in people often leads to people investing in causes – they’re easy leaders to get behind.
Research backs this up – Rebecca Abraham’s paper reveals that transformational leaders can help to boost employee performance by as much as 22%.
Servant
Servant leaders work similarly to transformational leaders in that they believe in the fulfillment of their people. They want their employees to be happy and satisfied at work – which makes them fantastic communicators. This in turn helps to cultivate trust and boost productivity.
It’s easy to see how this leadership style can translate well to purpose-driven enterprises. Servant leaders put people and causes first, and therefore focus strongly on social missions if they’re important to them. Servant leaders also work hard on long-term impacts – an essential stance to take when looking to make genuinely positive change.
What are some opportunities you could take to make social impact part of your business model?
Regardless of the leadership style you adopt, there are a few key ways that you could incorporate social impact into your business model. You don’t have to be a transformational, servant or laissez-faire leader to make the most of these insights – they can be great starting points for leaders from all walks of life interested in various causes.
- Transparently set aside a percentage of your profits toward causes you care about – do so publicly to increase accountability.
- Change the way that you source raw materials and goods – look at ethical supply chains and consider who made the items and resources you use, and if you can change your sources without harming your bottom line.
- Take time to learn more about what constitutes a ‘living wage’ for your employees – you can be focused on social causes and purposes just by ensuring that you pay people fairly.
- Think carefully about why you do what you do outside of making a profit – how could you make the world a better place?
- Make employee resources such as mental health programs and healthcare support freely available to all who work for you.
- Collaborate with other businesspeople who share your vision and who want to make similar differences – and share ideas and insights.
What makes people trust brands that claim to care about social causes?
Ultimately, consumers trust brands and social entrepreneurships that actually deliver on their promises – you need a clear set of values and measurable impact to show people that you’re not purely getting behind causes for the optics, such as by greenwashing.
Above all, as a supportive and caring leader, you need to be consistent in how you support and inspire your people – by doing this, consumers will see that you genuinely care about the causes you get behind.
Remember – it’s going to take time to build a successful purpose-driven business – and regardless of what leadership style you choose, you need to be transparent and provide evidence of the work you do!
