An interesting case study about business ethics in Management for Social Enterprise (www.sagepublications.com) is that of Divine Chocolate Ltd. Its mission is to ‘improve the lives and opportunities of small-scale cocoa farmers in West Africa by establishing a dynamic, branded fair trade chocolate marketing company in the large UK chocolate market, thus putting the farmers higher up the value chain.'
The company sets itself the task of confronting the global problem of developing world commodity producers becoming poorer while multinational corporations increase their profits and market share from the sale of manufactured products derived from the commodities provided by these producers, narrate the authors, Bob Doherty, George Foster, Chris Mason, John Meehan, Karon Meehan, Neil Rotheroe, and Maureen Royce. “To do this, Divine engages in the chocolate market according to a fair trade model that seeks to protect and provide human rights and justice to smallholding cocoa farmers in Ghana.”
Ownership structure of Divine is that 45 per cent is owned by Kuapo Kokoo, a Ghanaian farmers' union, which is the recipient of the fair trade benefits, and the balance of the equity is owned by founder organisations, including Christian Aid, Body Shop, Comic Relief, and Twin Trading. One learns that the Kuapo Kokoo shares cannot be diluted, apart from by the inclusion of other farmers; and that the Northern hemisphere equity allows for an innovative and a very business-like trading approach in the Northern markets.
Social premium
The business model of Divine allows for the payment of a transparently set guaranteed fair trade price to the farmers for their cocoa beans, the book informs. “It moves them away from income dictated by world commodity markets, set by the forces of speculation, often at prices at or below subsistence level.”
The authors note that, in addition, a social premium is also paid, on a per tonne basis. They add that the premium is used by the farmers to assist in their social and environmental community infrastructure, including education, health, access to safe drinking water and so on; these projects are designed and implemented through the resources of the farmers' cooperative, which operates according to democratic principles. And, as the book highlights, the producers benefit both directly (in the form of dividends paid to farmers on shares owned), and indirectly (from the significant investment in the producer support and development programme).
Outcomes vs outputs
Another example in the book is about ADHD (Attention Deficit Hyperactivity Disorder) Foundation in the UK, which emphasises the need to focus on outcomes for the recipients of service innovations rather than on bureaucratically determined outputs demanded as surrogates of quality.
Stating that ADHD – a commonly diagnosed behavioural disorder – need not be a pathological condition which isolates and stigmatises those affected by it, the Foundation avers that when parents and children learn to understand and manage ADHD they are empowered to join with agencies to make positive improvements. “This changes their role from being passive recipients of services for which there are long waiting lists to being stakeholders in the design and delivery of services.”
Parental involvement, as the authors describe, ranges through a spectrum, from volunteering, engaging with the child's school, completing the organisation's accreditation programme, to some recipients becoming paid workers at the Foundation. The organisation measures itself by the outcomes achieved for the service recipients, in terms of their own measure, and not as per some conveniently measurable form of statistic or output. “This approach clearly demands resources and the qualitative appraisal needed does not easily satisfy the tick boxes of funders' requirements.”
Measure of progress
The Foundation's example illustrates what is meant by moving away from the top-down, telling approach to one that is sensitive to the views, needs and involvement of those receiving services, the authors observe. “It emphasises the categorical imperative to treat users of services as ends in themselves, with their own perceptions, their own life opportunity needs and so on. It is based in the reality of what they need to be achieved in order to be able to progress.”
This is in contrast to the often-criticised public-sector-led approach where the measurement of success is by means of ‘forced' outputs rather than outcomes, the authors distinguish. “These outputs would typically be the number of cases ‘treated' rather than the outcomes achieved for those individuals. This arrangement is enforced to satisfy the reporting needs of the bureaucracy, not the needs of those that it sets out to serve.”
Inspiring rehabilitation
In the intro chapter, the authors take us to Poland, where Hotel Klos (www.klos.tpn.org.pl) is discussed as a good example of a new type of social enterprise (SE). “This SE, based near ŁódŸ in Poland, rehabilitates people who are suffering from schizophrenia. As part of this rehabilitation, Hotel Klos provides training and employment in all aspects of running a hotel.”
The inspiration for this SE, as the book chronicles, came after a visit to the Forth Sector (www.forthsector.org.uk), an SE based in Scotland that has developed a number of successful SEs to generate employment opportunities for those excluded by mental health problems. Opened in 2005, Hotel Klos is financed by the European Equal project, National Fund for the Disabled, National Health Care Agency and the municipality of ŁódŸ; and the Polish Social Economy Centre provides the hotel with advice and help.
Towards financial stability
The book informs that the rehabilitation centre situated near the hotel site assists patients through group discussion and activities, emotion and stress support, and creative and life-skills training. “Sheltered employment training in the hotel is provided in all areas, including catering, front-of-house reception duties, secretarial, restaurant waiting skills, plus the duties of porters and cleaners.”
The authors report that the first 31 beneficiaries taken through the hotel training programme have already found jobs in the developing Polish tourist industry. And to achieve financial stability, the hotel aims to build up its occupancy rate by targeting the residential conference market and sell its services to other third-sector organisations and the socially responsible corporate sector.
Recommended study for the socially aware professionals.
