The Key to Balance? Your Team
Don’t underestimate the importance of hiring when pursuing mission and profits.
- February 11, 2022
- CBR - Social Impact
George Boghos founded Autism in Motion Clinics, a mission-driven company that provides autism therapy in underserved communities in the United States. As the website states, “AIM Clinics was born out of a need for better autism care for children in Arkansas”—inspired by a woman, later the company’s first clinical director, who couldn’t find the therapists her sons needed in the mid-South region.
AIM is also a for-profit enterprise. The dual nature of the company is embodied by the team—all care about both the financial viability and the mission of the company. But the dilution effect in psychology holds that people assume that adding goals essentially distracts from an original, focal goal, and at AIM, employees tend to default to the one they most want to maximize: mission or profits. As Boghos will tell you, that puts the company’s twin goals (and sometimes the people as well) at odds.
Boghos has learned, however, to keep those two groups rowing in the same direction, as he says. He knows that these two goals, more mission and more profits, are actually mutually reinforcing. So when the team has to make big decisions such as how to structure incentives for the clinic staff, or small decisions such as the content of a tweet about World Autism Awareness Day, he pays close attention to how decisions are guided by both the mission and profitability goals of the company.
This is a challenge to which more and more managers can relate. Many companies say they are balancing making profits with pursuing a mission, be it environmental sustainability, equality, or the like. Those that don’t may face demands from consumers and employees that they do so in the future. Rather than being sidelined as a “soft” initiative with little relationship to the central, profit-making units of a business, corporate social responsibility is increasingly seen as integral to what companies are producing and how they’re delivering these products or services.
And as corporate social responsibility becomes embedded in business units, it presents a major test for managers to keep employees aligned and customers engaged. There are business trade-offs between profit and mission, and managers can’t always anticipate what these trade-offs will be. The best way to prepare for them, then, is by building a team that is sensitive to them and can help keep priorities balanced.
If you’re in charge, it’s unlikely that everyone you hire will turn out to understand perfectly, align with, and be motivated (much less equally motivated) by both goals. And if you seek to bring on only people who understand your precise and ever-changing mix of social and profit targets, you will never find enough workers, particularly in this labor market.
This means you will often hire some people who lean in one direction and some who lean the other way. The challenge is that your company, much like a boat, has charted a course and needs a properly balanced crew. If you don’t have that, you can be tipped by a gust that arrives in the form of a bad quarter or other disappointing news. One minute you’re running a company, and the next you’re bailing water out of the boat.
It’s hard to keep your dual-minded crew motivated, happy, and afloat. Lean too far in either direction and you risk destroying value. The exact risk you run depends on variables such as your industry and market position, but the larger picture is universal: a company that strays from its mission will lose customers and key employees, while one that forgets its profit motive will lose its ability to fuel growth or to do business altogether. You can’t maximize two things, by definition. The best you can do is optimize them. Both priorities are equally important and should support each other, and it’s up to the person in charge to keep the sometimes-competing interests aligned.
Particularly in the absence of well-developed, formal frameworks, it’s imperative to have people with diverse opinions working together to hash out a solution.
This comes down to hiring, some research suggests. Maitreesh Ghatak, an economist at the London School of Economics, covers some of this territory in a chapter in The Nonprofit Sector: A Research Handbook, published in 2020. Economists, he writes, based many traditional models on the idea that companies (and people) fall into two camps: private companies that are only profit maximizing and nonprofit entities that are only social maximizing. In the face of the new “hybrid” entities (either for-profits seeking a social goal or nonprofits earning market-driven surplus), many models are now flummoxed by the idea of this new class of social enterprises, which “flexibly combine features of both nonprofit and for-profit organizations.” Conventional economic models do not quite fit these entities.
Even the language used by researchers studying these phenomena is lacking in standard economic terminology, he notes: “In the economics literature, mission is not a widely used term, and instead individuals or organizations are said to pursue objectives, which can be financial (e.g., profit maximization) or social (e.g., a cleaner environment).” US legal precedent and market forces typically push managers to prioritize the financial objectives, but executives and managers recognize there is value in the social ones, or what they often refer to as mission.
The manager at a mission-driven company, balancing its two halves, has what Ghatak calls a “mission-integrity” problem, finding it difficult to forecast how employees will react to various factors such as compensation and incentives. Profit sharing is usually a simple way to motivate profit-driven employees, but what works for mission-driven ones? Moreover, how should a company screen for and hire people who are truly committed to the mission? The models that traditional corporate managers have used don’t function for mission-driven companies.
To work through some of these issues, Ghatak suggests frameworks, drawing on joint research with his LSE colleague Sir Timothy Besley, that involve thinking of a hybrid organization as one with two different but rigid missions, where employees are either selfish (profit driven) or motivated (mission driven), as he puts it. And he concludes that to find and maintain balance at a social venture, hiring practices must be prioritized. In order to keep your ship in balance, you have to select the right crew.
Of course, people are complicated and can have more than one motivation. But Ghatak is at the lead of wrestling with this topic theoretically, and it’ll likely be some time before we have anything resembling empirical data to back up his arguments or others that arise. In the meantime, what we have to learn from is anecdotal evidence, including data from managers such as AIM’s Boghos, among others.
I have been an advisor to AIM since its founding, including as a board member, which gives me some insight into how this balancing act plays out. In addition to a clear mission, AIM has a strong business case, which helped it win the John Edwardson, ’72, Social New Venture Challenge, cosponsored by Chicago Booth’s Rustandy Center for Social Sector Innovation and the Polsky Center for Entrepreneurship and Innovation at the University of Chicago, in 2018. AIM has carved out a high-growth position by focusing on markets in less populous cities in the southern United States, where there is a dearth of clinicians who work with children with autism.
With every new hire, particularly near the top of the company’s hierarchy, Boghos has to recalibrate the company and maintain balance. If AIM were to boost profits by compromising care, his company would lose the trust of parents who are counting on it to help their children, as well as alienate the scarce clinical talent attracted by the culture at the company. To prevent this, he has to keep pronounced and present the voices of people who are passionate about its mission. At the same time, he has to ensure operations are profitable and incentives are aligned so that his team is able to maintain the growth afforded by profitability. This conforms with Ghatak’s framework.
Make sure you have a balanced executive team of people who will bring different viewpoints to the table and be able to discuss them honestly and respectfully.
Yet, complicating matters, the line between mission and profit isn’t always clear. I’m also a board member at AutonomyWorks, a business-process outsourcing company that connects people with autism with work to which they are well suited—jobs that require attention to detail and focus, and tend to entail repetitive tasks. AutonomyWorks was founded by the parent of a child with autism, David Friedman, a former social entrepreneur in residence at the Rustandy Center and CEO of the company, whose mission is to create jobs for people with autism and other disabilities.
But balance is more complicated than pairing a mission-driven person with a profit-focused one. Often decisions can be made that optimize mission and profit together, but it isn’t always that simple. Consider the question of pay that AutonomyWorks faces. More than 80 percent of American adults with autism are unemployed, and for many, having a job would be truly, deeply life-changing. Meanwhile, those that are employed barely make minimum wage. These factors raise more questions bathed in gray for AutonomyWorks. Since the roles being hired for tend to otherwise go to offshore alternatives, should the company peg to the local minimum wage, thus enabling the company to keep its rates competitive, get more clients, and hire more people in life-changing jobs? Or, is it critical to pay its workers a local living wage to ensure financial independence, even if that dramatically affects its ability to lock in contracts?
Mission and profit can be opposing forces, but in working through questions such as these, it’s important to have people with the two perspectives come together as they highlight opportunities and risks. Consider a hypothetical discussion between AutonomyWorks and a big multinational. The multinational is considering replacing its current full-time workers, paid $20/hour, with a workforce of people with autism to be paid $15/hour and no benefits. This would be good for AutonomyWorks’ profits, and more importantly, it would put a lot of people with autism to work, but they would be paid less than the rate the multinational was paying. Is it a deal worth doing?
These are tough questions, and particularly in the absence of well-developed, formal frameworks, it’s imperative to have people with diverse opinions working together to hash out a solution.
Of course, multinationals routinely send jobs offshore to save money. A team with only a profit-oriented view may jump into a deal with a multinational without considering that employees and hiring partners might not be familiar with this practice and may react negatively. A team that is only mission driven may reject the project on the grounds that people with autism shouldn’t be paid any less than the going rate. They may not consider the idea of pushing the multinational to pay higher wages to generate goodwill and a narrative at home about making a social impact. Combining viewpoints on a decision prevents one-sided assumptions from prevailing.
Make sure you have a balanced executive team of people who will bring different viewpoints to the table and be able to discuss them honestly and respectfully. This only works when your team can be transparent with themselves and others about what frame they are taking on decisions, and which direction that frame rows the boat. Include them in decisions big and small as a constant sounding board, and use those decisions to underscore the idea that mission and profitability can be reinforcing. Lastly, don’t wait for agreement or consensus that may never arrive. It’s ultimately up to you to make the decisions that will keep the boat stable and moving ahead.
Christina Hachikian is clinical associate professor of strategic management at Chicago Booth.
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