There's more to a 'good business' than just money - this is now the prevalent perception that guides potential investors, consumers, employers and even the common public. A recent study to gauge people's understanding of a 'good business' found that conventional metrics including financial performance, market share or even profitability have now taken a back seat to qualities like ethics, social responsibility and inclusiveness.
The 'Mahindra Good Business Study', commissioned by the Mahindra Group to mark its 75th anniversary, showed that the perception of a good business "is a deeply personal view, based on individual values and life experiences" and a key business issue. The study surveyed 2,089 respondents aged between 18-65 years across ten Tier 1 and 2 cities to understand what they look for in an enterprise before working for, spending on, or investing in a company.
The study found that the term 'good business' is now "associated with having 'ethical standards', 'caring for the community', and 'inclusivity'". People look for these attributes before traditional business metrics like financial performance, market leadership, profitability or growth, the study added.
Sixty-two per cent of the respondents said that good business constitutes more than a financial return, while 14 per cent associated the term with qualities such as environmental consideration and CSR commitments.
Over 45 per cent of young respondents - aged between 18 and 25 years - prioritised ethical standards, caring for the community and inclusivity, rather than just profits. Contrastingly, performance metrics like profitability, growth and market leadership were the benchmark for increase (48 per cent of respondents) among older respondents aged over 46.
"Interestingly, 46 per cent of Tier 2 cities respondents cite 'care for the community (15 per cent)', 'ethical standards (20 per cent)' and 'inclusivity (9 per cent)', as the first thing that comes to their minds when they hear the term 'good business'; as compared to 47 per cent of Tier 1 respondents who associate good business with business metrics such as 'financial performance', 'market leadership', 'profitability' or 'growth'," the study said.
Job seekers' definition of a good company extended beyond pay and perks to include community initiatives, flexible working hours, environmental consideration and workforce diversity, the study found. Nearly half - 49 per cent - of the respondents chose salary and employee benefits, career and growth potential and climate change policies and environmental commitments as the top 3 considerations for a 'good' business'.
Of the total respondents, 35 per cent said that they will "always" reject job offers from a company they didn't consider to be good. Meanwhile 34 per cent said their top considerations would be good community-related factors such as good environmental policies, inclusivity and ethics, and CSR programs while choosing a new job in the future.
"Additionally, 81 per cent of women would reject a job offer if they did not consider the business to be a 'good' one, compared to 74 per cent of their male counterparts," the study found.
Investors among the respondents said that while financial returns were crucial, they were not the sole factor guiding their investment choices. Seventy per cent of the respondents said they would never invest in a business they didn't consider a genuinely good business. On the other hand, 20 per cent of them consider the 'lack of leadership and vision' as the top barrier preventing business from becoming truly 'good'.
"A company's social and community impact is being discussed as loudly and frequently as its balance sheets; and by more people than ever before... The principle role of business leaders today is to find that mutually beneficial, common ground - for me, that is the essence of Good Business," said Mahindra Group Chairman Anand Mahindra.