Businesses and NGOs can come together with the best of intentions, but must manage competing desires and expectations. New research explains how to meet each partner’s needs and achieve both financial and social impact goals.
The Truth about Relationships
Collaborations between for-profit and not-for-profit organizations are increasingly widespread, but they’re not always happy unions. A recent survey of 120 leading businesses and NGOs found that less than half of all respondents reported improvements to business practices from partnering together.
In recent research, Garima Sharma and Pratima Bansal (Western University) unpacked business-NGO relationships to understand what makes them tick. Sharma and Bansal identified what they call the “commercial–social paradox.”
Wanting Different Things
In a business-NGO alliance, the researchers explain, “businesses want social impact, but need to meet their commercial demands; NGOs need financial support, but have social ambitions.” How can the partnership achieve social and business outcomes?
Sharma and Bansal studied five partnerships in India, to see how they addressed the “commercial-social paradox.” Each partnership involved a business that sourced products and services by partnering with an NGO that employed disadvantaged workers. For example, in one partnership, the NGO ran a laundry that provided services to a hotel group. The laundry workers were former sex trafficking victims.
These partnerships had a clear social goal: improve employees’ lives. They also faced a clear commercial requirement: supply needed products and services.
Troubles in Paradise
Of the five partnerships, only two met each other’s needs, achieving social and commercial goals.
In successful partnerships, the workers received much more than just wages. The partnership also enhanced employees’ physical and emotional wellbeing by providing a work environment with trust and respect. And though the workers weren’t highly skilled, they produced high quality, cost-effective, on-time products and services in return.
Unsuccessful partners failed to achieve either social or commercial goals. Businesses provided only wages, believing basic compensation for a disadvantaged population was social impact enough. In return, the NGOs failed to deliver products and services that met business expectations.
Secrets to a Long, Happy Partnership
Why do some partnerships achieve a win-win while others are unsatisfying? Sharma and Bansal offer a simple set of rules to improve the chances of success.
1. See beyond Stereotypes
Businesses often see NGOs as lacking business sense, and NGOs often see businesses only as funders that do not require a return on investment.
Managers in successful partnerships ignored these one-dimensional fixed categories, seeing their partner as able to move beyond a “business” or “NGO” identity based on project needs. As a result, partners could draw on a broader toolbox of options, and were better able to find creative solutions.
2. Guiding ≠ Micromanaging
In unsuccessful partnerships, managers didn’t have faith that their partners were capable of greater things. Business managers monitored the NGOs closely instead of helping them to grow and improve. In turn, NGOs resisted pressure to meet the businesses’ expectations of suppliers.
Success came from trusting the partner to perform. In successful partnerships, businesses communicated their availability to help as needed. The NGOs didn’t try to defend their daily decisions or hide failures. By guiding instead of micromanaging, businesses in successful partnerships actually ended up knowing more about their NGO partners’ daily actions than did the more controlling businesses in unsuccessful partnerships.
3. Talk It Out
All partnerships had times of tension and disagreement. NGOs sometimes wanted a higher price for the product, and businesses wanted a more traditional supplier relationship, where they received products without investing in additional benefits for their staff.
In successful partnerships, business and NGO managers openly discussed their problems, and tried to remember that they were partnering because of, not despite, differences. Someone able to understand both sides, such as a sustainability manager, facilitated conversation between the business purchasing team and the NGO.
These conversations reminded the purchasing team of the NGO’s constraints and also encouraged the NGO to be more efficient. Each side might not get everything it wanted, but at least partners better understood each other’s contribution.
In unsuccessful partnerships, businesses pressured the NGOs, without open, facilitated conversations. Pushed against the wall, NGOs pushed back. Instead of seeking shared solutions, they wanted business to fix the problems, for example by reducing product quality expectations.
4. Don’t Be a Stickler
In successful partnerships, players didn’t stick rigidly to rules. For example, if the NGO’s truck broke down, and the business had an extra one, it would offer it up like a team player. “They tried to create a solution for the problems they faced that particular day. There was no rulebook,” Sharma explained. “They were improvising based on each other’s constraints, not saying, ‘It’s not my job, it’s your job.’”
In unsuccessful partnerships, business and NGOs stuck to the contract. Each partner struggled to improvise or depart from the agreed-upon terms, instead frequently reminding the other of contractual obligations.
Everyone Wins or Everyone Loses
Remember – a business partnership is not a zero-sum game. These relationships will either reach social and commercial goals, or achieve neither. Addressing the commercial-social paradox requires flexibility in how each partner sees the other, and similar flexibility in actions.
Let the relationship ebb and flow; mastering the paradox requires adaptive behaviour and open communication to reach mutual benefit and a lasting, prosperous union.
Sharma, G., and Bansal, P. 2017. Partners for good: How business and NGOs engage the commercial–social paradox." Organization Studies, 38(3-4), 341-364.