The Social Business

Are we naive to expect mutuals to be better than the rest?

At times of crisis it’s tempting to seek out the Big Idea which is going to make everything better.

There are many who believe that social enterprises are inherently better at delivering services to customers. The story goes that the social mission, combined with a lack of external shareholders to service, alongside an enterprising approach will result in happier customers.

It’s a compelling narrative. And I for one do believe that those three factors – clear mission, the absence of shareholders focused on the short-term, and a can-do culture can achieve big things.

But I think we need to be careful not to get too carried away. Social enterprises can have clear missions, can be focussed on customers rather than shareholders, and can develop an enterprising culture – but those three things can’t be taken for granted.

Allow me to indulge in a moan which does, nonetheless, make this point. I have been a happy customer of Yorkshire Building Society for ten years. But this year – as we sold our house and tried to buy another – their service was consistently poor. Without boring you with all the details, their two main errors were that they sent me the deeds for the house we’d just sold, and did the wrong survey on the house we were trying to buy. Our ID also got lost somewhere between our postbox and their mailroom, which may or may not have been their fault. And throughout, their new automated phone system was difficult to navigate, and I often ended up at the wrong department.

I’ve complained, and they’ve said they’re sorry but they won’t consider refunding any of the administration fees I’ve paid. My point is that their service was poor, and I paid fees for that service. I’m now taking it to the Financial Ombudsman, mainly because I’ve got no other option.

I chose Yorkshire because they were competitive – but also because they are a mutual. I tell myself that they’re better, and are likely to give me a better deal, because they don’t have outside shareholders to satisfy. I also think that being a member may be different to being a customer, particularly when things go wrong.

But am I just being naive? This article on Nationwide – another mutual – would suggest that mutuals aren’t immune from some of the customer-unfriendly practices of other shareholder-driven companies. And are we as a society being equally naive in assuming that mutuals and other social enterprises will do a better job than others at delivering services?

I believe fully that they can deliver better services, not that they always do. Obvious really, but as we hunt for ways to get ourselves out of the mess we’re in, I think we’re in danger of putting too much faith in one form of organisational structure.

Categories: Business, Customer service, Mutuality, Public services, Social change, Social enterprise, Social Justice

Mediocrity and Big Society » « Social innovation, Danone style

1 Comment

  1. Yes, my concern is that many people – including people who are both decent and intelligent – get too hung up on the issue of profit distribution to shareholders (or lack of it).

    I run a CIC Limited-by-Guarantee so I do see the value of not-for-profit structures but I don’t think not distributing profit is a good thing in itself.

    I completely agree with your point that not-for-profits and mutuals won’t necessarily be better at what they do but in addition to that I could list plenty of organisations that don’t distribute profits to shareholders that I don’t think are socially positive in what they’re trying to do.

    Not-for-profit and mutual structures are both really useful tools for positive social change and may be an active part of some positive social change in themselves but they’re definitely not a guarantee of social benefit.

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