Running a social enterprise is hard, particularly when catering to “base of the pyramid” customers. Marketing to low-income customers, infrastructure and distribution challenges, razor-thin margins, raising money from investors—these challenges would test even the hardiest entrepreneur!
Then, of course, there’s the major task of hiring and retaining great people. Although this challenge around talent is typically overlooked, it is probably the greatest factor driving the success or failure of the social enterprises we’ve worked with.
When Village Capital surveyed its portfolio of over 400 entrepreneurs in 2012, they cited talent acquisition and retention as their number one barrier to growth, easily surpassing financing. In 2015, a survey of C-suite executives by Bain & Company for Accion Venture Lab identified human resources as the biggest organisational need across 21 enterprises.
The challenge exists throughout the talent life cycle—from initial recruiting to training, ongoing development and retention—across hierarchies, from junior unskilled workers to senior executives. Unfortunately, it’s not a challenge that can be magically solved with more money.
Let’s be honest. Hiring and talent management is a challenge at all companies, but here’s why it’s harder for social enterprises:
Mission, not just skills: Beyond finding skills and experience, most social enterprises also need to see a demonstrated passion for the organisation’s mission. For many, this shrinks a small talent pool into a puddle, making it even harder to find a fit.
Unknown brands: Most social enterprises are relatively young, small and little known beyond specialised circles. With less inbound interest in the company, it becomes more of a sales job than an HR one to convince candidates and, sometimes, their families, who might prefer they join more established organisations.
Talent doesn’t come cheap: As revealed by a 2012 Intellecap report, early-stage social enterprises cite low salaries as a key constraint to hiring and retention. Personally, we don’t believe there should be an inherent trade-off in compensation when choosing a career of meaning and impact, and it is encouraging to see this slowly changing. But, for now, social enterprises often pay a fraction of what talented people could be earning elsewhere.
It’s not an easy life: To top it all off, many social enterprises operate in remote areas with few creature comforts. Five-star hotels are traded in for village cots. Express trains and Uber make way for motorbikes and rickety rickshaws. High-speed internet and stable electricity are swapped for molasses-slow Wi-Fi and off-grid living. This is obviously not always the case (and for many this experience can be a draw), but some companies find it challenging to convince senior talent to take the plunge.
Related article: 6 steps to attract good talent
Yes, hiring at social enterprises is hard. The good news is there are many ways to make it better:
At a system level
Related article: Five ways nonprofits can leverage for-profit talent
At a social enterprise level
So where does this leave us? While money will always be a concern, human capital is often more important. Luckily, we believe there’s something to be done at all levels to help bring talent to the social enterprise space and to support job seekers in finding dream jobs at impact businesses.
Perhaps social enterprises have the most to gain or lose in solving this, and we hope to see more social enterprises recognise the importance of getting their team and talent equation right.
We’ve seen many times at companies globally that to create something persuasive and extraordinary in the marketplace, one must often first create something persuasive and extraordinary in the workplace. This principle may hold even more strongly for social enterprises, who must create a unique kind of mission-driven soil to attract and grow a talent foundation for scale and impact. If we get this right, the chain reaction of impact will extend beyond the enterprise to customers, employees, and the world at large.