The Second Container: Business, Legal, and Financial Exposure to Risk and Upside

by | Sep 6, 2022

At Kadabra, we say the future of leadership is here, now. We see it most clearly through the voiced expectations and behaviors of young leaders, who are more networked and often more open about their perspective on social issues, compared to leaders from previous generations. The notion that businesses can remain forever neutral is woefully outdated. Business is no longer, if it has ever really been, just business.

For this reason, it’s important for organizations to share well-informed perspectives on social issues that impact people in their workforce as well as those who may buy their products or services. This can be complicated for any organization, regardless of size or industry.  This is where The Second Container: Business, Legal and Financial Exposure to Risk and Upside can help.

As a business owner or executive, there is an expectation that you’re making decisions that prioritize the business. So what can organizations do when major social issues like coping with a pandemic, the right to bodily autonomy, or social justice require leaders to make decisions that will impact their employees and ultimately, their investors?

First, identify and evaluate all possible decisions from an objective and thoughtful perspective. Then weigh any quantifiable potential decisions against your risk tolerance.  Assess to what extent certain actions would bring benefit or harm to the organization, for example: 

  1. What is the estimated cost of each possible decision? 
  2. Where is there potential for losing clients resulting in lower revenue? 
  3. What are the possible areas of legal exposure? 
  4. How could a lawsuit impact the organization? 
  5. How might employees respond? 
  6. Where is there leverage to support people who could be impacted, while upholding fiduciary responsibilities? 

Ideally, leaders in larger organizations can model various scenarios leveraging people and data they already have available.  Smaller organizations typically don’t have equivalent resources to assist with this process.  

In a smaller organization, every decision the leadership team makes can have an immediate impact on the organization’s future. 

Deciding to offer benefits in the form of financial assistance for medical and travel expenses or expressing support for Black Lives Matter and LGBTQ+ rights may result in positive benefits, significant harm or both.  

Large organizations juggle more complexity when they operate across multiple geographies with different legal, business and cultural practices.  Consolidating and reviewing financial forecasts, sales estimates, and client retention in different areas of the globe takes time, but may ultimately be doable.  What’s more challenging to determine is how a decision related to complex social issues may impact individual employees and teams.

Regardless of the size of an organization, one thing is clear.  Businesses cannot stay on the fence indefinitely when it comes to social issues. If a business decision results in excluding benefits to its employees through policy, leaders are expected to share an explanation with their team. 

Organizations also need to share whether or not they support related social issues, even when their risk tolerance doesn’t allow them to provide direct support to mitigate that issue to employees.

The future of leadership requires organizations to express compassion for people and the issues that impact them, particularly when weighing business, legal and financial exposure to risk and upside. 

If the title The Second Container: Business, Legal, and Financial Exposure to Risk and Upside reads cold, consider every possibility this container could hold. The outcome of any decisions resulting from considerations in The Second Container could make or break a business. Sometimes, organizations are faced with the challenge of choosing the business to save the livelihoods of many over benefits for a few. The future of leadership isn’t neutral, it’s contextual.  

New to this series of articles about The Four Containers? Check out Introducing The Four Containers, The First Container: Bodily Autonomy and Personal Agency, The Third Container: Institutional Structures and Systems and The Fourth Container: People, Equity and Social Justice.

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