Category Archives: Insights from the Business World

The social enterprise end game must be outplacement

Phnom Penh is home to several social enterprises. I’m very much enjoying visiting them, meeting people who work there, and thinking about how this handful of enterprises fits into the bigger picture of business in Phnom Penh.

It seems to me that the “start game” for social enterprise is much easier than the “end game.” In the start game we can hire people, train them, treat them well, pay them well—possibly out of line with general market pricing. We do this because we can, because we  believe it’s a good idea and more “profitable” for the society as a whole.

However assuming that the whole economy isn’t going to turn into a “social benefit economy,” but will continue to largely be driven by  bottom line profit, we need to consider a few things:

  • There will never be enough of these special opportunities to be trained by and work for social enterprises–demand will outstrip supply.
  • The end game for a social enterprise needs to basically be about outplacement. Although yes, there is some room in a social enterprise for internally developed management and leadership, that ought to be relative small compared to the much larger number of people moving through the organization.

But consider: if said employee couldn’t get a fair wage before going through a social enterprise’s program, what’s to say that they are going to be able to get a livable wage after? Thus smart social enterprises need to consider how they will set people up to have market power, to get a good wage, especially in a developing country where that can be hard to achieve.

I think that skills based market power is the way to go. Thus to the extent that these social enterprises in Cambodia can set up their workers to gain market power,their “outplacement” will be that much more successful for them.

What do you think? What else must a social enterprise consider in how it fits into the bigger picture of the broad world of business?

How Friends International Develops Hospitality Market Power

While at Romdeng, the upscale Khmer restaurant of the Friends International, I talked with one of the local managers about their success in outplacement for the staff there. What I learned was right in line with what I’ve been blogging about with respect to market power.

The Friends International hospitality program has 3 levels. In the first, students learn to cook Khmer food for the 300 kids in the children’s program. Then in the second level, they move onto Romndeng, where they learn gourmet Khmer cooking as well as how to be a waiter at a nice restaurant. And for the third level, they move to Friend the Restaurant, where they also learn to cook western food. And that’s where the market power came in.

I learned that although some students wish to leave the program after the second level to find work, they strongly encourage them finish the third level. Why? Because they know that there is unmet demand for cooks that can both local AND Western cooking.

Thus by staying for the third level, students are building important market power that will give them higher wages and better job stability. They’ll be in demand. This is precisely the type of strategic thinking that brings a social enterprise’s impact from good to great.

What happens after socent workers leave the “estuary?”

A few nights ago I was enjoying dinner at Friends the Restaurant in Phnom Penh, Cambodia, watching the waiters in this lively social enterprise bustle around. It was fun to see that the team on shift was comprised of waiters of many different skill and training levels. That got me thinking of the prospects for these young people after they leave the training program.

One way to think of a social enterprise is as an estuary for underdeveloped talent, a warm and fuzzy place that values people and provides them the extra support that they need in order to get up to speed and do a good job. All very nice.

But what happens when they leave this “estuary” and go out into the “real world” to find employment? I propose that an important aspect to how they’ll fare depends on the amount of market power that they’ve developed while at the social enterprise.

What does this mean for these waiters? It means that they will be that much more likely to succeed if they can be *excellent* waiters, who stand out in the local employment marketplace. Furthermore if they have special, hard to find skills that employers want, such as familiarity with wines, all the better. That’s market power, and it matters for planning employee transitions from social enterprises to the broader employment world.

For a moment let’s contrast this highly skilled waiter to one who is simply “average,” just another person on the employment market. They’re going to struggle, they’re going to have less job security, and they’re going to make less money.

On the one hand it’s true that many folks coming into social enterprises couldn’t even get average employment before, and so yes they are a bit better off to at least find average employment. But there is so much more potential for their economic stability if a social enterprise can set them up with the skills and experiences to have market power. It’s a goal worth reaching for.

So how does market power work in more detail? I’ll be posting a follow-up article pretty soon. In the meantime, I’d love to hear from you. It’d be great if you would share in the comments social enterprises you’re familiar with that generate workers with strong market power.