What is a social firm?

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This definition comes to us from Social Firms UK. It is for the UK only but other Member States may benefit from looking at how it has been developed.

A Social Firm is one type of social enterprise. Other types of social enterprise include development trusts, co-operatives, credit unions and community businesses. A social enterprise is a business that trades for a social purpose. The specific social purpose of a Social Firm is to employ people disadvantaged in the labour market. Case studies showing the range of Social Firms in operation are available on this website.

For more information about social enterprise, take a look at the Social Enterprise Coalition website or the Social Enterprise London (SEL) website were there is an comprehensive introductory publication available to download called ‘Introducing Social Enterprise’.

A Social Firm is a business set up specifically to create good quality jobs for people disadvantaged in the labour market. There are 3 core values that Social Firms will subscribe to within their businesses, orientated around Enterprise, Employment and Empowerment:

Enterprise – Social Firms are businesses that combine a market orientation and a social mission (‘businesses that support’ rather than ‘projects that trade’):

  • At least 50% of the firm’s turnover is earned through sales of goods and/or services. (Lowest for Social Firms April 2005 - 66%)
  • The firm has an appropriate legal status. It must not be governed or driven by individual profit (except for worker co-operatives). Remote shareholders must not extract unreasonable profit.
  • The firm is trading and follows business processes, such as having a business plan in place.

The firm has a constitution or written guiding principles that reflect its employment objective concerning disadvantaged people.

  • The firm has a management structure that supports trading as the firm’s primary purpose.

Employment – Social Firms are supportive workplaces where the working environment is one that provides all employees with support, opportunity and meaningful work:

More than 25% of employees are people disadvantaged in the labour market.

  • All employees have a contract of employment and market wage at or above national minimum wage.
  • An equal approach is taken to the type of employment contracts used (permanent, fixed term, temporary) between disadvantaged and non-disadvantaged staff.
  • The firm operates processes to engage employees in their own and the organisation’s development.
  • The firm has procedures and policies in place in respect of Equal Opportunities and Health and Safety.
  • The firm is compliant with relevant employers legislation e.g. Disability Discrimination Act and National Minimum Wage.
  • All employees have the opportunity to progress either within the Social Firm or into alternative employment as appropriate.
  • The firm is acknowledged as a good employer by employees and stakeholders.
  • The firm is acknowledged as a good employer through an external accreditation process.
  • Empowerment – Social Firms are committed to the social and economic integration of disadvantaged people through employment. A key means to this end is economic empowerment through the payment of market wages to all employees:

Reasonable adjustments are made for employees relevant to their needs.

  • Staff development is a priority for the firm to maximise each employee’s ability and potential.
  • There are processes in place for managing stress. Staff are encouraged to have control over their working environment.
  • The firm demonstrates a commitment to maintaining staff confidentiality. There is a procedure in place that demonstrates when staff have agreed what information can be shared.
  • Volunteers have agreements that reflect good practice in volunteering.
  • The firm provides Disadvantage/Disability Equality and Awareness training to all staff as appropriate (e.g. mental health awareness).
  • The firm has an added emphasis on training for disadvantaged staff. Training reinforces and builds on learning and takes account of developing social skills as appropriate.
  • The firm’s organisational structure is enabling and encourages staff to participate in business decisions as appropriate.
  • Trainees, work experience candidates and volunteers have different programmes and responsibilities to those of employees. Training should be time-limited and should lead to an award once competences are achieved.

Criteria For Social Firms: The Values-Based Checklist

In consultation with its members, Social Firms UK developed a list of Social Firm criteria to:

  • bring recognition to Social Firms that meet all of the essential values, enabling them to effectively communicate their status within the sector;
  • assist those groups working towards being Social Firms to understand clearly which elements are important;
  • assist funders, stakeholders, trustees, carers and those seeking to work within Social Firms, to understand the model more clearly, enabling them to have realistic expectations and support as appropriate;
  • safeguard the reputation and credibility of the Sector and understanding that Social Firms are good quality businesses and supportive workplaces. This may lead to organisations that neither meet, nor intend to meet, these criteria, to use more appropriate terminology;
  • assist support agencies e.g. Business Links, enterprise support agencies, co-operative development agencies and independent business advisors or consultants to understand the characteristics and support requirements of Social Firms;
  • form the basis of exploring the option of a Social Firm Accreditation Scheme.