TABLE OF CONTENTS

S.NO
1.

PARTICULARS
Introduction Of Topic

PAGE NO.
02 - 19

2.

Literature Review

20 - 52

3.

Objectives

53 - 54

4.

Research Methodology

55 - 57

5.

Analysis & Interpretation

58 - 74

6.

Conclusion Findings

75 - 85 86 - 88

Limitations
7.

Suggestions

89 - 91 92 - 95

8.

Bibliography

95 - 96

9.

Annexture

97 - 107

INTRODUCTION
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CORPORATE SOCIAL RESPONSIBILITY is a concept that states that organizations, especially commercial businesses, have a duty of care to all of their stakeholders in all aspects of their operations. This duty of care is seen to go beyond their statutory obligation to comply with legislation. CSR is closely linked with the principles of Sustainable Development which argue that enterprises should be obliged to make decisions based not only on financial/economic factors (e.g. Profits, Return On Investment, dividend payments etc.) but also on both the immediate and the long-term social, environmental and other consequences of their activities. Corporate Social Responsibility is the continuing promise by business to act ethically and supply to economic development while enhancing the quality of life of the workforce and their families as well as of the local community and society as a whole. Companies set up social welfare foundations, charity trusts etc for (a) the satisfaction of giving back to the society (b) increasing their visibility. The primary impetus for increased corporate social responsibility has come from increased consumer awareness. Every organization has a social commitment to fulfill beyond their business. Every company has a social ethical and economical commitment to its host country.

1.0

What is Corporate Social Responsibility (CSR)?

Corporate Social Responsibility is the concept whereby companies act to balance their own economic growth with the sustainable social and environmental development of the country. A company performing highly in CSR is one that goes beyond compliance with the legal framework to actively pursue positive impacts on local communities and the environment.

2.0 Who is liable to CSR?

As from 1 January 2012, every profitable company is required annually to set up a CSR Fund equivalent to 2% of its profits chargeable to income tax, derived during the preceding year. However, for accounting periods prior to this date the CSR Fund is calculated on the adjusted book profit 1 after tax.

3.0 Objective of Corporate Social Responsibility

All profitable companies are required to use their CSR Fund on approved programmes, as defined in Part 2 of the CSR Guidelines that contribute to the social and environmental development of the country. As from January 2012, companies are required to spend 50% of their CSR Fund on the 4 priority areas as defined under paragraph 9.0 of Part 1 of the CSR Guidelines.

4.0 How can the CSR Fund be utilised?

A company may use its CSR Fund in the following ways: (i) Implement an approved programme by the company; (ii) Finance the project of an approved NGO; or (iii) Implement an approved programme under the National Empowerment Foundation, and (iv) Implement projects in collaboration with public sector organisations.

6.0 Entities Not Subjected To CSR

The following are excluded from the obligation of the payment of the 2% CSR contribution:

(i) A company holding a Global Business Licence Category 1 under the Financial Services Act. (ii) Incomes of banks derived from transactions with non-residents and corporation holding a Global Business Licence. (iii) An IRS company (iv) A non-resident societe, a trust or a trustee of a unit trust scheme.

Extract of the relevant sections of the Income Tax Act is available on www.nef.mu/csr

7.0 CSR Certificate

All companies and SPVs with a CSR Fund of Rs. 500,000 and above should submit an Audit Report duly signed by an independent auditor certifying that all disbursements from the CSR fund complies with:

(i) the Corporate Social Responsibility guidelines; and (ii) the Income Tax Act

The report should be sustained, respectively, by the fully filled in Monitoring Form 5 for corporate and Monitoring Form 6 for SPVs of the NCSR Committeee. A copy of the document should be filed with the NCSR Committee

8.0 Approved Programmes

The National CSR Committee has published a list of approved programmes that qualify for financing through a CSR Fund. The list of approved programmes is set out in Part 2 to the guidelines. The approved programmes should fall in one of the following areas of intervention. Health Leisure and sports Environment

8.0 Remittance of Unspent CSR Fund to MRA

Where, in respect of a year, the amounts paid out of the CSR Fund is less than the amount provided under the Fund, the difference shall be remitted to the MRA at the time the company submits its return of income under Section 116 of the Income Tax Act.

10.0 Non-Qualifying Activities

The following activities do not qualify for funding under CSR:

(i) Contribution for religious activities (ii) Contribution to activities discriminating on the basis of race, place of origin, political opinion, colour or creed. (iii) Contribution to trade unions (iv) Sponsorship for marketing purposes (v) Contribution to political parties (vi) Shareholders and senior staff benefits (schemes benefiting staff and/ or their family members and shareholders holding more than 5% of shareholding) (vii) Staff welfare (including e.g. current and future staff training costs), (viii) Activities which are against public safety and national interest.

11.0 Vehicles Used In Implementing an Approved Programme by a Company

A company can implement a programme approved by the NCSR either directly or by making use any of the following vehicles:

i. An approved NGO (paragraph 12.0 refers) ii. A special purpose vehicle (paragraph 13.0 refers) iii. A corporate partner (paragraph 14.0 refers) iv. A Housing Development Trust (paragraph 15.0 refers)

13.0 Corporate Partners

In implementing approved programmes, companies may work in collaboration with local organisations, known as Corporate Partners. A Corporate Partner needs to satisfy the following criteria: i. It should operate on non-profit making basis; ii. It should operate on a non-sectarian basis and should not discriminate on the basis of race, place of origin political opinion, colour or creed; iii. It should keep proper books and records; iv. The administrative costs of the Corporate Partner should not exceed 15% of its total project(s) costs. v. It should implement programmes as per the CSR Guidelines.; and 8

A company or an SPV is allowed to spend an amount not exceeding 25% of its CSR Fund on projects implemented by a corporate partner.

The books and records of corporate partners will be subject to periodical review and monitoring by the National CSR Committee or any assigned officer for that purpose. The procedure for approval of programmes for corporate partner is set out in Part 5 Administrative procedures.

15.0 Housing Development Trust

A company or groups of companies or SPVs can set up a Housing Development Trust (HDT) for the implementation of its CSR programme in housing sector.

A HDT needs to satisfy the following criteria: (i) It should have a legal status; (ii) It should be run on non-profit making basis; (iii) It should operate on a non-sectarian basis and should not discriminate on the basis of race, place of origin political opinion, colour or creed. (iv) It should keep proper books and records should submit certified/ audited financial statements; (v) It should implement programmes, approved by the NCSR Committee (Part 2 of CSR Guidelines); and

THE EU COMMISSION defines CSR:

By stating their social responsibility and voluntarily taking on commitments which go beyond common regulatory and conventional requirements, which they would have to respect in any case, companies endeavor to raise the standards of social development, environmental protection and respect of fundamental rights and embrace an open governance, reconciling interests of various stakeholders in an overall approach of quality and sustainability

This quotation shows that the Commission regards CSR as a form of corporate strategic management that sets its standards of conduct at a level higher than legal constraints, and envisages CSR as a system for the governance of transactions and relations between the firm and its stakeholders. It is clear that here governance is no longer the set of rules simply allocating property rights and defining the owners control over the management of a firm. Instead it looks like the neo-institutional view whereby the firm, like the contract and other institutional forms, is a governance system which establishes diverse rights and obligations in order to reduce transaction costs and the negative externalities of transactions.

When CSR is pictured as extended governance, it completes the firm as an institution of transactions governance. The firms legitimacy shortfall (whatever category of stakeholders is placed in control of it) is cured if the residual control right is complemented by further fiduciary duties towards the subjects at risk of abuse of authority and depressed of the residual control right. At the same time, this is a move towards greater social efficiency because it reduces the disincentives and social costs generated by the abuse of authority. From this viewpoint, extended governance should comprise: 10

 The residual control right (ownership) allotted to the stakeholder with the largest investments at risk and with moderately low governance costs, as well as the right to pass on authority to professional directors and management;

The fiduciary duties of those who successfully run the firm (administrators and managers) towards the owners, given that these have handed over control to them;

The fiduciary duties of those in a position of authority in the firm (the owner or the managers) towards the non-controlling stakeholders: the duty, that is, to run the firm in a manner such that these stakeholders are not underprivileged of their fair shares of the surplus produced from their specific investments, and that they are not subject to negative externalities.

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CSR Focus:

Sustainable livelihood, education, infrastructure development, social causes

Employee welfare, human rights and adhering to anti-child laws

Helping people live better lives

Fighting Corruption in Public Life

Counter the growing threats of AIDS in India

Educational and charitable development projects

Targeting women's empowerment and female infanticide

Employees donations to a social cause of their choice

Backward integration efforts to be self sufficient

Partnering NGOs for the upliftment of society

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Mother and childcare / HIV

Donors to sponsor treatment for other underprivileged patients

Building successful partnerships between NGOs and Corporate

'Positive Action' to generate awareness, care & support for people living with HIV/ AIDS.

International human rights and anti-child labor laws

Senior citizens

Specific micro-finance initiatives

Health, Education, Social Welfare, Art and Culture, Sports

Sponsor of children projects

Elementary Education, Health at Birth, and Micro-Financial Services

Children's issues like education and health 13

Improving the stand of living of the local host community near its operating units

Protect, preserve and promote our national heritage and culture

Education, women's projects, healthcare, community development, and preservation of art and culture

Women empowerment and education

Socially disadvantaged children

Adoption of villages around their plants for development activities

Hiked its budget for community development activities

Provides services, free of cost, to the community HIV / AIDS

Students; human & animal health; trees

Invests in projects that provide quality education to underprivileged children 14

Community projects in education, health and welfare and infrastructure

International program of employee volunteering called 'Helping Hands'

Free treatment to leprosy patients worldwide

Providing Access to Medicines

Rural healthcare

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Why companies are actively engaged in CSR?

Companies that are socially in charge in making profits also contribute to some, although obviously not all, aspects of social development. Every company should not be anticipated to be involved in every aspect of social development. That would be absurd and needlessly restraining. But for a firm to be involved in some aspects, both within the firm and on the outside will make its products and services (for example financial services) more attractive to consumers as a whole, therefore making the company more profitable. There will be augmented costs to implement CSR, but the benefits are expected to far overshadow the costs.

Corporate social responsibility is not a new issue. The social responsibility of business was not broadly expected to be a significant problem from Adam Smiths time to the Great Depression. But since the 1930s, and increasingly since the 1960s, social responsibility has become central issue not only for business but in the theory and practice of law, politics and economics.

Today We are now seeing consumers avoiding what they see (rightly or wrongly) as socially irresponsible products or the products of companies that have allegedly not acted in societys best interest. Enterprises have noted that social responsibility is good for business for, and from, each of the seven main azimuths within which they trade and operate. These are: their 16

shareholders and potential investors; managers; employees; customers; business partners and contractors or suppliers; the natural environment; and the communities within which they operate, including national governments. Such azimuths are now commonly known as an enterprises stakeholders. Indeed, appalled at being implicated in anti-social practices, thousands of investors are placing ethics on a par with personal gain in choosing where to place their money. In response, a number of money managers are tailoring portfolios to allay their clients qualms. The managers of billions of dollars of investment funds therefore now channel their cash into companies that pass one test or another for ethical or social responsibility.

For people investing their own money, several investment management companies maintain blacklists of ethically or socially irresponsible companies. Moreover, poor social performance will drive away potential investors. The increase in litigation, especially in the United States (arising from corporate lawbreaking), has strengthened the penalties for professionals and has made the conduct of business a hazardous occupation.

Because of the explosion in litigation, business now faces a battle on two fronts: increases in both the number of multimillion dollar verdicts and in the number of actions being filed. Expanded third party liability means that many more professional groups are being held liable, including underwriters, accountants and lawyers. The first year in which considerable awards were awarded to corporate whistle-blowers was 1992. Since then, the increased focus on business conduct has matched with a growing public awareness that business should be more socially responsible.

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Principles of Social Responsibility

Legitimacy

Public Responsibility

Managerial Discretion

Concerns business as a social institution, and frames the analytical view of interrelationship between business and society.

Concerns the individual firm and its processes and outcomes within the framework of its own principles in terms of what it actually does.

Whereby managers and other organizational members are moral actors; within every domain of CSR, they are oblige to exercise such discretion as is available to them towards socially responsible.

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Process of Social Responsibility

Corporate social responsiveness consists of the capacity of a business to respond to social pressures. This suggests the ability of a business organization to endure through adjustment to its business environment. To do so, it must be acquainted with as much as possible about the business environment, be capable of examining the relevant data and must react to the results of this analysis. But the environment of a business is not still; it is a complex and ever shifting set of circumstances. This environment can be untouched for decades, if not centuries, and then it falls apart and is reformed like a kaleidoscope with increasing speed. The skill to scan, interpret and react successfully to the business environment needs equally complex mechanisms.

Three elements are identified as being basic to this level of the CSR model:

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Business Environment Scanning: indicates the informational gathering arm of the business and the transmission of the information gathered throughout the organization. Stakeholder Management: Stakeholder management refers to mapping relationships of stakeholders to the firm whilst finding, listening and meeting their expectations that legitimate concerns should be balanced and met as a prerequisite for any measurement process. Issues Management: Having identified the motivating principles of a firm and determined the identities, relationships and power of stakeholders, the researcher now turns to the main issues which concern stakeholder.

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1.Corporate Social Responsibility (CSR) and Reputation Definitions of concepts:

(a) Reputation: 21

Scholars (Brown et al., 2006; Rindova et al., 2005) refer to Reputation (R) as the stakeholders collective knowledge about and regards for the firm in its organizational field. However, they note that different stakeholders groups (external and internal) May have different reputations about the same company. These stakeholders include workers, suppliers, customers, etc. A firms reputation is strongest when its both prominent in its organizational field and positively evaluated by stakeholders (Rindova & Petkova, 2005; Rindova et al., 2005). Fombrun & Van (2004) describe reputation as something that attracts people to an organization. They go ahead to indicate that an organization with a good reputation attracts people to engage with it, either through purchasing, investing, working, etc. Also by combining Fombrun & Van (2004) views with Fill (2006), reputation May be defined as consistency in images stakeholders have over time, about an organization. One of the challenges is that the time for which images pile up to be termed reputation, is not defined whether its in months or years, or weeks.

(b) Corporate Social Responsibility (CSR)

Bowen (1953), the original proponent of corporate social responsibility (CSR), defined it as the obligations of businessmen to pursue those policies, to make those decisions, or to

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follow those lines of action which are desirable in terms of the objectives and values of society. Later, Carroll (1979) redefined CSR as the integration of ethical, legal and 9 philanthropy components into economic activities of business. Recently, other scholars like Visser (2005) and World Business council for sustainable development (WBCSD) have attempted to revisit both Bowen and Carrolls works and have defined CSR as the integration of social and environmental concerns into business economic operations on a voluntary basis. Voluntary basis means that for companys activities to be regarded as CSR, such activities must not be forced on them. In additions, such activities must go beyond the fulfillment of legal requirements. Looking at Business for Social Responsibility (BSR), corporate social responsibility is defined as achieving commercial success in ways that honor ethical values and respect people, communities, and the natural environment. McWilliams & Siegel (2000) define CSR as actions that appear to further some social good, beyond the interest of the company and that which is required by law. These various CSR definitions present to the researchers an impression that CSR has various CSR dimensions. For example, while Carroll (1979; 1999) shows ethical, philanthropy, economic and legal dimensions, the FORGE Group (a consortium of financial institutions in UK), as cited in Decker (2004), as well as Freemans stakeholder theory (Freeman, 1984) identifies four dimensions for CSR. These are the community, the marketplace, the workplace and the environment. Corporate social responsibility and Reputation:

A series of experiments conducted by The University of Western Ontario's Ivey School of Business revealed that it pays companies to invest in social responsibility (The Wall 10

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Street Journal, May 12, 2008). For example, consumers are willing to pay a slight premium for ethically made goods and services and would buy unethically made goods only if greater discounts are offered. Companies don't necessarily have to get involved full-blast in CSR to win stakeholders approval and consumers attention in particular. Fombrun & Van (2004) observed that once a company hits certain socially responsible thresholds, they will have measured to some reputation levels. In return, consumers will reward it by paying higher prices, recommending other stakeholders and customers to the company, etc. However, works of Birch (2003) seem to disagree with Fombrun & Van (2004) and with the Ivey school of business, by observing that good corporate social responsibility does not require outside approval, nor should it necessarily be a measure of how good or ethical a company is. Birch (2003) emphasizes that its essential that corporate social responsibility is made a part of all decision making in the company.

That is, it needs to be an integral part of all of the operations and policies of the business. A controversial position emerges when Fombrun & Van (2004) re-confirms Fombrun (1996, p. 57) by emphasizing that reputation that is positive, enduring, and resilient requires managers to invest heavily in building and maintaining good relationships with their companys constituents (stakeholders). On another note, Visser (2005) noted that CSR May be associated with a series of bottom-line benefits. For example, socially responsible companies have enhanced brand image and reputation. That is, consumers and stakeholders are often drawn to brands and companies with good records in CSR related issues. A company regarded as socially responsible can also benefit from its reputation within the business community by having increased ability to attract capital

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and trading partners. Overlooking negative social and environmental externalities when 11 valuing a company might be equal to ignoring significant risks. Companies that adopt the CSR principles are more transparent and have less risk of bribery and corruption. Nkiko & Katamba (2010) observed that CSR oriented companies May implement stricter and, thus, more costly quality and environmental controls, but they run less risk of having to recall defective product lines and pay heavy fines for excessive polluting. They also have less risk of negative social events which damage their reputation and May cost millions of dollars in information and advertising campaigns. Companies perceived to have a strong CSR commitment often have an increased ability to attract and to retain employees which leads to reduced turnover, recruitment, and training costs. From the above discussion, we hypothesize that:

1.2 Organizational culture (OC) and Reputation:

Culture May be defined as "the shared beliefs and values of a group. It is what people do, not just what they say. As cited in Musiime, Ntayi, & Musigire (2009, pg 618),

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organizational culture is characterized by shared assumptions, beliefs and values that help to shape and guide the organizational ethical climate. Therefore, organizational culture May be defined as a set of values, beliefs and basic assumptions that are guided by leaders and shared by employees, (OReilley et al., 1991). An organizations culture is shaped as the organization faces external and internal challenges and learns how to deal with them. When the organizations way of doing business provides a successful adaptation to environmental challenges and ensures success, those values are retained, and the reverse holds. Hence these ways of doing business are taught to new members as the way to do business.

Based on the organizational culture profile (OCP) developed by OReilley et al., (1991), the dimensions that are most important parts of Organizational culture are eight. That is, innovation, attention to detail, outcome orientation, aggressiveness, supportiveness, emphasis on rewards, team orientation and decisiveness. These factors can be examined as follows: Attention to detail and innovation dimensions relate to how work is handled. It also involves the degree to which employees are expected to be creative and take risks. Two dimensions, that is, team orientation and supportiveness describe values or norms for interpersonal relationships. These dimensions further indicate the degree to which work activities are organized around teams rather than individuals. Outcome orientation and aggressiveness dimensions describe norms for individual actions. They indicate the degree to which management emphasizes results and also the extent to which employees are expected to be competitive than just easy going. Emphasis on rewards is the degree to which reward allocations are based on employee performance in contrast to seniority,

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favoritism or any other non-performance criterion. Lastly, decisiveness is the degree of authority, freedom and independence that individual employees have in their jobs. Fombrun (1996) suggests that organizational cultural aspects contribute to reputation. In particular, credibility, reliability, trustworthiness and responsibility are perpetual contributors. He further states that a companys reputation roots in its core values that shape its communication, organizational culture and decisions. These assertions were further confirmed by Musiime, Ntayi & Musigire (2009) who observed that external perception of identity and reputation is constituted in culture context. We can therefore present a second hypothesis that:

1.3 Organizational culture and CSR:

Wartick & Cochran (1985), in their attempt to conceptualize a model for CSR, redefined Carrolls (1979) four dimensions of corporate social responsibilities as the Principles of CSR. Hence, according to these scholars, the culture of a company would form the foundation upon which it would formulate and manage its social responsibilities. Borrowing from the works of Freeman (1984) and Visser (2005), the CSR dimensions and activities most relevant to the business environment in developing countries (Uganda inclusive) relate to workplace, environment, society and environment. 1.4 Ethical Citizenship and Reputation

According to Sacconi (2004), ethics can be defined as "obedience to the unenforceable." Therefore part of what an organization does in pursuant of this obedience is Ethical

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citizenship. The responsibility for promoting, developing and maintaining a culture of ethical citizenship and integrity within a financial institution or any organization lies with the organizations leadership team. This responsibility should be taken seriously because there is much to be gained or much to be lost if ignored. According to Maignan & Ferrell (2001), the following ethical citizenship activities can be employed: Code of conduct, 14 Ethics trainings, Integrity in staff evaluations, and providing full product information. Code of conduct: Values-based decision-making focuses on feedback and continuous improvement. Therefore stakeholders (especially customers and employees) feel confident that their voices will be heard and listened to. Effective dialogue is made more possible when an organization's shared ethical values are explicit, written, clearly posted and incorporated in meeting agendas, newsletters, collateral and its Web site. Financial services institutions are better off when stakeholders are encouraged to voice their concerns and objections. This can only be made possible by having a code of ethics /conduct (which is a working and breathing document). Ethics training: Inside financial services institutions supervised by Bank of Uganda, some ethics training is required. This is aimed at changing and shaping the behavior and culture of these institutions. Also such trainings help employees make ethical decisions when the answers are unclear to certain transactions.

2.5 Ethical Citizenship and CSR

In this competitive world and business environment, companies are increasingly becoming interested in processes and activities that can add visibility to their CSR

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policies, practices and activities (Visser, 2005; Porter and Kramar, 2006). One method that is gaining increasing popularity to achieve this is the use of well-grounded training programs, where CSR is a major subject, coupled with ethics, integrity, and business simulations (Nkiko & Katamba, 2010). The researchers May therefore want to test the relationship between ethical citizenship and CSR, hence a research hypothesis: H5: Ethical citizenship and CSR are positively and significantly correlated Although it is not a new concept, CSR remains an emerging and elusive idea for academics, and a contested issue for business managers and their stakeholders. Owing to the range of contrasting definitions, and often convoluted by varying use of terminology, the notion of CSR has lead to the emergence of a variety of practices (Freeman 1984; Crane and Matten 2004; Welford 2004; Habisch and Jonker 2005; Fairbrass et al 2005). In brief, the concept of CSR has evolved considerably since it first emerged in the 1950s (Carroll 1999; Freeman 1984:38; Carroll and Beiler 1977; Sturdivant 1977). As a result there appears to be disagreement about what the term means, whether it should be implemented, how it should be implemented, or why it should be implemented (Welford 2004; Stigson 2002). Three specific factors may have been instrumental in determining that a vast amount of literature has emerged over the last half a century with regard to CSR.

Social Responsibility And Business Ethics

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Changing Attitudes towards Social Responsibility and Business Ethics To meet societys expectations, managers will need to be more socially responsible. Most of 500 largest U.S. corporations now have a code of ethics Corporate Social responsibility is the implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect the interests of groups other than themselves. Organizations have obligations to society beyond their economic obligations to owners or stockholders. Ethics: morality of an individual Social responsibility relates to an organizations impact on society

If there is a concept today which is embracing many of our current and future challenges - a concept we should all reflect upon - it should be the concept of social responsibility. Social and environmental responsibility is one of the key-concepts for the future of our world - KOFI ANNAN A healthy society is based upon three interdependent sectors: the public sector of effective governance, the private sector of successful companies and economics, and the social sector of a caring community and of social organizations. All three sectors are responsible for a civil society they have to be managed effectively, and they need to learn from each otherPETER.F.DRUCKER

THE SOCIAL CONTRACT

The Organization

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Individuals

Organizations

Society Other Government

Social Contract:

Social Contract is a set of written and unwritten rules and assumptions about acceptable interrelationships among various elements of society.

The theory of the social contract is based on the assumption that all men live in a state of nature which is not ideal. In order to make these conditions favorable, men enter into contracts with each other, so that they can live in peace and unity. Justification of this formation of state is given by theory of social 31

contract. All members within a society are assumed to agree to the terms of the social contract by their choice to stay within the society without violating the contract; such a violation would signify a problematic attempt to return to the state of nature.

BUSINESS ETHICS
Business Ethics refer to the discipline of dealing with what is good and bad, or right and
wrong, or with moral duty and obligation. Sources of Ethical Guidance refer to the number of sources that determine what is right or wrong, good or bad, moral or immoral, so as that it confirms the ethical climate of an organization. Business ethics is a form of the art of applied ethics that takes into account ethical rules and principles within a commercial context, the various moral or ethical problems that can arise in a business setting and any special duties or obligations that apply to persons who are engaged in any kind of business. Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, it is primarily normative in nature. In academics, descriptive approaches are also taken. The array and size of business ethical issues mirrors the degree to which business is perceived to be at odds with non-economic social values.

Two Key Branches of Ethics: Descriptive ethics involves describing, characterizing and studying morality

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o What is

Normative ethics involves supplying and justifying moral systems

o What should be

o WHY ARE ETHICS IMPORTANT?

o Ethical climate is primary to any organization engaged into

commerce because: Customers and suppliers prefer to deal with ethical

organizations Ethical business/organizations build trust which forms the base of business

Inventory of Ethical Issues in Business

Employee-Employer Relations Employer-Employee Relations

Company-Customer Relations

Company-Shareholder Relations

Company-Community/Public Interest/ Public Relations

Four Important Ethical Questions What is? 33

What ought to be?

How to we get from what is to what ought to be?

What is our motivation for acting ethics

SOURCES OF ETHICAL NORMS

Community: non-commercial activities that address social and cultural challenges from the very local to the global.

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Products and services: activities that address societal needs with marketplace solutions that returns a profit to the company.

Operations: responsible business practices that integrate a commitment to corporate citizenship across all business units and corporate functions

Concept of Corporate Citizenship

Corporate citizenship is a new term now-a-days, but it is not a new concept. Nor is it alien to developing countries. In 1965, the then Prime Minister of India presided over a national meeting that issued the following declaration on the Social Responsibilities of Business:

Business has responsibility to itself, to its customers, workers, shareholders and the community ... every enterprise, no matter how large or small, must, if it is to enjoy confidence and respect, seek actively to discharge its responsibilities in all directions ...and not to one or two groups, such as shareholders or workers, at the expense of community and consumer. Increased competition and commercial pressure are combining with rising regulatory standards and consumer demand to create a whole new playing field for business.

The face of business and traditional expectations out of it are also changing. It is no longer considered enough to simply employ people, make a profit and pay taxes. Companies are now

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expected to act responsibly towards society, and be accountable and benefit as a whole. This is the new schema of corporate social and environmental responsibility (CSER) or corporate citizenship. From a drip, it has become a wave sweeping boardrooms across the world. Smart business leaders have been quick to clinch this new philosophy spotting its possibility for .triple bottom line benefits: profit for the economic bottom line, the social bottom line and the environmental bottom.

Corporate Citizenship is acknowledgment that a business, corporation or business-like organization, has social, cultural and environmental responsibilities towards the community in which it seeks a license to operate, as well as economic and financial ones to its shareholders or immediate stakeholders. Corporate citizenship involves an organization coming to terms with the need for, often, major internal and external changes, in order to better meet its responsibilities to all of its stakeholder, in order to establish, and maintain, sustainable success for the organization,.and, as a result of that success, to achieve long term sustainable success .

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Standards of Excellence in Corporate Citizenship and Community Involvement

d I: r a d Stan ership Lead

Standard II: Issues Management

Stan Rela dard III : Buil tionship ding

Standards of Excellence

Stan Stra dard IV tegy :

Standard V: Accountability
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VI: d r a e d Stan structur Infra

Companies see themselves as, corporate citizens- as part of a Civil Society

Companies are not only responsible for economic success (shareholder value), but also for a healthy society (stakeholder value) Corporate Citizenship means social responsibility towards community

CSR: A BUSINESS NECESSITY In recent years, the business case for CSR has been gaining ground, spinning around the idea that what is good for the environment, workers, and the community is also good for the financial performance of the business. A recent global survey by PricewaterhouseCoopers, in harmony with the World Economic Forum, found that more than two-thirds of the 1100 CEOs polled believe that proper implementation of corporate social responsibility is important to gain profitability and prevent the loss of customers, shareholders, and even employees. Dynamically practiced CSR strategies present number opportunities for increasing competitiveness and profits.

THE SUSTAINABILITY ASPECTS RELATE TO

governance and management, stakeholder engagement, 38

environmental process improvement, environmental products and services, local economic development, community development, and Human resource management

THE BUSINESS SUCCESS FACTORS INCLUDE

revenue growth and market access, cost savings and productivity, access to capital, risk management and license to operate, human capital, and Brand value and reputation

Research done in developing countries have pointed towards strong link between CSR and the sustainability and business success factors. In particular, eight areas of opportunity are found to be most relevant to the developing countries.

These relate to the following. 1) Cost savings from environmental improvements, eco-efficiency measures using less energy and materials, lesser pollution costs and fines, restructuring production processes, material flows, and supplier relationships. 39

2) Cost savings from effective human resource management and increased labor productivity. Provision of training, health, and education benefits for workers; a clean and safe working environment; and fair wages are all factors that result in an increased productivity and reduced costs. 3) Increasing revenues by innovating and uplifting new environmental products and byproducts from waste. 4) Increasing revenue by building linkages with the local economy and providing work for local residents. A clear relation exists between poverty reduction and business growth.

5) Reducing risk through engagement with stakeholders such as employees, customers, NGOs, politicians, and other business partners. Such commitment assists the company in better management of environmental and social expectations, thereby reducing the risk of civil action and improving access to financial capital.

6) Building reputation by increasing environmental efficiency and improving environmental responsibility. An improved reputation is often apparent in awards and recognition from governments, rating agencies, and public surveys.

7) Developing human capital through better human resource management . A high quality work force is crucial for competitiveness since it perks up productivity, product quality, and innovation. A study in India covering 52,000 employees in 200 companies found a positive correlation between employment practices and financial returns.

40

8) Improving access to capital through high standards of corporate governance that restore confidence among investors on issues relating to shareholder and stakeholder rights, transparency and disclosure, and proper governance structures. These range from reducing hiring and retention costs, improving productivity, decreasing expenses, to increasing revenue and shareholder value. Willard also provides a customizable spreadsheet into which company executives can insert their own data to see for themselves whether the case for sustainable initiatives will be a profitable one for their company.

By integrating sustainability into their business model corporations can realize the following seven bottom line benefits.

Easier hiring of the best talent Researchers ballpark figure that the most important corporate resource over the next 20 years will be talented employees, many of which pay consideration to corporate social and environmental behavior. Willard shows how recruiting costs for SD Inc. could be reduced by 5% through a positive SD branding..

Higher retention of top talent Studies illustrate that talented employees are likely to stay with a company when they have meaningful work. Willard shows how SD Inc., in taking up a sustainable framework, could avoid 38 million dollars in costs.

Increasing employee productivity Willard converse the connection between meaningful work and productivity, and shows that engaging the entire organization in sustainable 41

development goals like zero emissions, self-sufficient energy production, zero waste, helping restore the planets health, guarantee that the company gets more output from its employees. SD Inc.s productivity benefit translates into 756 million dollars, the equivalent of 12,600 extra employees. Reduced expenses in manufacturing Willard exhibits savings opportunities through purging or recycling waste and redesigning processes to use less energy, water, and materials in manufacturing, which are the low hanging fruits of eco-efficiency.

Reduced expenses at commercial sites A lot of unnecessary wastes take place at nonmanufacturing sites. Through more cautious waste handling, energy efficiency, water conservation, and naturalized landscaping, SD Inc. can add 26 million dollars of pure profit.

Increased revenue/market share by tapping into the trend of consumer preference for green products, Willard shows how SD Inc. can increase its revenue by 5% a year (an extra 2.2 billion dollars) and increased profits of 150 million dollars.

Reduced risk, easier financing Companies that illustrate environmental and social responsibility tend to be viewed as less risky and that can convert into cost avoidance, lower insurance premiums, and reduced legal and regulatory costs, preferred rates on 42

loans, greater investor appeal, and avoidance of lost revenue from consumer activists actions.

Corporate Social Responsibility In India

India has one of the worlds richest traditions of CSR (corporate social responsibility).

While much has been done in recent years to elevate awareness on social responsibility as an essence of business, CSR in India has yet to achieve critical mass. If this goal is to be grasped then the CSR movement will have to become much more business-likewith companies starting to set clear objectives, making real investments, measuring actual returns, and reporting performance openly. To know the current status of CSR in India, it is important to first map out the landscape and then identify the main families of corporate responsibility. For longestablished industrial empires, such as the Birlas and the Tatas, concepts of nation-building and trusteeship have been alive in their operations decades long before CSR become a popular case. Besides, these are the leading Indian companies with strong international shareholdings, such as Hero Honda, HLL (Hindustan Lever Ltd), ITC, and Maruti Udyog, where local dynamics blend with the business standards of the parent or partner. Another practice emerges from the public sector enterprises, such as BHEL (BharatHeavy Electricals Ltd), HDFC (Housing Development Finance Corporation), NTPC (National Thermal Power Corporation), and ONGC (Oil and 43

Natural Gas Corporation), where social obligations stay an integral part of their business in spite of the march of privatization. And then there is this new generation of enterprises that has pitched on the back of knowledge based globalization, such as Dr Reddys, Infosys, Ranbaxy, and Wipro, where less stress is on minimizing negative impacts and more on maximizing the positive run over effects of corporate development.

The emerging model of CSR in India

Mapping out these four families of CSR helps provide a context for understanding the up-andcoming model of corporate responsibility in India. Looking across the existing practices of leading Indian corporations, a number of core elements come into sight.

Community development Most large companies either have their own foundations or contribute to other ingenuity that directly support the community upliftment, notably in health, education, and agriculture.

Environmental management Environmental policies and programmes are now standard, and many companies have put into practice the ISO 14 001 system throughout their businesses.

Workplace Budding out of long-standing commitments to training and safety is a more topical accent on knowledge and employee well-being.

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India Inc.: selected CSR innovations

Issue Company Action

Community development

Hindalco

Asian CSR Award for its Integrated Rural Poverty

Alleviation Programme

Corporate giving

Indian Oil Corporation

Dedicating 0.75% of net profit to community development initiatives

Health

Larsen and Toubro

One of first corporates to launch programme an HIV/AIDS

Gender equality

NTPC 45

One of the few organizations

to have a policy for the grant of paternity leave

Labour standards

ITC

First company in India to be certified to the SA8000 social accountability standard for its Chirala facility

Human capital

Infosys

Pioneering human education employees

evaluation using for

of an its

capital index

Environmental management

BHEL

All BHEL units are certified to the ISO14 001

environmental management system

Energy conservation

Reliance

Energy conservation measures are saving the company 1150 million rupees per annum 46

Water conservation

Hindustan Sanitaryware

Reduced flushing WCs is estimated to save 2 billion litres of water

Disclosure

Tata Iron and Steel

First

Indian

company

to

publish a sustainability report in line with Global Reporting Initiative guidelines

Source: Compiled from published data on company web sites

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Associating the CSR progress of India Inc. with the other emerging economies is difficult to accomplish, not least because there are no global benchmarks. However, some alternate gauges are available. In September 2004, the International Organization of Standardization published its latest survey of the adoption of the ISO 14 001 environmental management system. At the end of 2003, over 66,000 certificates had been issued worldwide, up 16% on the year before. Of these, India had 879 certificates, a substantial growth from the 600 certificates in 2002.

India lagged far behind China, which had over 5000 ISO 14 001 certificates in 2003, making it the country with the third highest number of ISO 14 001 registrations after Japan and the UK. Another broader measure of corporate commitment to social responsibility is the UN Global Compact, a set of 10 principles launched by UN Secretary-General, Kofi Annan. Currently, 95 Indian companies have backed the Global Compact, slightly less than in Brazil, but on this occasion, considerably more than in China.

Over the years, India Inc. has progressively become more aware of social responsibility as being important to business. Many consider it important to incorporate it with their business strategy. Corporate social responsibility (CSR) has come a long way from the time when companies purely gave donations to charity to the present time, when several companies have fully integrated social goals with their business goals.

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Most Indian companies undertake initiatives that meet up the strictest definition of the term quality as corporate social responsibility. In the dearth of a structured approach to defining CSR and a system for its deployment, companies are often ignorant of the nature of such initiatives and the degree of their investment in CSR initiatives. CSR activities are, in fact, are principally driven by the developmental needs of the Indian communities in which the businesses survive. Poverty, poor infrastructure and living conditions, lack of education, inadequate health care facilities, and inadequate sources of livelihood in the surrounding communities are of concern to Indian industry.

In India educational institutions, the corporate sector, the social sector, and the government are jointly functioning on the very important question of how to incorporate CSR into the curriculum of business schools and into corporate business strategies. India, with its strong and dynamic private sector and a strong ethical tradition, is best placed to take up CSR.

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Corporations have over the years focused on the following areas:

Community development (for livelihood programs)

Disaster management

Education and literacy

Population and health, with a special focus on HIV/AIDS through the Indian Business

HIV/AIDS

Physical challenges

Vocational training

Empowerment of women

Sustainable-livelihood programs

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Most CSR programs are considered to tie into the business of the company. Many hardware and software majors have made a sortie into e-learning by using their old computers and having a team of developers work on the content. The biggest success story in this remains the e-choupal initiative of the ITC Group. ITC has been able to gain access to remote villages through the traditional choupals (village meeting places), by installing V-SAT, computers, public address systems, and solar power. It uses E-choupal (the name of its agriculture portals) to market its products as well as procure raw material. The system benefits the farmers, because they can sell directly to the company without middlemen.

CSR with Smile

Corporate Social Responsibility (CSR) schema of a corporation is weighty of its social conscience and commitments to the community and society at large within which it operates. It is no more viewed as a liability on corporate resources. More and more Companies have gradually come to realize that it is an investment with multiple benefits for the corporate sector. Various observed research findings clearly pointing to a strong positive correlation between CSR and corporate profitability have further provided the thrust.

However, Corporate Institutions in India, though more receptive towards CSR as compared to elsewhere, with all the resources at their command, remain guarded in terms of their reach- both geographically and demographically. Their efforts appear insignificant in light of the size of our 51

country and diverse, multiple problems therein. Smile Foundation is an Indian Charitable Trust, promoted by a group of young professionals from corporate and business sectors. The Foundation ropes child-centric welfare initiatives of NGOs across 15 States of Federal India. The Foundation, itself a living example of Corporate Social Responsibility (CSR), very legitimately believes and passionately advocates for a more proactive and vital role of corporate sector in developmental plane for greater mutual benefits.

Following the philosophy of Social Venture Philanthropist, Smile hunt out for social entrepreneurs with innovative ideas & vision, running genuine grass root initiatives and making significant contributions with low cost. In the process Smile happens to be the first ever grant maker in over 75% of organizations it supports across the country.

Smile sincerely believes that CSR agenda continues to gain immensely through fostering and strengthening corporate-civil society partnerships in development missions. The Foundation, therefore, actively seeks to network and forge Partnerships with corporate world and premier Management Institutes in the country.

Smile Foundations commitment to CSR has been duly recognized by a host of organizations like ASSOCHAM, Indian Institute of Foreign Trade (IIFT) etc. Besides working for promoting and strengthening CSR in the country, the Foundation also provides Social Exposure Program (SEP) for Management students the future corporate Leaders. 52

Smile Foundation very genuinely believes in a more proactive corporate sector and passionately advocates for promoting and strengthening CSR agenda in the country. Also a vibrant corporate-civil society partnership is what the Foundation strives for in view of NGOs going (working in) outreach with commitments and community support.

Smile Foundation helps the corporate in strengthening their CSR Program in following ways:

Corporate becoming CSR Partner of Smile. Adopting development initiatives of NGOs supported by Smile Foundation. Helping Corporate to establish projects under CSR.

53

54

OBJECTIVES
To study the CSR activities that are followed among most of the organizations.

To study that which department spearhead the CSR activities.

To study the role that you play in Framing and implementing CSR activities as an internal stake holder.

To study that good CSR activities attract and retain talented and competent employees. To study who do you form a CSR policy.

To rate the following CSR activities in the order of your preference for external & internal stakeholders.

To study how HR play a role in CSR.

To study that what are the Various Reasons for conducting CSR Activities.

55

 To study what is the communication mechanism of CSR to Employees.

56

RESEARCH METHODOLOGY

2.1 Sample design

2.1.1 Sample Universe

The sample universe includes all HR Managers.

2.1.2 Sample Unit

The sample unit includes 30 HR Managers of three companies.

2.1.3 Sample Size

The sample size which would be considered for the research is 30 respondents.

2.1.4 Sampling Technique

57

Convenience sampling

2.3 Data collection

2.2.1 Primary Data Primary data will be collected by an Exploratory Research and taking interview from the potential respondents in the form of questionnaire. The questions in the questionnaire would be in the form of rating-scale, open-ended & close-ended questions which would be logically framed in order to achieve the above stated objectives.

2.2.2 Secondary Data

Secondary data will be obtained through information from previous literature, reports, newspapers, reference books, magazines and websites.

2.3 Statistical Design

The primary data & secondary data collected has been analyzed with the help of simple statistical tools viz. means, percentages, tables and Graphs.

2.4 Limitations of Study

People may not give correct information about their incomes and preferences Difficult to deduce results based on small sample size Results concluded may not be applicable to entire population 58

Certain variables may have been ignored

59

Q 1. Following are the CSR activities that are Followed among most of the organizations. According to your perceptions on the present CSR activities in your company , rate these CSR activities as (1) Mostly Prevalent (2) Some what Prevalent (3) Not there ?

CSR Activities 1. Community development 2. Corporate Giving 3.Health 4. Gender equality 5.Labour Standards 6.Human Capital 7.Environment Management 8.Energy conservation 9.Water conservation 10.Disclosure 11.Disaster management 12.Education and Literacy 13.Population and health 15.HIV/Aids 16.Physical challenges 17.Vocational training 18.Empowermwnt of Woman 19.Sustainable Livlihood Program 20.Community outreach 21. good employee Relations 22.Sponcership and student Scholarship 23.Rural Development Activities 24.Promotion of sports 25.Poverty reduction activities 26.Educational institutional 27.Risk management and compliance 28.Loans 29.Medicare

Mean Varience 1.933 1.866 2.033 1.5 2.06 2.3 1.933 1.5 1.766 1.5 1.933 1.5 2.066 2.033 1.933 1.5 1.8 2.066 1.5 2.533 1.866 1.8 1.633 1.7 1.633 1.766 2.4 2.5 60

30.Provident fund 31.Maternity and safety Programs

2.766 2.533

Analysis : Provident Fund, Maternity and safety, Loans and Medicare programs are the most prevalent CSR activity practiced by the Companies for there internal stake holders where as health, Disaster management, Population, Environment management are the most commonly practiced CSR activities for external Stakeholder by the companies.

Q.2 . Which Department Spearhead the CSR activities ?

HR Department 12

Public Affairs/ Relations 8

Corporate Communicat ons 4

Marketing Department 3

CEOs Office

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Analysis: According to the data gathered the CSR activities are generally spearheaded by the HR Department followed by the Public Affairs and relations.

Q 3. What is the role that you play in Framing and implementing CSR activities as an internal stake holder?

Brand Builder 3

Strategic role 7

Change Management 8

Initiation role 6

Implement Role 6

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Analysis: According to the data collected most of the managers were into Change management and strategic roles and then the initiators and implementers of the CSR activities.

Q.4. Do you think that Good CSR activities attract and retain talented and competent employees?

Responses No of responses

Almost always true 15

Mostly true 9

Sometimes true 5

Rarely True 1

Not at all true 0

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Analysis: The result clearly shows that good CSR activities attract and retain talented and competent employees.

Q.5 Do the Employees undergo training programs which incorporate policies, procedures, and systems used on the workplace how to meet the CSR objectives?

Responses No of responses

Almost always true 7

Mostly true 12

Sometimes true 10

Rarely True 1

Not at all true 0

64

3% 3 4%

0 %

23 %

Alm ost alwa ys true Mostlytrue S om etim estrue

40 %

Ra relyT rue Not at all true

Analysis: According to the data collected Employees do undergo trainings to meet the CSR Objectives.

Q.6 How do you form a CSR policy?

a) based on internal stakeholders opinion

b) based on public opinion

c) based on external stakeholders opinion 65

d) based on opinion from NGOs

15%

50%

15%

20%

Analysis: The data shows that CSR activities are generally based on public opinion and then the opinion of the NGOs and then the opinion of the external and internal stake holders.

Q.7 Rate the following CSR activities in the order of your preference for external stakeholders:

Student Scholarships 3

Financial Performance 4

Environment Stewardship 1 66

Generation of employment 5

Community Outreach 2

Analysis: According to the data collected Environmental stewardship is the most important CSR activity for the external stakeholders whereas Financial Performance is the least Important CSR activity.

Q.8 Rate the following CSR activities in the order of your preference for internal stakeholders:

Loans 3

Medical Care 2

Pension Fund 1

Maternity and safety programs 4

67

Analysis: According to the data collected Pension Fund is the most rated CSR activity for the internal stake holders.

Q.9 How does HR play a role in CSR?

In many cases the board may have developed corporate policies that cover a range of issues, including CSR, but no one ensures they are adhered to, checks the staff awareness, or assesses their impact. It may be that the boards present mission, objectives and values do not reflect the values of staff or expectations of customers. Arguably, HR is best placed to engage staff in these issues.

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WHAT ACTIVITIES ARE CARRIED ON BY HR DEPT TO KEEP EMPLOYEES MOTIVATED TOWARDS CSR?

a) workshops to engage employees

b) developing interactive intranet sites

c) consult and involve employees in running of business

d) providing feedback questionnaire s to employees 10%

40%

20%

30%

69

Analysis: According to the data collected Workshop to engage employees is the most important activity carried out by the HR department to keep the employees motivated towards CSR

Q.10 Rank the benefits of championing CSR in HR as per your org.?

a) Staff pride

b) Improved staff motivation

c) Encouragement of innovation

d) Reduced staff turnover

e) increased profitabilit y 5

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Analysis: According to the data collected it is a matter of staff pride and improved staff motivation for championing CSR in HR.

Q.11 What are the Various Reasons for conducting CSR Activities? Rank them according to importance?

1.Improve image and reputation 2.Improve Trust 3.A more prominent profile 4.A better market position 5.More Business and Financial 6.Improved employee motivation 7.Increased attractiveness to potential

1 5 3 2 10 4 6

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recruits 8. Cost saving 9. Increased Efficiency 10. Improved Company Culture

9 8 7

Analysis: According to the data collected the most important reason for conducting CSR activity is to improve the companies image and reputation in the market.

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Q.12 What are your methods of evaluating CSR Activity?

1.Public image survey 50%

2.Customer satisfaction survey 30%

3. Return on Investment 20%

73

Analysis: according to the data collected Public image survey is the best possible way for the company to evaluate there CSR activity and then comes the customer satisfaction survey followed by the Return on investment.

Q.13 What is the communication mechanism of CSR to Employees?

1.E-mail 65%

2.Company news letter 10%

3.Regular staff meeting 20%

4.posters 5%

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Analysis: According to the data collected the most used mechanism of communicating the CSR to the employees id by E-mail and then by company news letter and then by regular staff meetings.

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76

Conclusion

CSR is more prevalent in advertising intensive (consumer-oriented) industries, and CSR is more positively related to profitability in these industries. Further, the effect of CSR on profits is stronger in competitive industries, especially when few other firms undertake such actions, suggesting that CSR may be used as a means of differentiation in otherwise competitive environments.

MANAGERIAL IMPLICATIONS Gain from CSR Initiatives

Following main issues are handled:

A companys business and brand equity solely depends upon its reputation in the market and there is a risk that this equity can be harmed. Reputation is built around intangibles such as trust, reliability, quality, consistency, credibility, relationships and transparency, and tangibles such as investment in people, diversity and the environment.

Secondly, access to financing is an issue since the market for socially responsible investment (SRI), though still relatively small, is growing. This increase is a result of the growing support for the business case for CSR, together with regulatory (for example, United Kingdom pension funds) market and societal pressure. 77

CSR is an important factor for employee motivation and in attracting and retaining top quality employees.

CSR helps build in innovation, intellectual capital and learning.

Fifth, better risk management can be achieved by in-depth analysis of relations with external stakeholders. Factors such as new technologies and changing societal, regulatory and market expectations are driving companies to adopt a broader perspective when analyzing the range of risks that they may encounter. Expensive and time-consuming lawsuits, as well as lost investments, are driving companies to take a more proactive stance to establishing the necessary guidelines and processes to minimize this kind of risk. Given the increase in cross-border business relationships and the threat of cross-border litigation, boards have to consider the risk management standards of business partners, and even suppliers. CSR also helps in compliance with regulation and the avoidance of legal sanctions, while the building of relationships with host governments, communities and other stakeholders can enhance a companys reputation and credibility and be of vital importance should it encounter difficulties I the future with regard to its investment decisions.

Lastly, as the business grows the public expectations start increasing which again bear an impact on its CSR activities and which again lead to heightened expectations on part of the public. And this carries on as a circle.

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Good

corporate

citizenship

and

corporate

social

responsibility can provide business benefits in eight areas:

Reputation management;

Risk profile and risk management;

Employee recruitment, motivation and retention;

Investor relations and access to capital;

Learning and innovation;

Competitiveness and market positioning;

Operational efficiency;

License to operate

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Some other Benefits Derived from Ethics and Social Responsibility

Positive impact on investment in the company Continuing trust in the company for customers, suppliers Avoid fines from illegal activities Avoid negative publicity

A VIRTUOUS CIRCLE
The relationship between social responsibility and profits

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MODEL OF SOCIAL RESPONSIBILITY

81

Accountability by management

Health, Safety &Environment SOCIALLY RESPONSIBL E CORPORATE Communication outside the company Social Philanthropy

Transparency and Fair Disclosures

Business Ethics

Based on my understanding of the kind of Social Responsibility programs which the above said MNCs take, a model has been which may be helpful in determining if a particular company is Socially Responsible or not.

This model can be used as a standard instrument to judge a companys social responsibility. In todays environment where every citizen is expected to be socially responsible towards his/her country and to the community as a whole the role of Corporate cannot be ignored. Big MNCs coming to India are not only generating loads of job opportunities for us, they also bring with

82

them their rich work culture and alertness towards society. These MNCs give back to our society what they are taking away from it.

The companies discussed above if were to be judged on Social responsibility based on the model, they can all be called Responsible. Let us see how:

1) Accountability By management: This means that the companies make the shareholders alert of everything that is happening in the company. Directors and trustees are in charge for the stewardship of assets and the owners of those assets hold the board responsible.

The main elements of being accountable are: The annual general meeting The annual report Regular reports to fund providers Other open meetings or consultations

Board members must report to fund providers (whether they be shareholders, owners, or Government) that the money provided was used as agreed and that expenditure was suitable and aptly viewed. It is a difficult balance to provide plenty detail to keep owners/fund providers informed without revealing business information to competitors or giving details on projects before all options have been look upon. This requires careful judgment from directors and trustees. The companies we discussed about in this

83

report do take all these four measures and hence can safely be called socially responsible.

2) Transparency And Fair Disclosures

The company must make fair, accurate and timely disclosures without benefit to any particular analyst or investor. The company should continue to provide current and potential shareholders admission to key information reasonably necessary to make an informed decision on whether to invest in the companys stock or not. It is always in the company's best interest to preserve an active and open dialogue with shareholders and potential investors regarding the company's historical performance and future prospects. The companies which we discussed about do have journals and other information published timely to keep their shareholders and potential investors well informed of the companys standing.

3) Business Ethics

The higher you climb in the world of business, the stronger the attraction to exchange your principles for success, but the ones who go long way are the ones who do not take these short-cuts and run their business in an ethical manner.

84

American Express has joined the project, and launched its new RED American Express card. When consumers use the card to make purchases, 1% of the purchase price goes to the Global Fund to help in its fight against AIDS, TB and Malaria. GEs commitment to perform with integrity is instilled in every employee as a non-negotiable expectation of behavior. This system is supported by a system of comprehensive processes, policies, communications and training that strives to enable lucidity and provides a direction on how to make the shared commitment to integrity actionable.

Fed-Ex has a full document on Code and conduct and Business ethics which every director and employee has to follow without exemption. The Code of Business Conduct & Ethics sets the policies with which every FedEx director, officer and employee is expected to follow. FedEx contractors and Global Service Participants operating under the FedEx brand name are also expected to obey with those portions of the Code that apply to them.

As a company, and as individuals, Microsoft values integrity, honesty, openness, personal excellence, constructive self-criticism, continual self-improvement, and mutual respect. They are dedicated to their customers and partners and have a zeal for technology. They take on big challenges, and pride themselves on seeing them through. They hold themselves answerable to customers, shareholders, partners, and employees by honoring their promise,s providing results, and striving for the highest quality.

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4) Social Philanthropy

Mr. Gates reveals how much the goodwill of a corporate leader can rub off on his company. Formerly chief executive officer and now chairman of Microsoft, he contributed to a marked improvement in the company's emotional appeal.

GE as a company now realizes that in addition to making cash contributions to various projects, it can also play a vital role in solving global problems through the direct use of its own capabilities. GEs accomplishments depend in part on its willingness to engage local government and nonprofits as partners in its work.

FedEx cares about the communities in which we live and work. They are dedicated to effective corporate citizenship, leading the way in charitable giving, corporate governance and a commitment to the environment.

5) Communication Outside company

The company should make sure that there adequate information being given to people who are interested in the companys affaires. The parties involved in companies like Shareholders, customers, employees etc should be well-aware with all the news on the companys front.

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6) Health, safety and environment

Companies must make sure that Health and safety of their employees and the public at large is not being adversely affected by its business. Safety measures should be taken when dealing with hazardous material so that accidents can be avoided. In addition to this companies must make sure that they are not doing anything bad to the environment. Creating fair value for our stakeholders in ways that are transparent and ethical while conducting our business with uncompromising integrity Improving the economic conditions of the community in which we work through job creation, business engagement and philanthropy Preserving and nurturing our heritage Providing access to healthcare facilities to the under-privileged Investing in education and e-inclusion programs enabling access to Information

87

Findings:

The findings of the research have been quite remarkable. These are listed as under:

It has been found that companies divide the stakeholders into two categories: Internal and External Stakeholders. 88

 It has been found that most widely practiced CSR activities for internal stakeholders are Provident Fund, Maternity and safety, Loans and Medicare programs where as health, Disaster management, Population, Environment management are the most commonly practiced CSR activities for external Stakeholder by the companies.

The highly rated activities of CSR are: Environmental Stewardship for external stakeholders and Pension Fund for internal stakeholders.

The study also reveals that HR plays an important role in CSR as it is spearheaded mostly by HR department followed by Public Affairs and relations.

Companies also engage themselves into CSR activities to attract and retain talented and competent employees along with maintaining their reputation and goodwill in the market. Employees are also undergone training to meet CSR objectives. Training activities include workshops carried out by HR department and also to keep them motivated.

It was also found that public opinion is of prime importance to the companies engaged in CSR activities to perform efficiently on societal front.

89

 After taking such pains for CSR the companies also want to evaluate these activities performed by them and hence go for public image survey.

90

LIMITATIONS

Problem Faced
91

There were few limitations, which were uncommitted while conducting this project but these limitations could not restrict the progress and completion of the present study.

Some of the inevitable limitation that crept in the study is as under:-

1.

Some of the respondent was not genuinely helpful, cooperative and responsive. They were hesitant to fully disclose the information with the research.

2. Most of the employees were busy, due to some work of the organization. 3. There was much difficulty in approaching the higher management employees. 4. Latest data of the company and books concerned were not easily available.

5. The options offered in the questionnaire were at time, not correctly interpreted by the employees of lower level management. 6. Most of the employees other than that of personnel department wee not at all cooperative.
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7. Employees of lower level did not take the questionnaire seriously. 8. A certain degree of fear and devotion towards the organization was a hurdle while conducting the research. 9. For certain workers at lower questionnaire were a source of showing their frustration.

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94

SUGGESTIONS

After gathering a wide variety of information on the various aspects of motivational approach in the company, few recommendations are worth attention.

Manger should be committed to activity and internationally motivate subordinates. Manger needs to understand their own strength and weakness before trying to change that factor. Manager should realize that workers have different abilities and motives. Job reward should be tied to performance not to seniority or other non merit based factor. Job should be designed in such a way as to provide challenge and variety. Manger should be uncertain that subordinate clearly understood what is expected of them.

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 Manager should try to stay close to their subordinates and correct problem as they arise. Manager should remit the activity cooperation of subordinates in improving the organization output. Subordinate should be made to realize that they are stakeholder in the organization. Responsibility without authority can be destructive. Management should not order, but should inspire. It should not impose but influence. Management should make every employee of the organization give their hearts not just heads to the goals. A timely presentation of the work done should be there to the top management. Teamwork in all operational process must be encouraged. Equip people with the skills necessary to perform their duties. Allow the voice of the workers to be heard.

The management should let his people know that it consider them valuable capable

individual.

Provide the employee enough work.

Dress code should be there.

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 Employee should be informed in advance about the changes, which are planned in the organization. Suggestion system can be a strong employee motivation because the employees are given the opportunity to say something. This will increase the sense of belonging. The fear motivation should be completely abolished though it works well in the short run but is an ineffective long term strategy.

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98

BIBLIOGRAPHY

References:

1) Agarwal , Sanjay K, Corporate Social Responsibility in India. May 9, 2008 2) Kotler , Philip and Nancy Lee, Corporate Social Responsibility. 2004 3) http://en.wikipedia.org/wiki/Corporate_social_responsibility 4) http://www.business4better.org/?cid=gglcsr&gclid=CMiskMGbwrYCFc5a 5) http://www.tutor2u.net/business/strategy/corporate-social-responsibilityintroduction.html 6) Grayson , David, British council India lecture tour. Feb 2006
7) Von Krogh, G., Spaeth, S., & Lakhani, K. 2003.

8) http://www.bou.or.ug/bouwebsite/export/sites/default/bou/boudownloads/

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CSR Questionnaire 100

Section : A

1. Name of the Organization ?

2. Name of the person?

3. Position Held in the organization?

4. Sector to which the organization belongs?

Section : B

101

Q 1. Following are the CSR activities that are Followed among most of the organizations. According to your perceptions on the present CSR activities in your company , rate these CSR activities as (1) Mostly Prevalent (2) Some what Prevalent (3) Not there ?

CSR Activities 1. Community development 2. Corporate Giving 3.Health 4. Gender equality 5.Labour Standards 6.Human Capital 7.Environment Management 8.Energy conservation 9.Water conservation 10.Disclosure 11.Disaster management 12.Education and Literacy 13.Population and health 15.HIV/Aids 16.Physical challenges 17.Vocational training 18.Empowermwnt of Woman 19.Sustainable Livelihood Program 20.Community outreach 21. good employee Relations 22.Sponcership and student Scholarship 23.Rural Development Activities 24.Promotion of sports 25.Poverty reduction activities 26.Educational institutional 27.Risk management and compliance 28.Loans 29.Medicare 30.Provident fund 31.Maternity and safety Programs

Mostly Prevalent

Somewhat Not there prevalent

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Section : C

This section Examines the perception of the manager on the various roles they play in Implementing the CSR Activity .

Q.2 . Which Department Spearhead the CSR activities ?

HR Department

Public Affairs/ Relations

Corporate Communicato ns

Marketing Department

CEOs Office

Q 3. What is the role that you play in Framing and implementing CSR activities as an internal stake holder?

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Brand Builder

Strategic role

Change Management

Initiation role

Implement Role

Q.4. Do u think that Good CSR activities attract and retain talented and competent employees?

Responses No of responses

Almost always true

Mostly true

Sometimes true

Rarely True

Not at all true

Q.5 Do the Employees undergo training programs which incorporate policies, procedures, and systems used on the workplace how to meet the CSR objectives.

Responses No of responses

Almost always true

Mostly true

Sometimes true

Rarely True

Not at all true

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Q.6 How do you form a CSR policy?

e) based on internal stakeholders opinion

f) based on public opinion

g) based on external stakeholders opinion

h) based on opinion from NGOs

Q.7 Rate the following CSR activities in the order of your preference for external stakeholders:

Student Scholarships

Financial Performance

Environment Stewardship

Generation of employment

Community Outreach

Q.8 Rate the following CSR activities in the order of your preference for internal stakeholders:

Loans

Medical Care

Pension Fund

Maternity and safety programs

Q.9 How does HR play a role in CSR? 105

In many cases the board may have developed corporate policies that cover a range of issues, including CSR, but no one ensures they are adhered to, checks the staff awareness, or assesses their impact. It may be that the boards present mission, objectives and values do not reflect the values of staff or expectations of customers. Arguably, HR is best placed to engage staff in these issues.

WHAT ACTIVITIES ARE CARRIED ON BY HR DEPT TO KEEP EMPLOYEES MOTIVATED TOWARDS CSR?

e) workshops to engage employees

f) developing interactive intranet sites

g) consult and involve employees in running of business

h) providing feedback questionnaire s to employees

Q.10 Rank the benefits of championing CSR in HR as per your org.?

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f) Staff pride

g) Improved staff motivation

h) Encouragement of innovation

i) Reduced staff turnover

j) increased profitabilit y

Q.11 What are the Various Reasons for conducting CSR Activities ? Rank them according to importance?

1.Improve image and reputation 2.Improve Trust 3.A more prominent profile 4.A better market position 5.More Business and Financial 6.Improved employee motivation 7.Increased attractiveness to potential recruits 8. Cost saving 9. Increased Efficiency 10. Improved Company Culture

Q.12 What are your methods of evaluating CSR Activity?

1.Public image survey

2.Customer satisfaction survey

3. Return on Investment

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Q.13 What is the communication mechanism of CSR to Employees?

1.E-mail

2.Company news letter

3.Regular staff meeting

4.posters

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