MANAGEMENT AND SOCIETY

CSR
Every individual living in the society has obligations towards society. Business men therefore have an obligation to run the business on those lines which make the business desirable from the point of view of society. Therefore, their decisions must be influenced by their obligations towards society. Today, businessmen have reaffirmed their belief in the concept of "Social Responsibilities of Business". David and Blomstorm have observed that business is "a social institution, performing a social mission and having a broad influence on the way people live and work together"

Definition:
Specifically, we see CSR as the voluntary actions that business can take, over and above compliance with minimum legal requirements, to address both its own competitive interests and the interests of wider society.

Source: www.csr.gov.uk

Why CSR?
Consumers & investors: growing expectation for organisations to behave responsibly Consumer awareness: Green and Ethical consumerism Legislation: H&S, EPA, Sustainability, Codes of Practice Globalisation: Adoption of Best Practice, Consumer & Legal Acceptance.

Business advantages of CSR:

Business Development New markets, products and services Resources Management Better management and conservation of strategic assets Stakeholder Management Better internal and external relationships Freedom of operation: reduce government, public, NGO intervention in organisation

Corporate Social Responsibility:

adds value

IN FAVOUR OF SOCIAL RESPONSIBILITY OF BUSINESS

Business is a creation of society and therefore it should respond to the demands of the society

Business managers are obliged to use its resources for the common good of society because the business uses resources which belong to the society. It is therefore necessary that every business enterprise should fulfill its obligations to society.

The self-interest of business is best served by meeting the aspirations of society

The long-term self-interests of the business are best served when business assumes social responsibilities. People who have good environment, education and opportunity make better employees, and customers for the business. Hence there is a growing realization on the part of the enlightened business managers that it is in their self-interest to fulfill the aspirations of the society.

To improve the public image of business

The business will retain the needed credibility with the public if it performs its social obligations. Good relations with workers, consumers and suppliers will lead to success of business.
The social responsibilities of business managers must be proportionate to their social power. If the business managers do not assume social responsibility, their social power will be taken away by the society through government control and regulations and other measures.

It is the moral thing to do

Understanding the Components

Responsibility Economic Legal Ethical Societal Expectation Required Required Expected Examples Be profitable. Maximize sales, minimize costs, etc. Obey laws and regulations. Do what is right, fair and just. Be a good corporate citizen.

Discretionary Desired/ (Philanthropic) Expected

Pyramid of CSR

Arguments for supporting business being socially responsible:

Public expectations. Long-run profits. Ethical obligations. Public image. Better environment. Government obligations. Shareholders interests. Possession of resources. Balance of power & responsibility.

The Three Principal Bottom lines

Economic/Financial bottom line Social bottom line

Environmental bottom line

For corporate sustenance, companies should not just focus on economic bottom lines that will be concerned with revenues and subsequent profits but also focus on the actions taken for social and environmental betterment

CSR Initiatives: Examples

Different companies are found to adopt different measures with focus on different bottom lines

Focusing on Social Bottom Line

Focusing on Environmental Bottom Line

CSR in practice
Focus on building trust Provide leadership and show it (internal & external) Define what CSR means for your company and sector Make it happen (commitment, not perfection) Be transparent Engage in dialogue (third parties) Keep moving the boundaries!

CSR covers:
Human rights Environment Supply chain Community Accountability Governance -

Some of the most common ways in which CSR is demonstrated:

Specialist adopted projects Corporate charitable donations Voluntary schemes for staff Staff fundraising activities Changes to organisational operations

Communicating Corporate Social Responsibility

General values statement

Organisations should develop a general values statement which reflects their stance towards CSR This may form part of a more comprehensive Mission Statement Should define ethical framework that guides the accomplishment of the overall mission of an organization within a society

Example: Organizational Focus

JP Morgan Chase

Example: Environmental Focus

Coca Cola

Example: Customer Focus

Home Depot

Example: Employee Focus

Johnson and Johnson

Example: Stakeholder Focus

Credit Suisse

United Technologies

Example: Social Focus

Bristol-Myers Squibb

Reporting CSR:
CSR projects may be administered and communicate achievements via: A dedicated CSR section or department The HR department Business development section Public Relations department Directly via CEO and / or Board of Directors

Definition of Ethics
Ethics Rules & principles that defines right & wrong conduct.

Views
Utilitarian view- Ethical decisions based on outcomes or consequences. Rights view- Individuals moral judgment. Theory of justice view- Managers impose & enforce rules fairly & impartially.

Why fostering Good Business Ethics is important

To gain the goodwill of the community To create an organization that operates consistently To produce good business To protect the organization and its employees from legal action To avoid unfavorable publicity

Factors affecting ethical behavior

Org.culture
Moderators Ethical behavior

Structural variables

Creating an Organization that Operates Consistently

Operate with honesty and integrity, staying to corporate principles Operate according to standards of ethical conduct, in word and in action Treat colleagues, customers, consumers with respect Strive to be the best at what matters most to the company Accept personal responsibility for actions Value diversity Make decisions based on facts and principles

Key Features to implement Ethics

1. Identifying the core beliefs, which need to include a commitment to ethical conduct. 2. Understanding the strengths and weaknesses of and organization culture & organizational structures. 3. Scan the business environment 4. Determine relative to its goals and objectives and what is expected. 5. Identify targets and measurable indicators of expected program outcomes. 6. Design, implement, and enforce a program that will promote an organizational structure that encourages ethical conduct and a commitment. 7. Regularly evaluate, for improvement.

How Management can affect Employees Ethical Behavior #1

Manager:
Set and hold people accountable for meeting stretch goals, quotas, and budgets

Possible Employee Reaction:

My boss wants results not excuses, so I have to cut corners to meet the goals has set.

How Management can affect Employees Ethical Behavior #2

Manager:
Fail to provide a corporate code of ethics and operating principles to guide decision making

Possible Employee Reaction:

Because there are no guidelines, I dont think my conduct is really wrong or illegal.

How Management can affect Employees Ethical Behavior #3

Manager:
Fail to hold people accountable for unethical actions

Possible Employee Reaction:

No one will ever know the difference, and if they do, so what?

How Management can affect Employees Ethical Behavior #4

Manager:
When employees are hired, put a 3-inch binder titled Corporate Business Ethics, Policies, and Procedures on other desks. Tell them to read it when you have the time and sign the attached form that say you read and understand corporate policy.

Possible Employee Reaction:

This is overwhelming. Cant they just give me the essentials? I can never absorb all this.

Seven Steps for Ethical Decision Making

1. Get the facts 2. Identify stakeholders and their positions 3. Consider the consequences of their decision 4. Weigh various guidelines and principles 5. Develop and evaluate your decision 6. Review your decision 7. Evaluate the results of your decision

Code of Ethics
Formal statement of an organizations primary values & ethical rules to be followed by employees. Usually written. Must state in detail acceptable behaviors & actions.

Management responsibility relating to codes of ethics

Develop codes with active involvement of every one in the organization. All levels of management must support & continually reaffirm the importance. Consistently discipline those who break the codes. Set an example by behavior & action.