Why Companies Need To Devote Time and Resources to Managing Their Social Responsibility - Example

Why Companies Need To Devote Time and Resources to Managing Their Social Responsibility Name of Student Institution Lecturer Submission date In the past, corporate social responsibility, (CRS) of managers was only limited to ensure maximizing profits for shareholders. The changing times have defined social responsibility inclusive of the immediate environment that hosts the business premises taking into account the environment and the surrounding communities that are directly affected by the activities of the organization. Ethics is the moral code of upheld values which govern individual or group conduct defining what is morally accepted as either right or wrong. In the business fraternity, ethics are meant to define standards for decision making. For companies to thrive in business, the management must ensure that any individual, groups and partners are covered within the ethics of its operation otherwise risk loosing support from them. I agree to a larger extend that these companies must therefore devote huge chunks of their time and valuable resource in ensuring their social responsibility as this paper will discuss encompassing economic, legal, ethical and discretionary responsibilities. It will also rebuttal the issue before concluding. Ethical social responsibilities, exemplifies a range of customs, values, and potentials that consumers, shareholders, employees and the community a large regard as fair and just as well as maintaining respect for the shareholders moral rights (Carroll 1999). According to Carroll (1991), social responsibility revolves around ethical, legal, philanthropic and economic responsibility which forms a pyramid of social responsibility.. Trevino & Nelson (2005) support the issue citing these responsibilities to include legal, ethical and philanthropic responsibilities in addition to economic responsibilities. Economic responsibility is prioritized as the first and core responsibility. Under this, the company main aim is to produce the best goods and services needed by the society and distribute them with the sole purpose of maximizing profits for its shareholders and owners. This is also referred to as the profit maximizing view with economist Milton Friedman being its main advocate. The view holds that as long as companies stay and operate within the rules of the game then they should be operated mainly on the sole basis of making and increasing profit margins. Before the economic responsibility is attained the rest remain under threat of being met by any company. All businesses therefore practice this responsibility. The legal responsibilities require that all civilized societies formulate rules and regulations that all businesses must ascribe to and which must overly be bound by the legal framework. This responsibility attracts the federal regulatory agencies, state legislators and local town councils in overseeing the business activities in line with the law. This is important in preventing non standardized, defective goods intentionally manufactured or companies that bill their clients on substandard services that may not have been delivered. Through punitive measures such as fines imposed on these companies the consumer will have been saved a great economic responsibility in exchange for undesired quality of goods and services. A case in point is Tenet Healthcare. The medical company which runs different hospitals, was caught up in neglecting its legal responsibility and was forced to pay $54 million in settlement of a lawsuit presented by the federal citing charges of one of Tenet Healthcare hospitals not following medical ethics by performing not only unnecessary but also expensive cardiac procedures on clients and reaping escalating profits from it. In critical analysis of such cases it is painful to loose life through such unnecessary procedures or even pay huge medical bills at the expense of someone who does not even care nor feel for human life except lining their pockets and sustaining their business operations without ethical consideration. In 2001 great pacific sea foods a Washington corporation with operations based in Alaska, together with its General manager Stiles D, violated the Clean air act that earned the corporation a five year probation, $7000 in restitution, $75000 fine and a published apology in the local dailies besides adopting an environmental management programme. Styles paid a lump sum $5000 fine besides performing 120 hours of community service. The issue involved exposure of the workers to inhalation of airborne asbestos fibers that cause asbestosis, a type of lung cancer. In essence asbestos fumes are known to cause death and biodiversity loss leading to global warming that has bedeviled the human race today causing hunger strife’s and malnutrition. If businesses continue neglecting their social responsibilities, many lives and sums of money paid for unnecessary hospital bills or substandard goods and services are bound to be lost at the expense of the managers with no regard to whom they serve. Under ethical responsibility the company is required to ensure that it upholds the desired behaviors that are legally recognized and seek to serve the direct economic interests of the company itself. Coldwell (2001) argues that; to be ethical, decision makers in an organization must be fair, impartial, respectful, and rewarding to its employees’ of the organization and this should be applicable to lowest to highest employee. On the other hand, unethical behavior puts an individual or company at a gaining position at the expense of the community. If a product like cooking fat is promoted by a company claiming it is cholesterol free, receiving much attention from the media and consequently being adopted by the consumer when the management knows the contrary is true then it is not ethical. A case in point is from New York Times where Jayson Blair, a reporter doctored research on peak stories hitting the news line. The top managers investigated and confirmed this after reader’s speculations. Driven by their personal interests and the sheer need to protect the papers image and reputation, they decided to cover up the issue. Later, it was blown out of proportion and the truth came out. Sales went down due to loss of credibility but the management published volumes of information to explain to the public in attempts to salvage the paper. Considering this case, false information about a product service individual and matters of vital concern such as research can easily create enmity in human relationships. False reporting on the effects of a product to promote its adoption can cost innocent lives such as in the case of herbal medicine that is not tested which end up causing abortion in pregnant women using it as reported in native African societies. Discretionary responsibility, otherwise referred to as philanthropic, is based purely on generosity and voluntary basis. This responsibility is not bounded by the law in any way and does not pay back anything to the company but rather to the community. Optional liability is the highest manifestation of social accountability considering it goes beyond public hope to contribute to the society’s wellbeing and desired welfare (Wheeler et al., 2003). Giving back to the community severs to benefit the company in a number of ways. The company name will always be associated with the locals beyond the local setting. The company is bound to retain a large market share within the locality from brand loyalty and adoption of products. Many workers and labor force will easily be derived from the community willing dwellers hence cases of labor shortages will be a thing of the past. Without such responsibility the company is bound to close down due to lack of the support and loyalty from the community. A case in point is the General mills company that helped reduce crime and drugs related cases in its immediate Minnesota and Minneapolis neighborhood. $2.5million in donation together with thousands of hours, were channeled to the project. In conjunction with the relevant authorities homicides and robberies dropped 32 & 52 %respectively in Hawthorne. With demolition of crack houses, elementary schools came up and to date an orphanage operating as a child guidance center exist thanks to General mills. In return the company is enjoying labor from the locals and security boost, thus, the company enjoys a good environment for business. On the other hand social responsibility can not be fully accepted by business societies basing on specific issues. Take for instance on discretionary responsibility, it is not logical for a company to engage in philanthropic ventures when it is on the margin of losses. As long as the company is not realizing its economic goal, then it is pointless to give back to the community. Empirical studies also support Friedman (1970) who claims that the sole purpose of a business is to make profit and the rest is secondary as long as the business operates within the rules of the game. The question as to whether social responsibility translates to improved overall financial performance or whether this performance leads to availing more funds for CSR activities can be answered by a negative correlation realized by (Wright & Ferris 1997) study. Several difficulties exist in measuring the above correlation despite positive correlations in other researches. Profit is an incomplete measure of social performance yet another setback is developing a consistent set of measures to define CSR (Lantos 2001). Balabanis et al. (1998) analysis of the economic performance of 56 UK companies against CSR measures disclosed weak and inconsistent relationships. This highly throws doubts on the effectiveness of CRS in business. In concluding this discussion, it is evident that all organizations that are considered ethical, comprises of three main pillars of ethical leadership, ethical individuals, and organizational systems and structures. These pillars have to work concurrently in meeting the responsibilities of the company. The shareholders and recruiting agencies therefore must put in effort to employing ethical minds and organization structures that deliver ethically with consideration of the larger community of suppliers, partner’s consumers and the environment for better business relations and functionality. It is therefore instrumentally productive in investing in CSR activities. References Balabanis, G., et al. (1998). Corporate Social Responsibility And Economic Performance In The Top British Companies: Are They Linked?, European Business Review 98 (1), 25-44. Bavec, C. (2010). Social Responsibility, Professional Ethics and Management: Social Responsibility And Professional Ethics: Does It Matter?. Proceedings of the 11th International Conference 2010 Ankara, Turkey, 24–27 November 2010. Carroll, A. (1999). Coporate Social Responsibility, Buiness and Society 38 (3), 268-295. Carroll, A.(1991). The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons, July-August, pp. 39- 48. Coldwell, L. (2001) Perceptions And Expectations Of Corporate Social Responsibility: Theoretical issues and empirical findings. SA Journal of business management, 32 (1), 49-55. Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits’, New York Times Magazine, 32-33. Lantos, P. (2001).The Boundaries Of Strategic Corporate Social Responsibility, Journal of Consumer Marketing 18 (7), 595-630. Trevino, L., & Nelson, K. (2005). Corporate Social Responsibility And Managerial Ethics. Hoboken, NJ: John Wiley and Sons, Inc. Wheeler, D,. Colbert, B., &. Freeman, R, (2003). Focusing on Value: Reconciling Corporate Social Responsibility, Sustainability and a Stakeholder Approach in a Networked World. Journal of General Management 28, (3) pp 1–28. Wright, P., &Ferris, S. (1997).Agency conflict and corporate strategy: The effect of divestment on corporate value, Strategic Management Journal 18, 77-83. Read More