Definition of social responsibility
Social responsibilities also known as corporate social responsibilities (SCR) is an idea that business social obligations above and beyond making a profit. The idea is that businesses should not function amorally, but instead should contribute to the welfare of their communities. This is the idea that business also has obligation to the society. In deed, there are different definitions among experts.
In addition, different organizations have framed definitions, but there is common ground to explain what SCR. is.
One expert said that CSR is about how companies manage the business processes to produce an overall positive impact on society. Lord Holme and Richard Watts stated the definition of SCR in their publication "Making Good Business Sense" that "Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large"
At the same time, there are some evidences of the different perceptions of what this should mean from a number of different societies across the world. Definitions are as different as "CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government" from Ghana, through to "CSR is about business giving back to society" from the Philippines.
The CSR is also business strategy establishing a positive company reputation and brand in the public eye through good work that yields competitive edge while at the same time contributing to others and demands that organizations shift from solely focusing on making a profit to including financial, environmental and social responsibilities.
According to the Archie B. Carroll, business ethic scholar, in term of CSR, the global corporation should make a profit consistent expectations for international businesses, obey the law of host countries as well as international law, be ethical in its practices taking host-country and global standards into consideration and be a good corporate citizen, as specially as defined by the host country’s expectations. He also described philanthropic responsibilities as “social activities that are not mandated by law nor generally expected of business in an ethical sense”.
“People talk about businesses needing to be responsible as if it’s something new we need to do on top of everything else. But the whole sense of business should be responsibility. My philosophy is, we don’t run companies to earn profits. We earn profits to run companies. Our company need meaning and purpose if they’re to fit into the world, or why should they live at all?” is said by Tachi Kiuchi, managing director of Japan’s Mitsubishi Electric Corp.
In the United States, CSR has been defined much more in terms of a philanthropic model. Companies make profits, unhindered except by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to charitable causes. It is seen as tainting the act for the company to receive any benefit from the giving.
The European model is much more focused on operating the core business in a socially responsible way, complemented by investment in communities for solid business case reasons. This model is more sustainable because:
Social responsibility becomes an integral part of the wealth creation process - which if managed properly should enhance the competitiveness of business and maximize the value of wealth creation to society.
When times get hard, there is the incentive to practice CSR more and better - if it is a philanthropic exercise which is peripheral to the main business, it will always be the first thing to go when push comes to shove.
But as with any process based on the collective activities of communities of human beings (as companies are) there is no "one size fits all". In different countries, there will be different priorities, and values that will shape how business act. Nevertheless, the debate about CSR created four arguments supporting to and four arguments against and there are;
Arguments For
The arguments supporting convinced that a business should be more than simply a profit machine; proponents of social responsibility have offered these arguments;
Business is unavoidably involved in social issues. As social activists like to say, business is either part of the solution or part of problem. There is no denying that private business shares responsibility for such societal problem as unemployment, inflation, and pollution. Like everyone else, corporate citizens must balance their rights and responsibilities.
Business has the resources to tackle today’s complex societal problems. With its rich stock of technical, financial, and managerial resources, the private business sector can play a decisive role in solving society’s more troublesome problems. After all, without society’s support, business could not have built its resource base in the first place.
A better society means a better environment for doing business .Business can enhance its long-run profitability by making an investment in society today. Today’s problems can turn into tomorrow’s profit.
Corporate social action will prevent government intervention. As evidenced by waves of antitrust, equal employment opportunity, and pollution-control legislation, government will force business to do what it fails to do voluntarily.
Arguments like these four give business a broad socioeconomic agenda.
Arguments Against
Remaining faithful to the classical economic model, opponents of corporate social responsibility rely on the first two arguments below. The third and fourth arguments have been voiced by those who think business is already too big and powerful.
Profit maximization ensures the efficient use of society’s resources. By buying goods and services, consumers collectively dictate where assets should be deployed. Social expenditures amount to theft of stockholder’s equity.
As an economic institution, business lacks the ability to pursue social goals Gross inefficiencies can be expected if managers are forced to divert their attention from their pursuit of economic goals.
Business already has enough power. Considering that business exercises powerful influences over where and how we work and live, what we buy, and what we value, more concentration of social power in the hands of business in undesirable.
Because managers are not elected, they are not directly accountable to the people. Corporate social programs can easily become misguided. The markets system effectively controls business’s economic performance but is a poor mechanism for controlling business’s social performance.
These arguments have been encapsulated into two points of view. Those who believe that organizations should not be concerned about social responsibility base many of their arguments on the costs involved and whether organizations should shoulder those costs on behalf of society. Those who are in favor of corporate social responsibility feel that organizations benefit from society and, therefore, have an obligation to improve it. Although there is no universal agreement, surveys and other reports indicate that many organizations are, in fact, becoming increasingly active in addressing social concerns.
The advantages and important of social responsibilities are being discussed here. This action would be taken by some organization base on their view. To have social responsibilities, the suppliers, business associates, and customers would be more confidence on the organization. So, the products and services of the organizations increase and lead to maximize profit.
The Importance of Social Responsibility
Although the activity of social responsibility is benefit for social and business organizational, the arguments for and against business social responsibility exist. There are several reasons of agreement of the activity. The importance of social responsibility is state below: -
1 Best Interest of Business to Promote and Improve the Communities
Organizations, as members of society, have a moral obligation to help society deal with its problems and to contribute to its welfare. It is the ethical thing to do by the business organizations. A measurement should be made of whether the organization is performing such activities as producing goods and services that people need, creating jobs for society, paying fair wages, and ensuring worker safety.
People and organizations need each other. Social responsibility to employees extends beyond terms and conditions of the formal contract of employment and gives recognition to the workers as a human being. People today have wider expectations of the quality of working life, included justice is treatment, opportunities for consultation and participation, training in new skill and technologies, effective personal and industrial relations policies, and provision of social and leisure facilities. Organization should be, for example, give due consideration to the design of work organization and job satisfaction, make very reasonable effort to give security of employment, and provide employment opportunities for minority groups.A number of leading companies have taken steps to develop more ethical cultures and system by involving individual employees in corporate affairs. To provide or support some benefits to the workers will lead to a good community in the business organizations. Good communication in the internal business would be leads to avoid miss understanding of each other. The workers would then enjoy their work and work out more efficiency. The quality of goods and services of the organization therefore increase. This will lead to profitable to the organization's business. Therefore, the social responsibility is important in internal environment of the business too.
2 Improves Public Image of the Firm
To many people, responsibilities to consumers may be seen as no more than a natural outcome of good business. There are, however, broader social responsibilities including providing good value for money; the safety and durability of products or services; standard of after-sales service; prompt and courteous attention to queries and complaints; long-term satisfaction, for example serviceability, adequate supply of products or services, and spare and replacement parts; fair standards of advertising and trading; full and unambiguous information to potential customers. Increasing concern for social responsibilities to consumers can be seen by the activities of such bodies as the Consumers Association, and the number of television and radio programmed devoted to this subject.
As an example of degrading the quality of life, some people believe that cigarette companies, because they produce goods that can harm the health of society overall, are socially irresponsible. By doing that, the consumers would be loses of confidence on the organization's products, and not buying their products. Then consumers will buy the goods from other organizations that they are confidence to. Social initiatives taken by organizations tend to promote goodwill, public favor, and corporate trust, and these may contribute to the long-run success of the organizations and profit. Therefore, socially responsible would acts enhance an organization's image and business in general.
3 Improving Stock Price
To having the action of social responsibility of an organization would lead to their suppliers and business associates more confidence to the organization. The examples of social responsibility might include: fair standards of trading, honoring terns and conditions of purchase or sale, and settlement dates, for example payment of accounts, assistance to smaller organization; engagement only in fair competition; respect for copyright and patents. By doing that, the other organizations would view the company as less risky. This is in the stockholders best interest. It will improve the price of stock in the long run because the stock market will views the company as less risky and open to public attack. So, it would reduce the cost of the production of the company. Therefore award it a high price-earnings ratio. Some organizations extend the range of social responsibilities even future by, for example: giving recognition to the needs of developing countries; limiting the extent of political involvement or campaigning; donations to, or sponsorship of, the arts, educational or educational or research institutions, sporting organizations or charities.
4 Solving Social Problems
Organizations have a responsibility not to misuse the scarce factors of production upon which the wealth of the country depends. Organizations have a responsibility to society, to respect environmental considerations and take care of amenities. For example, the effects and potential dangers of pollution, noise, disposal of waste; the siting and appearance of new buildings; transportation policies, such as the routing of heavy vehicles through narrow village roads; and avoidance of excessive packaging and more use of biodegradable materials. All of that must be think off since the decision making of the organizations to have their process of production. For example, is the protest against aerosol sprays containing chlorofluorocarbons. These have been blamed for damaging the ozone layer, which protects the earth from harmful ultraviolet rays from sun. Organizations should, of course, respect and obey the law which is set up of government even where they regard it as not in their best interests. But what is debatable is the extent to which organizations should co-operate voluntarily with actions requested by the government. Some examples are: restraint from trading with certain overseas countries, and the acceptance of controls over imports or exports; actions designed to combat inflation.
By the side, some pollutions can not be avoid, and sometime, our government is too busy to solve the others problems, society should give business a chance to solve social problems, such as air pollution and water pollution, that government has failed to solve. To solving those social problems, the environment will be cleaner. This would lead to a good image of the companies to their consumers or other companies. The confidence of consumer's increases, and favor to buy the goods from the companies. The profit of the companies will increase eventually. Therefore, acts of social responsibility is very important by organizations help correct the social problems that the organizations create.
5 Resource given by the organizations to solve the social problem
The measurement of social investment deals with the degree to which the organization is investing both money and human resources to solve community social problems. Here, the organization could be involved in assisting community organizations dedicated to education, charities, and the arts.
For example, Ben and Jerry's have a great reputation for being a socially responsible company. Management seems to include social responsibility issues in everything that it does. As an example, when recently looking for a site to build its new factory, the company was torn between building a new factory in its native Vermont to support struggling farmers or closer to the West Coast to avoid the pollution caused and energy expended by transporting the ice cream a couple of thousand miles. The Vermont site was eventually chosen.A lot of money would be used for solving the social problems. Most of the time, there is limited money for that. Technical also been used to solving problems. So, in order to avoid the limited of resources, most of the organizations will possess the resources (such as money and expertise) needed to tackle social problems. A good image of the companies develops. It will lead to even more consumers to have confidence on that companies and more consume on the goods of the companies. These companies would be profitable in the long run period. Therefore, being social responsibilities is very important to an organization in order to create a good image to the company
At the present days, many people turn to the CSR and find the way how to deal with it. The following are the strategies for the CSR.
Social strategies
There are four strategies to approach the CSR.
Reaction A business that follows a reactive social responsibility strategy will deny responsibility while striving to maintain the status quo.
Defense A defensive social responsibility strategy uses legal maneuvering and/or a public relations campaign to avoid assuming additional responsibilities.
Accommodation The organization must be pressure into assuming additional responsibilities when it follows an accommodative social responsibility. Some outside stimulus, such as pressure from a special interest group or threatened government action, is usually required to trigger an accommodative strategy.
Proactive A proactive social responsibility strategy involves taking the initiative with a progressive program that serves as an inspiring role model for the industry.
When learning the CSR, it is useful point to look at Carroll’s global corporate social responsibility pyramid. The pyramid is build with four levels, economic responsibility, legal responsibility, ethical responsibility and philanthropic responsibility. It will express that the learning on CSR alone will not work all points and will encourage to learn ethics to get fully understand of paradigm of the CSR and organizational ethics.
Definition of ethics
The idea that businesses should not function amorally, but instead should contribute to the welfare of their communities.
According to Cambridge dictionary, ethics is translated as a system of accepted beliefs which control behavior, especially such a system based on morals and work ethics is decoded as the belief that work is morally good. But we will focus on business field to find what ethics is.
The ethics is the study of moral obligation involving the distinction between right and wrong. Many people don’t have clear idea on the ethics because they are sensitive on the discussion about these issues. Some may confuse the ethics with immoral. To get overall profile of ethics, rules of ethics of Dr.Stephan Rothlin, CIBE Center for International Business Ethics/ Beijing is deserved to take a look.
Rule1: If you strive to understand the values of different cultures, you will find common points.
Rule2: If you analyze the facts, you will realize that honesty and reliability benefit you.
Rule3: If you analyze case studies from different perspectives, you will discover the benefits of fair play
Rule4: Respecting your colleagues is the smartest investment you can make.
Rule5: To increase productivity, provide safe and healthy working conditions.
Rule6: To inspire trust, make your performance transparent.
Rule7: Your loyal dissent can lead your institution in the right direction.
Rule8: Downsizing your labor force is only beneficial when you respect each stakeholder.
Rule9: To establish your brand name, act as a fair competitor.
Rule10: Reduce the gap between the rich and poor by developing a new social security system.
Rule11: If you act against discrimination, you will increase your productivity and profitability.
Rule12: If you protect intellectual property, all stakeholders will receive their due share.
Rule13: Ongoing changes in information technology require new forms of loyalty.
Rule14: Your public relations strategy will only secure your reputation if it witnesses your drive for quality and excellence.
Rule15: Your economic achievements will only stand on firm ground if you diminish corruption.
Rule16: Long-term success urgently calls you to constantly care for the environment.
Rule17: To become a refined player, sharpen your discernment and cultivate good manners.
Rule18: Care for your business by caring for society.
The work place is cultural diversity environment and very problemative. This is reasonable and this creates to consider the ethics issues. Employees' perceptions of fairness are equally or more important than other factors in terms of their influence on ethics-related outcomes. Fair treatment is so important because employees who perceive unfair treatment will rebalance the scales of justice by harming the organization. Employees who perceive fair treatment, on the other hand, will reciprocate by going above and beyond the call of duty to help management.
Ethical leadership is vital to creating an ethical workforce. It is a myth that employees are fully formed moral agents who can 'lead themselves' when it comes to ethics. Research indicates that most employees look outside themselves to significant others for guidance in ethical dilemma situations. If this leadership and guidance is not provided by the leader of the organization, employees will seek it elsewhere, most likely from their peers.
An ethical leader is a leader who cares, listens to what employees have to say, and has the best interests of employees in mind. In addition, an ethical leader communicates an ethics and values message. When making decisions, he/she asks "what is the right thing to do?" An ethical leader also role models ethical conduct and conducts his/her personal life in an ethical manner.
THE ETHICS AND THE SOCIAL RESPONSIBILITY OF MANAGEMENT
Each of us has our own set of values and beliefs that we have evolved over the course of our lives through our education, experiences and upbringing. We all have our own ideas of what is right and what is wrong and these ideas can vary between individuals and cultures.
As a manager you bring with you your own concept of what is right and what is wrong. Every decision that you make, for better or for worse, is the application of these values to the question at hand. This is made more difficult by the pressures of organizational life. There are the pressures of productivity, competition, bosses... Sometimes managers make decisions which conflict with their own or society's values because of what they see as the pressures of the business world.
But what is the right thing to do when it comes to social responsibility?
This is one of the most crucial questions that managers will face in the next decade. Is it a manager’s job just to maximize profits? Or should managers be concerned with using their organization to carry out other social responsibilities such as controlling pollution, employing disadvantaged groups or supporting education?
There are five factors which affect decisions made on ethical problems.
The Law
This defines the minimum ethical standards in a given area of practice. For example, deceptive advertising is illegal an violators of this law are liable to large fines, court action and/or loss of goodwill. Some unethical behavior is often not considered very illegal, such as pirating employees from other companies, padding expense accounts etc.
Government Regulations
These are also fairly clear cut outlining what is acceptable and what is not. These regulations set standards on issues such as unfair competition, unsafe products, etc. Failure to comply with these regulations could lead to criminal charges, or fines etc.
Sometimes these regulations do not force ethical behavior. In the U.S. cyclamates (artificial sweeteners) were banned because there was evidence that they were carcinogenic (caused cancer). In the next 16 months a major food packer sold 300,000 cases of cyclamate sweetened food overseas. Similarly many banned food additives and pesticides etc are being sold overseas, mainly to third world countries.
Industry and Company Ethical Codes
These are codes which clearly state the ethical standard a manager should follow within his or her organization.
These standard practices are usually followed if they are written down and the rules enforced however many companies have "unwritten" codes of practice or if written down, have no method of enforcing these rules.
Generally, written codes clarify the ethical issues but leave the resolution to the individual's conscience.
Social Pressures
There are often, in any society, groups of people who wish to change or influence government or businesses behavior and decisions. These groups may exert pressure on businesses through picketing, boycotting, publicity in the press, political lobbying etc. Sometimes organizations respond to what they see as the general feeling of the public on an issue.
For example, in 1989 on a televised debate on the issue of bleached paper products (i.e. toilet papers, sanitary products, writing and photocopying paper products etc) many businesses claimed that the Australian public would not buy unbleached paper products. A quick look at the products now available and selling well in supermarkets in 1991 should indicate how public pressure through selective buying and boycotting of unacceptable products has forced many of these same businesses to change their view. Keep an eye on television advertising which claim that their products are "environmentally friendly" as an example of many businesses seeing the publics concern over the environment as an "opportunity". (However some of these "environmentally friendly" claims are dubious and the government is introducing regulations and standards to try to avoid unethical advertising and promotion).
Some organizations will respond positively to this sort of pressure and some will see it as a threat to their achievement of the organizations goals.
Tension between personal standards and the goals of the organization.
This can complicate a manager's job enormously. If a managers task is to ensure that the organizations goals are achieved, and the task of a good citizen is to advance the welfare of the community, what if they clash?
You may refer back to the example involving the sale of banned substances overseas. It is not illegal, but it may be against your personal values to sell these products to unsuspecting overseas clients. Would you insist on a warning label such as those carried on cigarette packets?
What would you do if this action was a direct order from a superior? Does this take away your responsibility? As with many ethical problems there are no easy answers.
Seven step for changing the ethical culture of an organization
In order to change the organizational culture, leaders, managers, academics, and opinion molders are supposed to take seven steps for changing ethical culture of an organization developed by Frank Navran, Ethic Resource Centre 2003.
1. State position, philosophy or belief
The organization (through its senior leadership) announces that it has formally adopted a specific position, philosophy or set of beliefs regarding those fundamental values or principles which it wants employees to use as the basis for business decision-making. This statement is couched as integral to the identity of the organization and to be applied without exception, by every decision-making employee.
2. Create formal organizational systems
The organization creates and implements the formal systems, procedures and policies which explicitly define expectations regarding employee behaviors that are needed to guide employees in their day-to-day decision making. Examples of these systems include statements of values, codes of conduct, ethics policies, ombudspersons, ethics oversight committees, ethics surveys, employee "helplines", and other ethics management mechanisms.
3. Communicate expectations through informal (leadership) systems
Leaders at all levels of the organization explicitly and implicitly communicate their expectations regarding employee behavior, reinforcing the explicit organizational expectations detailed through the formal systems and structures. This includes the visible use of the ethics systems in their own decision making and the requirement that subordinate employees do likewise.
4. Reinforce policy through measurements and rewards
The organization reinforces its statement of position, philosophy or belief by making adherence to the associated guidelines and policies an integral part of how success is measured and rewarded. Informally, frontline leadership measures and rewards adherence to the stated position of the organization.
5. Implement communications and education strategies
The organization embarks on a strategic communications and education campaign to ensure that employees understand the stated position and the behavioral expectations, as well as have familiarity with the systems and structures that have been put in place to facilitate employee fulfillment of those expectations.
6. Use response to critical events to underscore commitment
Senior leadership uses critical events in the business to underscore their commitment to the stated position, philosophy or belief. They make their adherence to the position explicit and use the critical event as evidence of how the highest levels of the organization are accountable to the same standards as are imposed throughout the organization.
7. Avoid perception of hidden agendas
One of the most critical, yet least controllable, shapers of any organization's ethical culture is employees' perceptions of the motives behind senior management's adoption of the stated position, philosophy or belief, their hidden agendas. Senior management needs to assiduously avoid any decision or action which could reasonable be expected to communicate a self-serving or selfish motive for imposing the previously referenced position, systems or measurements on the employees of the organization.
The Ethics of Organizational Life or Organizational Ethics includes a body of theory and technique that is the domain of the ethics and compliance structures, systems, practices, procedures, and protocols necessary for a group of people to achieve shared purposes.
Examples of ethical organizations
Whirlpool Receives 2005 American Business Ethics Award
"Throughout the years, Whirlpool has built a culture of doing the right thing based on living up to our commitment to stakeholders and by quietly working behind the scenes to strengthen the economic and social fabric of the communities in which we operate," said Jeff M. Fettig, Whirlpool's chairman, president and CEO.
As an employer, Whirlpool maintains a strong focus on diversity and was a pioneer in the establishment of a confidential ethics hotline (1993). In addition, the company offers a comprehensive ethics program that incorporates a wide range of internal communication vehicles, training programs, employee surveys and leadership assessments.
In its demonstration of ethical behavior to shareholders, Whirlpool is compliant with the Sarbanes-Oxley Act and has established multiple internal control and audit groups. Whirlpool also actively participates in the ENERGY STAR program and has been recognized repeatedly for its energy saving initiatives in both its product innovations and its commitment to reduce the company's global greenhouse emissions.
The company was nominated for the award by the Southwestern Michigan Chapter of the Society of FSP and by Mike Damschroder, a member of the chapter's board of directors.
The awards are presented in three categories: large companies (over 2,500 employees), midsize companies (250 - 2,500 employees), and small companies (under 250 employees). Whirlpool received the award in the large company category; Paetec Communications, Inc., received the award for the midsize company; and Schloegel Design Remodel, Inc., received the small company award.
Levi's do not conduct business with those who violate their stringent standards of work environment and ethics. The conglomerate pulled an astounding $40 million worth of business out of a vast Chinese market. This act was in protest of human rights violations.
The Calvert Group, a mutual fund company, demonstrated social zeal in prohibiting investments in companies that produce guns, cigarettes and vodka. Hence, an angelic image was produced. This in turn increased overall business with other entities that appreciate what the mutual fund company did.
Examples of unethical organization
A federal jury convicted Tyson Foods of market manipulation and ordered it to pay cattle producers $1.3 billion.
Pharmaceutical giant Bristol-Myers Squibb was fined $150 million by the SEC for accounting fraud.
Conclusion
The first responsibility to society is to operate at a profit, and only slightly less important is the necessity for growth. The business is the wealth-creating and wealth-producing organ of the society. Management must maintain its wealth-producing resource intact by making adequate profits to offset the risk of economic activity. And it must beside increase the wealth-producing capacity of these resources and with them the wealth of society.
Ethics play an importance role in social responsibility. The business organizations must have ethical responsibility as they are doing business, including production, management, and services and so on. Without ethics, it would be danger to the human. Ethics is simply the rules that say what is right and wrong, as defined by a particular reference group or individual.The social responsibility is very importance to both society and business organizations. Although there are some arguments for and against social responsibility, even more of the organizations would take action on social responsibility. Many of the advantages being social responsibility was created, some of that was already discuss on previous pages. Believed that, the best interest of business organizations is social responsibilities, that would be benefit in the long run of company, can be earn more profit, and benefit to the human and the environment.
5 Resource given by the organizations to solve the social problem
The measurement of social investment deals with the degree to which the organization is investing both money and human resources to solve community social problems. Here, the organization could be involved in assisting community organizations dedicated to education, charities, and the arts.
For example, Ben and Jerry's have a great reputation for being a socially responsible company. Management seems to include social responsibility issues in everything that it does. As an example, when recently looking for a site to build its new factory, the company was torn between building a new factory in its native Vermont to support struggling farmers or closer to the West Coast to avoid the pollution caused and energy expended by transporting the ice cream a couple of thousand miles. The Vermont site was eventually chosen.A lot of money would be used for solving the social problems. Most of the time, there is limited money for that. Technical also been used to solving problems. So, in order to avoid the limited of resources, most of the organizations will possess the resources (such as money and expertise) needed to tackle social problems. A good image of the companies develops. It will lead to even more consumers to have confidence on that companies and more consume on the goods of the companies. These companies would be profitable in the long run period. Therefore, being social responsibilities is very important to an organization in order to create a good image to the company
At the present days, many people turn to the CSR and find the way how to deal with it. The following are the strategies for the CSR.
Social strategies
There are four strategies to approach the CSR.
Reaction A business that follows a reactive social responsibility strategy will deny responsibility while striving to maintain the status quo.
Defense A defensive social responsibility strategy uses legal maneuvering and/or a public relations campaign to avoid assuming additional responsibilities.
Accommodation The organization must be pressure into assuming additional responsibilities when it follows an accommodative social responsibility. Some outside stimulus, such as pressure from a special interest group or threatened government action, is usually required to trigger an accommodative strategy.
Proactive A proactive social responsibility strategy involves taking the initiative with a progressive program that serves as an inspiring role model for the industry.
When learning the CSR, it is useful point to look at Carroll’s global corporate social responsibility pyramid. The pyramid is build with four levels, economic responsibility, legal responsibility, ethical responsibility and philanthropic responsibility. It will express that the learning on CSR alone will not work all points and will encourage to learn ethics to get fully understand of paradigm of the CSR and organizational ethics.
Definition of ethics
The idea that businesses should not function amorally, but instead should contribute to the welfare of their communities.
According to Cambridge dictionary, ethics is translated as a system of accepted beliefs which control behavior, especially such a system based on morals and work ethics is decoded as the belief that work is morally good. But we will focus on business field to find what ethics is.
The ethics is the study of moral obligation involving the distinction between right and wrong. Many people don’t have clear idea on the ethics because they are sensitive on the discussion about these issues. Some may confuse the ethics with immoral. To get overall profile of ethics, rules of ethics of Dr.Stephan Rothlin, CIBE Center for International Business Ethics/ Beijing is deserved to take a look.
Rule1: If you strive to understand the values of different cultures, you will find common points.
Rule2: If you analyze the facts, you will realize that honesty and reliability benefit you.
Rule3: If you analyze case studies from different perspectives, you will discover the benefits of fair play
Rule4: Respecting your colleagues is the smartest investment you can make.
Rule5: To increase productivity, provide safe and healthy working conditions.
Rule6: To inspire trust, make your performance transparent.
Rule7: Your loyal dissent can lead your institution in the right direction.
Rule8: Downsizing your labor force is only beneficial when you respect each stakeholder.
Rule9: To establish your brand name, act as a fair competitor.
Rule10: Reduce the gap between the rich and poor by developing a new social security system.
Rule11: If you act against discrimination, you will increase your productivity and profitability.
Rule12: If you protect intellectual property, all stakeholders will receive their due share.
Rule13: Ongoing changes in information technology require new forms of loyalty.
Rule14: Your public relations strategy will only secure your reputation if it witnesses your drive for quality and excellence.
Rule15: Your economic achievements will only stand on firm ground if you diminish corruption.
Rule16: Long-term success urgently calls you to constantly care for the environment.
Rule17: To become a refined player, sharpen your discernment and cultivate good manners.
Rule18: Care for your business by caring for society.
The work place is cultural diversity environment and very problemative. This is reasonable and this creates to consider the ethics issues. Employees' perceptions of fairness are equally or more important than other factors in terms of their influence on ethics-related outcomes. Fair treatment is so important because employees who perceive unfair treatment will rebalance the scales of justice by harming the organization. Employees who perceive fair treatment, on the other hand, will reciprocate by going above and beyond the call of duty to help management.
Ethical leadership is vital to creating an ethical workforce. It is a myth that employees are fully formed moral agents who can 'lead themselves' when it comes to ethics. Research indicates that most employees look outside themselves to significant others for guidance in ethical dilemma situations. If this leadership and guidance is not provided by the leader of the organization, employees will seek it elsewhere, most likely from their peers.
An ethical leader is a leader who cares, listens to what employees have to say, and has the best interests of employees in mind. In addition, an ethical leader communicates an ethics and values message. When making decisions, he/she asks "what is the right thing to do?" An ethical leader also role models ethical conduct and conducts his/her personal life in an ethical manner.
THE ETHICS AND THE SOCIAL RESPONSIBILITY OF MANAGEMENT
Each of us has our own set of values and beliefs that we have evolved over the course of our lives through our education, experiences and upbringing. We all have our own ideas of what is right and what is wrong and these ideas can vary between individuals and cultures.
As a manager you bring with you your own concept of what is right and what is wrong. Every decision that you make, for better or for worse, is the application of these values to the question at hand. This is made more difficult by the pressures of organizational life. There are the pressures of productivity, competition, bosses... Sometimes managers make decisions which conflict with their own or society's values because of what they see as the pressures of the business world.
But what is the right thing to do when it comes to social responsibility?
This is one of the most crucial questions that managers will face in the next decade. Is it a manager’s job just to maximize profits? Or should managers be concerned with using their organization to carry out other social responsibilities such as controlling pollution, employing disadvantaged groups or supporting education?
There are five factors which affect decisions made on ethical problems.
The Law
This defines the minimum ethical standards in a given area of practice. For example, deceptive advertising is illegal an violators of this law are liable to large fines, court action and/or loss of goodwill. Some unethical behavior is often not considered very illegal, such as pirating employees from other companies, padding expense accounts etc.
Government Regulations
These are also fairly clear cut outlining what is acceptable and what is not. These regulations set standards on issues such as unfair competition, unsafe products, etc. Failure to comply with these regulations could lead to criminal charges, or fines etc.
Sometimes these regulations do not force ethical behavior. In the U.S. cyclamates (artificial sweeteners) were banned because there was evidence that they were carcinogenic (caused cancer). In the next 16 months a major food packer sold 300,000 cases of cyclamate sweetened food overseas. Similarly many banned food additives and pesticides etc are being sold overseas, mainly to third world countries.
Industry and Company Ethical Codes
These are codes which clearly state the ethical standard a manager should follow within his or her organization.
These standard practices are usually followed if they are written down and the rules enforced however many companies have "unwritten" codes of practice or if written down, have no method of enforcing these rules.
Generally, written codes clarify the ethical issues but leave the resolution to the individual's conscience.
Social Pressures
There are often, in any society, groups of people who wish to change or influence government or businesses behavior and decisions. These groups may exert pressure on businesses through picketing, boycotting, publicity in the press, political lobbying etc. Sometimes organizations respond to what they see as the general feeling of the public on an issue.
For example, in 1989 on a televised debate on the issue of bleached paper products (i.e. toilet papers, sanitary products, writing and photocopying paper products etc) many businesses claimed that the Australian public would not buy unbleached paper products. A quick look at the products now available and selling well in supermarkets in 1991 should indicate how public pressure through selective buying and boycotting of unacceptable products has forced many of these same businesses to change their view. Keep an eye on television advertising which claim that their products are "environmentally friendly" as an example of many businesses seeing the publics concern over the environment as an "opportunity". (However some of these "environmentally friendly" claims are dubious and the government is introducing regulations and standards to try to avoid unethical advertising and promotion).
Some organizations will respond positively to this sort of pressure and some will see it as a threat to their achievement of the organizations goals.
Tension between personal standards and the goals of the organization.
This can complicate a manager's job enormously. If a managers task is to ensure that the organizations goals are achieved, and the task of a good citizen is to advance the welfare of the community, what if they clash?
You may refer back to the example involving the sale of banned substances overseas. It is not illegal, but it may be against your personal values to sell these products to unsuspecting overseas clients. Would you insist on a warning label such as those carried on cigarette packets?
What would you do if this action was a direct order from a superior? Does this take away your responsibility? As with many ethical problems there are no easy answers.
Seven step for changing the ethical culture of an organization
In order to change the organizational culture, leaders, managers, academics, and opinion molders are supposed to take seven steps for changing ethical culture of an organization developed by Frank Navran, Ethic Resource Centre 2003.
1. State position, philosophy or belief
The organization (through its senior leadership) announces that it has formally adopted a specific position, philosophy or set of beliefs regarding those fundamental values or principles which it wants employees to use as the basis for business decision-making. This statement is couched as integral to the identity of the organization and to be applied without exception, by every decision-making employee.
2. Create formal organizational systems
The organization creates and implements the formal systems, procedures and policies which explicitly define expectations regarding employee behaviors that are needed to guide employees in their day-to-day decision making. Examples of these systems include statements of values, codes of conduct, ethics policies, ombudspersons, ethics oversight committees, ethics surveys, employee "helplines", and other ethics management mechanisms.
3. Communicate expectations through informal (leadership) systems
Leaders at all levels of the organization explicitly and implicitly communicate their expectations regarding employee behavior, reinforcing the explicit organizational expectations detailed through the formal systems and structures. This includes the visible use of the ethics systems in their own decision making and the requirement that subordinate employees do likewise.
4. Reinforce policy through measurements and rewards
The organization reinforces its statement of position, philosophy or belief by making adherence to the associated guidelines and policies an integral part of how success is measured and rewarded. Informally, frontline leadership measures and rewards adherence to the stated position of the organization.
5. Implement communications and education strategies
The organization embarks on a strategic communications and education campaign to ensure that employees understand the stated position and the behavioral expectations, as well as have familiarity with the systems and structures that have been put in place to facilitate employee fulfillment of those expectations.
6. Use response to critical events to underscore commitment
Senior leadership uses critical events in the business to underscore their commitment to the stated position, philosophy or belief. They make their adherence to the position explicit and use the critical event as evidence of how the highest levels of the organization are accountable to the same standards as are imposed throughout the organization.
7. Avoid perception of hidden agendas
One of the most critical, yet least controllable, shapers of any organization's ethical culture is employees' perceptions of the motives behind senior management's adoption of the stated position, philosophy or belief, their hidden agendas. Senior management needs to assiduously avoid any decision or action which could reasonable be expected to communicate a self-serving or selfish motive for imposing the previously referenced position, systems or measurements on the employees of the organization.
The Ethics of Organizational Life or Organizational Ethics includes a body of theory and technique that is the domain of the ethics and compliance structures, systems, practices, procedures, and protocols necessary for a group of people to achieve shared purposes.
Examples of ethical organizations
Whirlpool Receives 2005 American Business Ethics Award
"Throughout the years, Whirlpool has built a culture of doing the right thing based on living up to our commitment to stakeholders and by quietly working behind the scenes to strengthen the economic and social fabric of the communities in which we operate," said Jeff M. Fettig, Whirlpool's chairman, president and CEO.
As an employer, Whirlpool maintains a strong focus on diversity and was a pioneer in the establishment of a confidential ethics hotline (1993). In addition, the company offers a comprehensive ethics program that incorporates a wide range of internal communication vehicles, training programs, employee surveys and leadership assessments.
In its demonstration of ethical behavior to shareholders, Whirlpool is compliant with the Sarbanes-Oxley Act and has established multiple internal control and audit groups. Whirlpool also actively participates in the ENERGY STAR program and has been recognized repeatedly for its energy saving initiatives in both its product innovations and its commitment to reduce the company's global greenhouse emissions.
The company was nominated for the award by the Southwestern Michigan Chapter of the Society of FSP and by Mike Damschroder, a member of the chapter's board of directors.
The awards are presented in three categories: large companies (over 2,500 employees), midsize companies (250 - 2,500 employees), and small companies (under 250 employees). Whirlpool received the award in the large company category; Paetec Communications, Inc., received the award for the midsize company; and Schloegel Design Remodel, Inc., received the small company award.
Levi's do not conduct business with those who violate their stringent standards of work environment and ethics. The conglomerate pulled an astounding $40 million worth of business out of a vast Chinese market. This act was in protest of human rights violations.
The Calvert Group, a mutual fund company, demonstrated social zeal in prohibiting investments in companies that produce guns, cigarettes and vodka. Hence, an angelic image was produced. This in turn increased overall business with other entities that appreciate what the mutual fund company did.
Examples of unethical organization
A federal jury convicted Tyson Foods of market manipulation and ordered it to pay cattle producers $1.3 billion.
Pharmaceutical giant Bristol-Myers Squibb was fined $150 million by the SEC for accounting fraud.
Conclusion
The first responsibility to society is to operate at a profit, and only slightly less important is the necessity for growth. The business is the wealth-creating and wealth-producing organ of the society. Management must maintain its wealth-producing resource intact by making adequate profits to offset the risk of economic activity. And it must beside increase the wealth-producing capacity of these resources and with them the wealth of society.
Ethics play an importance role in social responsibility. The business organizations must have ethical responsibility as they are doing business, including production, management, and services and so on. Without ethics, it would be danger to the human. Ethics is simply the rules that say what is right and wrong, as defined by a particular reference group or individual.The social responsibility is very importance to both society and business organizations. Although there are some arguments for and against social responsibility, even more of the organizations would take action on social responsibility. Many of the advantages being social responsibility was created, some of that was already discuss on previous pages. Believed that, the best interest of business organizations is social responsibilities, that would be benefit in the long run of company, can be earn more profit, and benefit to the human and the environment.
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