SOCIAL RESPONSIBILITY OF BUSINESS Social responsibility is an ethical theory that an entity, be it an organization or an individual has an obligation to act so as to benefit

the society at large. It is the duty every individual or organization has to perform so as to maintain a balance between the economy and the ecosystem. It is therefore a 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 the local community and society at large. This responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by performing activities that directly advance social goals. Critics argue that social responsibility distracts from the fundamental economic role of businesses others argue that it is nothing more than superficial window dressing others argue that it is an attempt to pre!empt the role of governments as a watchdog over powerful corporations though there is no systematic evidence to support these criticisms. Social responsibility of business is one of the newest management strategies where companies try to create a positive impact on society while doing business. "ll companies have a two point agenda of doing social responsibility, to improve qualitatively #the management of people and processes$ and quantitatively #the impact on society$. FOUR TYPES OF CORPORATE SOCIAL RESPONSIBILITY The idea behind corporate social responsibility is that companies have multiple responsibilities to maintain. These responsibilities can be arranged in a pyramid, with basic responsibilities closer to the bottom. "s a business meets lower!level responsibilities that obligate it to shareholders and the law, it can move on to the higher level responsibilities that benefit society. 1. Economic responsibilities. The first responsibility of a company is its economic responsibility. That is, a company needs to be primarily concerned with making profit. This is for the simple fact that if a company does not make money it won%t last, its employees will lose &obs and the company won%t even be able to
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think about taking care of its social responsibilities. 'efore an organization can think about being a good corporate citizen, it first needs to make sure that it can be profitable.

2. Le !l responsibilities The legal responsibilities of a company are the requirements placed on it by the law. (e)t to ensuring that the company is profitable, ensuring that it obeys all laws is the most important responsibility, according to the theory of corporate social responsibility. *egal responsibilities could include adhering to labor laws, environmental laws, licensing etc.

". Et#ic!l responsibilities "fter a company has met the economic and legal responsibilities, it can concern itself with ethical responsibilities. These are the responsibilities that a company puts on itself because its owners believe it is the right thing to do, not because they have an obligation to do so. +thical responsibilities could include being environmentally friendly, paying fair wages etc.

$. P#il!nt#ropic responsibilities If a company is able to meet all of its other responsibilities, it can begin meeting philanthropic responsibilities. These are responsibilities that go above and beyond what is simply required or what the company believes is right. They involve making an effort to benefit society, for instance donating money to charitable causes.

%&Y SOCIAL RESPONSIBILITY'

Social responsibility is a voluntary effort in the part of business to take various steps to satisfy the e)pectation of different interest groups who may be owners, investors, employees,
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consumers, government and society or community. " company does this for the following reasons, i. To promote its public image

The activities of business towards the welfare of the society are to earn goodwill and good reputation for the business. The earnings of the business also depend on the public image of its activities. -eople prefer to buy products of a company that engages itself in various welfare programs. "gain, a good public image also attracts honest and competent employees to work with such employers.

ii.

To avoid government regulations

To avoid government regulations business should discharge their duties voluntarily. .or instance, if any business firm pollutes the environment, it will naturally come under very strict government regulations which may ultimately force the firm to comply with environmental laws

iii.

Survival and growth

+very business organization is part of the society. So, support from the society is very essential for its survival and growth. The business utilizes available resources like water, power, roads, land etc. it should therefore be the responsibility of every business to spend a part of its profit for the welfare of the society.

iv.

+mployee satisfaction

"part from getting a good salary and working in a healthy atmosphere, employees also e)pect other facilities like proper accommodation, transport, education and training. The employers should try to fulfill all the e)pectations of the employees because employee satisfaction is directly related to productivity. +mployee satisfaction is also required for the long
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term prosperity of the organization. .or instance, if business spends money on training of the employees, it will have more efficient people working for it and thus earning more profit.

v.

Customer awareness

(owadays consumers have become very conscious about their rights. They protect against the supply of inferior and harmful products by forming different groups. This has made it obligatory for the business to protect the interests of its customers by providing quality products at the most competitive prices. Instructions on how to use the product must be provided to consumers. There must be proper after sales services. The consumers% grievances if any must be settled quickly. /nfair practices like under weighing the product or altering its quality must be avoided.

RESPONSIBILITY OF A BUSINESS TO%AR(S T&E )ENERAL PUBLIC

The general public consists of individuals, groups, organizations, families etc. These are all members of the society who interact with each other and are also interdependent on each other. There e)ists a relationship among them which may be direct or indirect. 'usiness being a part of the society also maintains its relationship with all other members of the society.

Thus, it has certain responsibilities towards society which may be as follows,

i.

To help the weaker and underprivileged sections of the public.

ii. iii. iv.

To preserve and promote social and cultural values. To conserve natural resources and wildlife. To provide assistance in the field of developmental research, education, medical science and technology.

RESPONSIBILITY OF A BUSINESS TO%AR(S ITS E*PLOYEES

'usiness needs employees0workers to work for it. These employees put in their effort for the benefit of the business. So it is the prime responsibility of every business to take care of the interest of the employees. If the employees are satisfied and efficient, then the business can be successful.

The responsibilities of the business towards its employees include,

i. ii. iii. iv.

Timely and regular payment of wages and salaries -roper work conditions and welfare amenities 1pportunity for better career prospects 2ob security as well as social security, that is facilities like pension, retirement benefits, provident fund and group insurance

v. vi.

'etter living conditions like housing, transport, canteen etc Timely training and development

RESPONSIBILITY OF A BUSINESS TO%AR(S ITS CUSTO*ERS

(o business can survive without the support of customers. "s part of the responsibility towards the, the business should provide the following facilities,

i. ii. iii. iv. v.

-roducts and services must be able to take care of the needs of the customers -roducts and services must be of quality The supply of goods and services must be regular -rices of goods and services should be reasonable and affordable "ll the advantages and disadvantages of the product as well as the procedure of using it should be brought to attention of the customer.

BUSINESS ET&ICS

'usiness ethics is the accepted set of moral values and corporate standards of conduct in a business organization. The specifics of what this means can vary from one organization to another. 'usiness ethics manifests both as written and unwritten codes of moral standards that are critical to the current activities and future aspirations of a business organization. They can differ from one company to another because of differences in cultural perspectives, operational structures and strategic orientations. The guiding framework for business ethics permeates all levels of the organization. It is about having the wisdom to determine the difference between right actions and wrong decisions. In simpler terms business ethics stipulates the morality standards and behavioral patterns e)pected of individuals and the business as a whole.

S&ARE&OL(ER +ERSUS STA,E&OL(ER

There are two schools of thought regarding how companies should approach a definition for business ethics, the shareholder perspective and the stakeholder perspective. The underlying frameworks of the two schools of thought are primarily enshrined in the principal ob&ectives and activities of the business.

3. Shareholder perspective.

This school of thought focuses on making decisions that are in the owners% best interest. 4ecisions are guided by a need to ma)imize return on investment for the organization%s shareholders.

Individuals who approach ethics from this perspective feel that ethical business practices are ones that make most money. This perspective is influenced by the profit driven motives that are biased towards the optimization of the interests of shareholders. Such biases can prompt corporate managers to commit or omit e)tremely consequential actions. 5. Stakeholder perspective

1rganizations that approach business ethics from a stakeholder perspective consider how decisions impact those inside and outside the organization. Stakeholders are individuals and groups who affect or are affected by the company%s actions and decisions. They include employees, customers, government agencies, competitors, the news media, community residents and others.

The idea behind stakeholder based ethical decision making is to make sound business decisions that work for the good of all affected parties.

%&AT IS ET&ICAL BE&A+IOR'

The law defines what is and is not legal, but the distinctions between moral right and wrong are not always so clear. In many instances, lines between right and wrong are blurred. Such instances can lead to ethical dilemmas. 6hen faced with ethical dilemmas it is important to consider outcomes of the decision making process.
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This can be done in two ways,

3. /sing four way test

This involves evaluating decisions by asking the following four questions, i. ii. iii. iv. Is my decision a truthful one7 Is my decision fair to everyone affected7 6ill it build goodwill for the organization7 Is the decision beneficial to all parties who have a vested interest in the organization7

If all these four questions can truthfully be answered with a 89+S% then it is likely that the decision is an ethical one.

5. /sing publicity test

"sk yourself how you would feel if your actions were published in your hometown newspaper. If you would be comfortable having your parents, teachers and other people find out what you did, chances are that your decision is an ethical one.

*ANA)E*ENT AN( BUSINESS ET&ICS

" company%s managers play an important role in establishing its ethical tone.
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" company%s leaders are responsible for setting standards for what is or is not acceptable employee behavior. It is important for management to play an active role in creating a working environment where employees are encouraged and rewarded for acting in an ethical manner.

:anagers who want employees to behave ethically must e)hibit ethical decision making practices themselves. They must remember that leading by e)ample is the first step in fostering a culture of ethical behavior in their companies.

*ANA)IN) ET&ICS IN T&E %OR,PLACE

i.

+stablishing and managing ethics management programs.

1rganizations can manage ethics in their workplaces by establishing an ethics management program. +thics programs convey corporate values, often using codes and policies to guide decisions and behavior, and can include e)tensive training and evaluating depending on the organization. They provide guidance in ethical dilemmas.

'alancing competing values and reconciling them is a basic purpose of an ethics management program. 'usiness people need more practical tools and information to understand their values and how to manage them.

ii.

4eveloping, integrating and disseminating codes of conduct

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" code of conduct is a written collection of rules, principles, values and employee e)pectations, behavior and relationships that an organization considers significant and believes are fundamental to their successful operation. " code of conduct enumerates those standards and values that make an organization remarkable and that enable it to stand out from similar organizations

It serves as a framework for ethical decision making within an organization. It is a communication tool that informs internal and e)ternal stakeholders about what is valued by a particular organization, its employees and management. The code of conduct paints a picture of how employees, customers, partners and suppliers can e)pect to be treated as a result.

-articipation of stakeholders in the development of the code of conduct contributes to its successful integration. It should be published and disseminated to e)isting and potential stakeholders.

iii.

;esolving ethical dilemmas and making ethical decisions

'usiness ethics is often portrayed as a matter of resolving conflicts in which one option appears to be the clear choice. <owever ethical dilemmas faced by managers are often more real to life and highly comple) with no clear guidelines.

1ne knows when they have a significant ethical conflict when there is presence of, a$ Significant value conflicts among differing interests. b$ ;eal alternatives that are equally &ustifiable
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c$ Significant consequences on the stakeholders in the situation "n ethical dilemma e)ists when one is faced with having to make a choice among these alternatives.

iv.

"ssessing and cultivating ethical culture

Culture is comprised of the values, norms, folkways and behavior of an organization. +thics is about moral values, or values regarding right and wrong. Therefore cultural assessments can be e)tremely valuable when assessing the moral values in an organization.

v.

+thics training.

The ethics program is useless unless all staff members are trained about what it is, how it works and their roles in it. The entire system may invite suspicion if not handled openly and honestly. "lso, no matter how fair and up to date a set of policies is, the legal systems will often interpret employee behavior rather than the written policy as the de!facto policy. Therefore all staff must be aware of and act in full accordance with policies and procedures. This full accordance requires training about the policies and procedures.

I*PORTANCE OF ET&ICAL BUSINESS PRACTICES

Companies that adopt sound business decision making practices are more likely to en&oy ultimate success that those whose actions are motivated solely by profits. =nowing the difference between right and wrong and choosing what is right is the foundation for ethical decision making. In many cases doing the right thing often leads to the greatest financial, social and
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personal rewards in the long run. +thical practices send out a positive image about the organization, bring in more customers, improve business relationships and allow the firm to add new employees. /ltimately, quality and quantity of products and services improves, and profitability increases too.

'usiness may e)perience catastrophic consequences for failure to adhere to ethical practices. .or instance, public hostility, damaged reputation, huge losses, arrest, and sacking of employees 'usiness ethics is also important because if an enterprise lacks ethics, the employees, customers and everyone else involved with the company can be harmed.

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