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Monday, January 15, 2024

Ethical Relationship between Employees and Management

 Julliene Kay B. Saclayan

Abstract 

The paper addresses the ethical relationship between employees and management. The objective of this article is to review how to enhance the relationship between manager and employee. This article will describe the roles of managers and employees as they achieve the strategic goals of organizations. Despite growing professional and academic interest in business ethics, moral lapses continue in the business sector, which suggests a need to rethink the efficiency of existing ethical strategies. That is, top management’s efforts to promote ethical behaviour among employees tend to focus on the implementation of explicit formal mechanisms, whereas in practice, more informal elements that communicate the true attitude toward ethics may be more useful and necessary. Thus, top managers must work actively to make their personal ethics evident to influence the ethical behaviours of employees. Without a perception of ethics at the top, formal mechanisms likely fail to result in a more ethical workforce.

Keywords: Ethical Role of the Manager; Ethical Leadership; Top Management; Role Modelling; Responsible Management.

Background

The employer-employee relationship should not be looked at simply in economic terms. It is a significant human relationship of mutual dependency that has a great impact on the people involved. A person’s job, like a person’s business, are highly valued possessions that pervasively affect the lives of the employees and their families. With stakeholders everywhere, the relationship is laden with moral responsibilities. Though the pressures of self-interest are very powerful and compelling, both workers and bosses should guide their choices by basic ethical principles including honesty, candour, respect and caring.

Every day, managers and employees need to make decisions that have moral implications. And those decisions impact their companies, company shareholders, and all the other stakeholders in interest. Ethically conducting business is incumbent upon everyone in an organization for legal and business reasons. As a manager, it’s important to understand your ethical obligations so that you can meet your company’s expectations as well as model appropriate behaviour for others.

Despite great attention to and efforts by academics, professionals and society to avoid immorality in the business sector, moral scandals have not ceased. Ethical failures in the business sector (e.g. bribery, falsifying reports, stealing, deceptive advertising) appear in media reports, many of which point to the involvement of high levels of management in immoral acts. The study and understanding of ethical behaviours in organizations thus must advance if we are to minimize further ethical failures in business.

Considerable efforts have been aimed at implementing ethical standards in international business spheres (Weaver, Treviño & Cochran, 1999; IBE, 2008), yet most of the companies that gained reputations as “rotten apples” had in place organizational procedures, mechanisms or systems to promote ethics (Sims & Brinkman, 2003)

Ethical Role of the Manager

In a broad construction of the ethical role of the manager, managing and leading can be said to be inherently ethics-laden tasks because every managerial decision affects either people or the natural environment in some way—and those effects or impacts need to be taken into consideration as decisions are made. A narrower construction of the ethical role of the manager is that managers should serve only the interests of the shareholder; that is, their sole ethical task is to meet the fiduciary obligation to maximize shareholder wealth that is embedded in the law, predominantly that of the United States, although this point of view is increasingly accepted in other parts of the world. Even in this narrow view, however, although not always recognised explicitly, ethics are at the core of management practice. The ethical role of managers is broadened beyond fiduciary responsibility when consideration is given to the multiple stakeholders who constitute the organization being managed and to nature, on which human civilization depends for its survival. Business decisions affect both stakeholders and nature; therefore, a logical conclusion is that those decisions have ethical content inherently and that managerial decisions, behaviours, and actions are therefore inherently ethical in nature. Whenever there are impacts due to a decision, behaviour, or action that a leader or manager makes, there are ethical aspects to that decision or situation. While some sceptics claim that business ethics is an oxymoron, the reality is that decisions and actions have consequences and that reality implies some degree of ethics, high or low. Thus, ethics and the managerial role cannot realistically be teased apart.

 Ethical leadership

In the development of the ethical leadership framework, Brown and Treviño (Brown et al.,2005; Brown and Treviño, 2006; Trevion et al., 2003) proposed that ethical leadership is comprised of four components. First, by engaging in behaviours which are normatively appropriate in the eyes of subordinates such as exercising responsibility and showing respect to others, ethical leaders are viewed by subordinates as legitimate and credible role models (Brown and Treviño, 2014). Second, ethical leaders engage in two-way communication with their subordinates about ethical issues. They not only talk to subordinates about ethics and stress the importance to them of acting ethically, PR but also encourage subordinates to voice their concerns and provide feedback (Avey et al., 2012; Brown and Treviño, 2006), thus helping develop the employee’s ethical mindset for future moral-laden interactions and decisions (Zhu et al., 2016). Third, ethical leaders establish ethical standards and ensure their subordinates abide by those standards by rewarding or disciplining subordinates based on their ethical conduct or misconduct (Trevion et al., 2003). Finally, ethical leaders take into account ethical principles when making decisions and ensure that the decision-making process is observable by subordinates (Brown and Treviño, 2006). Taken together, this presents a narrative akin to the social learning process (Bandura, 1977) whereby employees are observing, internalizing, emulating, and then being rewarded for engaging in ethical behaviours such as CCBs, which has been shown to have an influence on employees’ ethical mindsets ( Jennings et al., 2015; Miao et al., 2019; Zhu et al., 2016). As highlighted in recent meta-analytical work (see Bedi et al., 2016; Hoch et al., 2018), growing research over the last decade has examined the relationship between ethical leadership and employees’ work outcomes including job satisfaction, organizational commitment, job engagement, job performance and counterproductive work behaviours. In addition, ethical leadership has been found to enhance employees’ organizational citizenship behaviours (OCBs) (e.g. DeConinck, 2015; Mayer et al., 2009). OCBs are discretionary behaviours on the part of employees which enable the team to achieve its mission and goals (Graham, 1991). CCBs are similar to OCBs as they are both prosocial behaviours that seek to benefit others, however, the recipients of these behaviours differ. For CCBs, they are focused on those outside of the organization (i.e. charities) (Rodell et al., 2016), whereas OCBs are directed at members of the team or organization (i.e. co-workers) (DeConinck, 2015; Lau et al., 2016).

Top Management Sanctioning Behaviour

Traditionally, the tactics used by top management to reduce immorality in their companies have involved the implementation of organisational and formal mechanisms (Ford & Richardson, 1994; O’Fallon & Butterfield, 2005), such as codes of conduct, training initiatives, ethical officers, ethical auditing and reporting or ethics ties to the performance system. According to previous research, these tactics also are some of the most commonly used instruments in European companies, especially in the Spanish business context (Guillen, Melé & Murphy, 2002). A system of rewards and punishments based on ethical actions has been cited as a necessary element for achieving a reputation for ethical leadership (Treviño, Hartman & Brown, 2000; Treviño & Nelson, 2004). Such system plays an important role in social influence processes; as Bandura (1977) argues, a person behaves following the negative or positive consequences that attach to his or her behaviours, such as avoiding behaviours linked to negative consequences and acting in ways that lead to positive consequences. Therefore, sanctioning unethical behaviours should encourage ethics among employees. Furthermore, this mechanism fulfils an informative, motivating and reinforcing function in the business organization (Bandura, 1977). Top management efforts to discipline unethical behaviour should offer an effective strategy to encourage ethical behaviour.

Top Management is a Role Model

Even if formal mechanisms are valid and effective in improving the ethical quality of a business organization (Ford & Richardson, 1994; O’Fallon & Butterfield, 2005), if ethics are absent at the top management level, an ethical organizational climate might not be easily achievable (cf. Schroeder, 2002; Weaver, Treviño & Agle, 2005). Top management’s behaviour thus affects the level of ethics among employees. In role set theory (Merton, 1957), a referent’s level of formal authority determines his or her influence on an employee’s behaviour and attitudes. Because top managers have great formal authority, their behaviour, values and decisions should exert strong influences over employees’ ethical behaviours. It may be difficult for employees to perceive the personal behaviours of top managers directly, but the top management level likely develops (even if unconsciously) a reputation for ethical or unethical, hypocritical or ethically neutral leadership (Treviño & Nelson, 2004). For example, rumours about decisions, strategies and behaviours (both in private and corporate settings) by top managers likely circulate throughout the organization and contribute to their ethical image. Therefore, top management needs to develop a reputation for ethical leadership if ethical behaviour among employees is desired to be encouraged. Ethics must start at the top; even if the firm implements various formal, ethics-related mechanisms, they cannot truly influence employees’ ethics if those mechanisms do not match the ethical image at the top (cf. Schroeder, 2002), in which case top management instead could be perceived as hypocritical (Treviño et al., 2000; Treviño & Nelson, 2004). Thus top management ethicality is one of the most important determinants of company ethics (Zabid & Alsagoff, 1993; Vitell, Dickerson & Festervand, 2000), and making such ethics evident to all organizational members should strongly affect the ethical behaviour of employees.

Responsible Management

Responsible management is defined as managerial practices that integrate and assume responsibility for the triple bottom line (sustainability), stakeholder value (responsibility), and moral dilemmas (ethics)‖ (Laasch and Connaway, 2015: 25). Within this quickly emerging field of research, there is a move towards a more holistic approach to disparate aspects of organizational activity, which used to be researched separately. A new research topic called the trans discipline or inter-discipline of Sustainability, Responsibility, and Ethics (SRE) (Laasch and Moosmayer, 2015; Laasch, 2016), is gaining increasing attention from scholars, with the view to establishing a more accurate approach to responsible business practices and management. As business organizations function with the approbation of society (Donaldson and Dunfee, 1994), they need to adapt to the changing societal conditions, for instance, by adopting a new conception of market success where traditional financial bottom-line indicators are being complemented with social and environmental factors‖ (Hilliard, 2013: 365). Responsible management provides a good answer to such challenges by promoting practices that lead to prime management. Prime management refers to superior management practice leading to performance that, at the same time, is socially, environmentally, and economically sustainable; optimizes stakeholder value; and leads to moral excellence‖ (Laasch and Conaway, 2015: 27).

To be able to advance such a holistic perspective, proper use of the basic components of responsible management is crucial. To this end, we address in this chapter the ethics component of responsible management, both in terms of what ethics is and how to manage it. Based on our examination of the literature, we focus on two issues. First, we present an overview of the various ethical criteria for the organizational and managerial levels. Second, we map the mechanisms, strategies and interventions that managers may use to embed ethics within organizations. Ethical and unethical behaviour in organizations is influenced both by individual behaviour and organizational activity (Treviño and Youngblood, 2004)

1990). Notably, ethical problems negatively impact ―the trust and reputation of both leaders and organisations (Kalshoven, Hartog and Hoogh, 2011: 51). We thus argue that developing responsible management research as a holistic approach necessitates taking a step further and addressing not only ethical management at the individual level and ethics management at the organizational level, but also their interconnections, how they complement each other, and how they may enable responsible business practices

Conclusion

In the wake of corporate scandals over the past several years, most organizations have written or updated their Codes of Conduct and Ethics Rules. The first thing a manager should do is to read and understand those documents. That means understanding the actual words used in the documents along with the spirit and intent behind the words. The second thing to do is to be sure that your staff also reads and understands the documents and can come to you with any questions.

If you act consistently with Codes of Conduct and Ethics Rules, you provide a foundation of trust in your relationships with others. Part of your goal is to show others what it means to make ethical decisions. The other part of your goal is to encourage others to come forward if they suspect that someone is not acting ethically. As a result, your organization will be in a position to look at that behavior and stop it before it is out of control or worse, crosses the line into illegal conduct.

Society is changing and so are the institutions that are part of our social reality. If they are to remain competitive in the long run, business organizations need to respond to the growing demands of society (Hilliard, 2013) through wise managerial practices. As ethical, social, and environmental performances are currently under the spotlight of public opinion, financial performance is no longer enough to ensure business success. To be able to achieve long-term, sustainable performance,business organizations need to operate ethically and be socially and environmentally sound while they aim for financial gains (Constantinescu and Kaptein, 2019). This calls for a new managerial perspective for business organizations, one that is robust and visionary enough to lead towards such performance. The umbrella concept of responsible management (Buckingham and Venkataraman, 2016; Ennals, 2014; Haski-Leventhal, 2018; Hibbert and Cunliffe, 2013; Laasch, 2016; Laasch and Conaway, 2015; Ogunyemi, 2012) encompasses these dimensions of an emerging type of management practice. The growing body of research supporting managerial integration of ―triple bottom line (sustainability), stakeholder value (responsibility), and moral dilemmas (ethics)‖ (Laasch and Connaway, 2015: 25) puts forward the new transdiscipline of Sustainability, Responsibility, and Ethics (Laasch and Moosmayer, 2016; Laasch, 2016). One aspect emphasized by current research on responsible management is the need to ensure that ethical decision-making processes are adequately responsive to moral dilemmas and that they strive for moral excellence in managerial practice (Laasch and Conaway, 2015).

REFERENCES 

Ajzen, I. & Fishbein, M. (1980). Understanding Attitudes and Predicting Social Behaviour. Englewood Cliffs, NJ: Prentice Hall.

Arnold, D. G. (2010). Transnational Corporations and the Duty to Respect Basic Human Rights. Business Ethics Quarterly, 20: 371-399.

Aronson, E. (2001). Integrating Leadership Styles and Ethical Perspectives. Canadian Journal of Administrative Sciences, 18: 244-256.

Beams, J.D., Brown, R.M. & Killough, L.N. (2003). An Experiment Testing the Determinants of Non-Compliance with Insider Trading Laws. Journal of Business Ethics, 45 (4), 309-323.

Cavanagh, G. F. (2005). American business values with international perspectives (5th ed.). New York: Prentice Hall.

Cavanagh, G. F., Moberg, D. J., and Velasquez, M. The ethics of organizational politics. Academy of Management Review vol. 6 no. (3) (1981). pp. 363–374.

Ennals, R. (2014). Responsible Management: Corporate Social Responsibility and Working Life. New York: Springer.

Cherrington, D. J. (1980). The work ethic: Working values and values that work. New York: AMACOM.

 

Tuesday, May 30, 2023

The Essence of Corporate Social Responsibility in Business

 Marivic B. Gonayon

Divine Word College of Laoag

Abstract

The term "Corporate Social Responsibility" or CSR came into common use in the late 1960s and early 1970s, after many multinational corporations formed. Corporate Social Responsibility or CSR is when a company operates ethically and sustainably and deals with its environmental and social impacts. This means careful consideration of human rights, the community, the environment, and the society in which it operates. Corporate Social Responsibility or CSR is a business approach companies follow to make a social impact and focus beyond profits. CSR is titled to aid an organization's mission as well as a guide to what the company stands for and will uphold to its consumers. Considering different aspects that have a huge impact on a business is vital for the business' success and profitability. This article answers the question, "Is CSR beneficial for those who decide to put up a business someday as well as the society and environment?". This article also discusses a lot of arguments from different authors which help readers to fully understand the essence of CSR concerning business, whether someone is still starting to put up a business or for the improvement of business.

Keywords: Corporate Social Responsibility, Social Responsibility,

Categories of CSR, Business Benefits of CSR, Ways to Incorporate CSR into Your Business

Introduction

CSR stands for Corporate Social Responsibility and is a business’s approach to sustainable development by delivering economic, social, and environmental benefits. It also encapsulates the initiatives by which a company takes responsibility for its effect on social and environmental well-being. CSR looks beyond the company's profits and focuses on benefiting the greater community (Hall 2020). The comprehensive definition of social responsibility is concerned with what is or should be the relationship between global corporations, governments of countries and individual citizens. More locally, the definition is concerned with the relationship between the corporation and the local society in which it resides or operates (Kapur 2020).

It is important to look at the wide range of aspects that can affect a business including the reputation of a business. By following the business approach which is the Corporate Social Responsibility main focus is to bring together people of different cultures, backgrounds, and ideologies to support and advance a single common initiative for the betterment of all people and to increase profitability in business. The main purpose is to build a positive business reputation, build stronger relationships with customers and generate more sales. This business approach not only benefits the business itself but also the society and environment for it also works to satisfy the needs and wants of the society.

            According to Friedman (1970), a corporation's purpose is to maximize returns to its shareholders, and since only people can have social responsibilities, corporations are only responsible to their shareholders and not to society. Socially responsible activities conducted by a corporation are distorting economic freedom because shareholders are not able to decide how their money will be spent. Friedman thus argues that corporations should focus on those activities that are causally related to company profit, excluding charitable activities that do not directly generate revenue. Friedman's main message is that the main responsibility of a business is to create wealth and that the corporation is an instrument of maximizing profit and that their priorities should be to maximize shareholder value, have a high competitive advantage and use whatever means, as long as it remains legal, to increase their sales and profitability. CSR which focuses beyond profits, has a close resemblance with Milton Friedman's argument for it focuses also on maximizing profits for its shareholders. Friedman's claim could help in achieving the purpose of the CSR approach. In generating more sales and building stronger relationships with customers, then a business could generate more profits that will benefit itself.

            In contrast with Friedman’s arguments, Reich (2008) stated that Corporate Social Responsibility (CSR) is a dangerous distraction, focusing hyped-up attention on the social interventions of corporations rather than laying responsibility squarely on the government, which is the only factor that can solve social problems. Reich still holds the view that CSR is about virtue and generosity rather than social impact and competitive advantage. He believes that we must also give importance and focus on virtue and generosity when applying the CSR approach to business. It is because businesses that want to stay relevant to new generations and who want to help people in need around the world while increasing their revenue and efficiency will benefit from embracing CSR. I agree with Robert Reich's arguments because nowadays, consumers want to spend their money on products and services that they believe in and engage with companies that follow ethical practices that meet their own beliefs. He does not only want businesses to focus on maximizing returns or profits but more on building good relationships with customers through applying both virtue and generosity in business.

            Handy (2002), in his article named "What's a business for" stresses the need to reevaluate why businesses exist. He proposes that the purpose of a business "is not to make a profit, full stop". Handy argues that companies should be managed as communities, for that is what they are, communities of employees organized to serve communities of customers. While Friedman's focus is to maximize profits that will satisfy shareholders' expectations because they are the investors that provide funds and will contribute to them their business. Handy, on the other hand, in contrast to Friedman's arguments, strongly believes that it should not only focus on shareholders' expectations but should also think about the benefit that an individual and employees of a corporation can get in a business. In connection with his article, businesses have a bigger purpose because it exists. What is the purpose of putting up a business? In his arguments, we can simply understand what's business for and it is not only for profits and shareholder's expectations towards a business but also take into consideration the employees involved in the everyday operation of a business and people who are part of the business which contribute to the success of a business. The employees of a corporation should be treated as an asset because they have a big influence on the operation of a business. Unlike Friedman's, which is not in favour of charitable activities, Handy’s purpose includes donating to a charity. Compared to the two articles by Friedman and Reich, Handy has a bigger scope to consider in business. I strongly agree with Handy’s arguments because we cannot just think for profits and shareholder expectations in a business but we should give importance to the assets of a business which are the employees that involve in a day-to-day operation of a business and customers by which businesses cannot be successful without them.   

Why should businesses be embracing CSR?

            To be complete, the concept of CSR had to embrace a full range of responsibilities of business to society (Carroll 2018).

According to Hall (2022), there are five reasons why should businesses be embracing CSR:

1.      CSR is a moral obligation. Domestically, businesses need to give back to the communities and nations that provided them the opportunity to succeed. Globally, economic and security concerns/events can immediately have a negative global impact. Investing, developing, and doing-no-harm will strengthen all sectors of business. As businesses use resources that a given society provides, they are obliged to give back to that society as their moral obligation. Giving back to society is a moral obligation that results from social contracts (Tamvada 2020). Amao (2008) argues that morality, which is driven by societal expectation, forms the basis of the corporation's entrance into the existing social contract. He further argues that the modern corporation has acquired the capacity to enter the existing social contract under the status the law has afforded to it.

2.      It helps in engaging customers/ clients. Building relationships and rapport with both customers and clients is important within any company and having a social responsibility policy can impact this. Using CSR can also help you engage with your customers in new ways. Since the message of CSR is about something ‘good’ it can often be an easy way to connect with your customers or clients. Creating this positive relationship with customers/ clients and the wider community can lead to a potential increase in sales and rising profits.

3.      It can improve brand perception. Being socially responsible can strengthen both a company's brand and image. As mentioned, the public perception of a company is critical to client confidence. By portraying a positive image through taking part in CSR projects, a company can make a name for itself by not only being successful in what they do but by being socially conscious too. Also, by engaging actively and positively within the community, companies’ employees could be interacting with potential customers, indirectly marketing the company in the process. Companies that actively promote their social responsibility activities, can take steps to publicize these efforts through the media. Getting the word out about corporate donations, or other CSR initiatives is a powerful branding tool that can help build publicity, for you in both online and print media.

4.      It supports employee engagement. Employees tend to perform better when they engage in socially responsible activities. Good CSR programs are proven to be more economically effective when trying to engage leaders and team members than things such as training and conferences. People also want to work at a company who have CSR ambitions in place – as a company's greatest asset is its people. Corporate responsibility can help a company to build the best team possible as companies which demonstrate impact initiatives, will have an easier time recruiting talent.

5.      It can improve innovation and collaboration within businesses. When employees engage in social good activities, it is proven that they become more innovative and collaborative. A lot of skills can be developed when taking part in any kind of CSR activity and beyond this, employees can learn about potential clients, develop their communication skills, improve leadership, and gain invaluable local insights. In turn, these new skills can develop within the workforce and allow the company to flourish within its market. If the employees are happy, their work will be of a higher quality.

Putting forth the business case for CSR requires a careful and comprehensive elucidation of the reasons why companies have concluded that CSR          is in their best interests to pursue (Carroll 2018).

Categories of CSR

According to CFI Team (2020), although corporate social responsibility is a very broad concept that is understood and implemented differently by each firm, the underlying idea of CSR is to operate in an economically, socially, and environmentally sustainable manner.

Generally, corporate social responsibility initiatives are categorized as follows

1.      Environmental responsibility. Environmental responsibility initiatives aim to reduce pollution and greenhouse gas emissions and the sustainable use of natural resources.

2.      Human rights responsibility (also called Ethical responsibility). These responsibility initiatives involve providing fair labour practices (e.g., equal pay for equal work) and fair-trade practices, and disavowing child labour. Companies campaign to improve their business ethics, which in turn has a positive impact on society (Easley 2019).

3.      Philanthropic responsibility. Philanthropic responsibility can include things such as funding educational programs, supporting health initiatives, donating to causes, and supporting community beautification projects. This criterion pays attention to the well-being of the unprivileged or needy people who badly require our support to sustain themselves on this planet (Nafi 2018).

4.      Economic responsibility. Economic responsibility initiatives involve improving the firm’s business operation while participating in sustainable practices – for example, using a new manufacturing process to minimize wastage. In this context, companies try to find out a solution that can facilitate their business growth and generate profits by benefitting the community and our society (Nafi 2018).

Business Benefits of CSR

The business benefits of corporate social responsibility include the following:

1.      Stronger brand image, recognition, and reputation. CSR adds value to firms by establishing and maintaining a good corporate reputation and/or brand equity.

2.      Increased customer loyalty and sales. Customers of a firm that practices CSR feel that they are helping the firm support good causes.

3.      Operational cost savings. Investing in operational efficiencies results in operational cost savings as well as reduced environmental impact.

4.      Retaining key and talented employees. Employees often stay longer and are more committed to their firm knowing that they are working for a business that practices CSR.

5.      Easier access to funding. Many investors are more willing to support a business that practices CSR.

6.      Reduced regulatory burden. Strong relationships with regulatory bodies can help to reduce a firm’s regulatory burden.

CSR practices can also benefit both society and the company by creating innovation (e.g. new products/services and efficient production processes) through CSR practices. However, further study is required on the motives for CSR initiatives which are becoming important to attract an increasing number of businesses to integrate the CSR concept into their core operations.

Ways to Incorporate CSR into Your Business

According to Newlands (2017), Corporate social responsibility lets companies put their expertise and money into helping local communities while illustrating that business is not just about making profits. If anything, the business has become about giving back and working in a collaborative way that offers solutions to help people and, indirectly, the world.

Below are some ideas on how to incorporate CSR into your business based on some methods he implemented in various companies he had worked with:

1.      Establish your corporate social responsibility values and relevancy. To make CSR part of your company culture, consider establishing a set of values and a sense of relevancy that explains why your business is socially responsible. This can become the basis for any employees or talent who is onboarded as you grow. They can look at your values and better understand the reasoning behind behaviours that promote corporate social responsibility. You can relate these to health and wellness, education, diversity, or anything else you value and want your team to believe in.

2.      Determine the skills related to social responsibility. If you are slim on resources to participate in social responsibility programs, focus on those activities that can rely on your time and talent. This includes specific skills you can put to work within the company, as well as volunteer activities outside of the company. These skills are often worth their weight in gold, as they offer programs and other organizations-specific capabilities that they would not otherwise be able to tap.

3.      Identify potential projects for your company. While it may take considerable time to keep your business going, you will always be busy. That means you can start taking the time now to participate in internal or external projects related directly to corporate social responsibility. This way, these regular projects will become a living example of the CSR values you are trying to promote.

4.      Target talent who are on the same page about corporate social responsibility. One of the millennials' key traits is their interest in doing work that matters, so they are usually already willing to participate in CSR. They may even help you shape your policies and strategy related to corporate social responsibility. Do what you can to identify the team members who are willing to participate in these types of activities, as you will not be paying them to join nonprofit projects or volunteer. Try to work side by side with your team so they see you putting your words to work, knowing you share the same beliefs for the greater good.

5.      Identify ways your company can be environmentally sound. By focusing on specific initiatives related directly to the environment, which is one of the pillars of CSR, you may find that you can save more money in terms of overhead costs. For example, you can focus on initiatives directed at lowering the company's impact on the environment through solar-based energy use and smaller office spaces. Try to identify how being socially responsible can also result in this added benefit and consider implementing those tactics to help promote a lean operating structure.

6.      Take baby steps when implementing your CSR program. Realistically, you may want to take small steps related to corporate social responsibility. Any action that helps the community, society and environment can make a difference.  You can build on your CSR program as you develop and expand your company. You are imbuing your business with the spirit of doing more than just making a profit; you're also in business to make the world a better place.

Conclusion

            Corporate social responsibility (CSR) is an important component of modern business operations that is gaining more and more attention today. Businesses that embrace CSR will increase their income and efficiency while helping those in need throughout the world and staying relevant to younger generations. By applying the CSR approach correctly, people can manage to improve their business and satisfy the demands of their consumers. Identifying what is the business's primary goal and purpose will also help in the success of a business.

REFERENCES

Amao, O.O. (2008). Corporate Social Responsibility, Social Contract,

Corporate Personhood and Human Rights Law: Understanding the Emerging Responsibilities of Modern Corporations

Baron, D.P. (2007). Corporate social responsibility and social 

entrepreneurship. Journal of Economics & Management Strategy, 16, pp. 683–717.

Carroll, A.B. (2018) Corporate Social Responsibility (CSR) and Corporate

Social Performance (CSP). The SAGE Encyclopedia of Business Ethics and Society.

CFI Team (2020). Corporate Social Responsibility (CSR). Retrieved from:

https://corporatefinanceinstitute.com/resources/esg/corporate-social-responsibility-csr/ (accessed May 26, 2023)

Easley, C. (2019). Categories of Corporate Social Responsibility. Retrieved

from: https://www.maximuslife.com/categories-of-corporate-social-responsibility/ (accessed May 28, 2023)

Friedman, M. (1970) The Social Responsibility of Business Is to Increase Its

Profits. New York Times Magazine, 13 September 1970, 122-126.

Hall, W.E. (2020). The Importance of CSR and Why a Company Should

Embrace it. Retrieved from: https://www.drpgroup.com/en/blog/the-importance-of-csr-and-why-a-company-should-embrace-it (accessed May 26, 2023)

Handy, Charles. 2002. What is a Business for? Harvard Business Review.

Kapur, R. (2020). Corporate Social Responsibility.

Nafi, J. (2018). Different Types of Corporate Social Responsibility (CSR).

Retrieved from: https://www.transparenthands.org/different-types-of-corporate-social-responsibility/ (accessed May 27, 2023)

Newlands, M. (2017). How to Incorporate Corporate Social Responsibility Into

Your Business.

Reich, Robert B. 2008. The Case Against Corporate Social Responsibility.

Goldman         School of Public Policy Working Paper No. GSPP08-003

Tamvada, M. (2020). Corporate social responsibility and accountability: a

new theoretical foundation for regulating CSR. International Journal of

Corporate Social Responsibility.

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Sunday, May 28, 2023

Corporate social responsibility: Make it a priority

 SUZETTE N. ALEJANDRO

Divine Word College of Laoag                                  

ABSTRACT

Corporate social responsibility is a philosophy, a priority and accountability rather than merely a policy. Effective corporate social responsibility policies typically require organizations to commit to both an internal and external approach to ethics, although they do not automatically equate to lower profitability. However, what exactly does "corporate social responsibility" mean? Who is advocating for businesses to be socially responsible, and for what reasons? This article covers the progress of the CSR concept as well as some of the attempts to define the social responsibilities of businesses. This article also discusses the benefits of CSR and how to implement it effectively.

Keywords: Corporate Social Responsibility, Stakeholders, Consumers, Community, Employees, benefits of CSR, implementing CSR              

INTRODUCTION

The business serves both economic and social purposes. It is the only activity that has an impact on all facets of society and the country. Businesses innovate, create new goods and services for people, produce goods and services for the nation and society, and create new molecules to treat human illnesses. The business also creates jobs, generates income, exports, and collects taxes to help the government run smoothly. The business also makes use of the resources of society and the nation. But this only represents one side of the story; the other side is all about the exploitation of human and natural resources, sexual harassment at work, political funding of business interests, the spread of materialism and pollution, the encouragement of terrorism to increase the sale of weapons and ammunition, the sale of tobacco and alcohol, acid rain, global warming, and numerous other human rights cases of abuse.

More so, as discussed by Byars (2018), the environment and sustainability have been the concerns responded to by the corporations to their stakeholders. Corporations and customers are becoming more and more aware that their actions can and often inflict harm to the environment. Destruction of the environment can ultimately lead to a decrease in resources, limited business prospects, as well as a lowered quality of life. Businesses that harm the environment frequently conceal their actions to avoid being discovered and suffer financial loss, legal penalties, or social consequences. The Earth itself, which is affected negatively by their hidden actions, maybe the only testimony.

Moorhead (2016) stated that smart business executives must be aware that a stable foundation is necessary for a company to build and enhance its commitment to sustainability and corporate social responsibility (CSR).

CSR DEFINED

What is CSR, one would begin to wonder. Simply defined, it is essentially giving back to society. CSR, however, is defined by the World Business Council for Sustainable Development as "the ongoing commitment made by businesses to act ethically and to contribute to economic growth while strengthening the quality of life of employees and their families as well as those in the community and society."

More so, social responsibility refers to the business decisions and actions that are at least partially made for purposes other than the organization's immediate economic or technical interest (Mittal 2008). Most CSR activities are related to sustainability, environment, safety, and gender issues (Tian et al., 2011).

Additionally, CSR also refers to an organization's efforts to address a wider range of social and environmental issues and concerns (Lindgreen et al., 2010).  Also, CSR is generally understood to be “beyond what is required by law”, i.e. beyond legal conformity (Buhmann, 2006).

Corporate social responsibility (CSR) is also known by several other names. These include corporate responsibility, corporate accountability, corporate ethics, corporate citizenship or stewardship, responsible entrepreneurship, and “triple bottom line,” to name just a few. As CSR issues become increasingly integrated into modern business practices, there is a trend towards referring to it as “responsible competitiveness” or “corporate sustainability” (Hohnen 2007).

SOCIAL RESPONSIBILITY OF BUSINESS

            No business can run its own in complete isolation. A business depends on a variety of interactions with its stakeholders, which include its shareholders, customers, employees, suppliers, communities, and others.

According to Mittal (2008), there are four significant groups that both influence and are influenced by business, and business is expected to recognize its responsibilities towards these groups. These categories are:

1.0 Responsibilities to Shareholders

Not all corporations have the luxury of not needing shareholders' cash. Many do need capital from equity investors. They frequently represent the new, expanding businesses that we all want to see more of. These businesses might stay in low gear or never even get moving without shareholders who are ready to take risks that a bank or a bondholder would not (Fox et al., 2012). Shareholders who have invested in businesses have only one interest: making money. They have invested money to make money. Thus, organizations' main duties include increasing shareholders' wealth, providing a good return on investment, paying dividends on time, protecting the interests of even small shareholders, listening to and respecting shareholders, and regularly inviting shareholders to participate in decision-making (Mittal 2008).

2.0 Responsibility to Employees

            Employees have a key role in the success of the company. Employees are no longer considered the organization's most underutilized resource. As stated by Costas, J., & Kärreman, D. (2013), CSR functions as a method of aspirational control that binds employees' ethical conscience to the organization and aspirational identities.

            Organizations have many obligations to their employees, including fair treatment, no bias based on sex, cast, or creed, equal pay, fair and performance evaluation system, a pleasant and secure working environment, establishment of equal employment standards and norms, the provision of job welfare facilities, equal chances for accomplishment and promotion, proper recognition, appreciation, and encouragement of special skills and capabilities of the worker, and provision of labour welfare facilities.

            More importantly, all employees must be given the chance to participate in managerial decisions regarding appropriate and desirable training and development programs, allowing workers to grow as individuals in response to the changing environment.

            Finally, consider family well-being. That is, if employees' home lives are less problematic, their productivity will be high (Mittal 2008).

3.0 Responsibility to Consumer

Consumers are generally aware of a company's CSR behaviour and its impact on the environment and the community (Tian et al., 2011). Consumer interest in corporate social responsibility (CSR) has increased over the past ten years (Carrigan and Attalla 2001).  Several reasons for this have been advanced: On the supply side, businesses are becoming more involved in CSR activities and place greater focus on promoting their CSR efforts while, on the demand side, consumer advocate groups are highlighting unethical corporate behaviour and encouraging boycotts (Snider et al. 2003). More so, consumers actively seek out goods from companies that conduct business ethically as they become more conscious of the value of social responsibility (Collier 2018).

            Organizations have many obligations to their customers, including the following: to offer products of known quality; to ensure that products are delivered to customers and to prevent any form of profiteering by middlemen and fraudulent individuals; to provide goods at reasonable prices; to offer necessary after-sale services and to ensure that spare parts are available on the market;  to fulfil its commitments impartially and courteously following applicable laws; to ensure that the product supplied has no negative effects on the customer; to hear and address the genuine complaints of the customer; to hear and address any type of cartel formation, and finally, to provide sufficient information about the product, including their adverse effects, risks, and care to be taken while using the products.                                                      

            More importantly, consistent research and development are essential for enhancing and innovating the offered goods and services (Mittal 2008).

            Note that companies who consistently adhere to high standards for the safety of products and services have a significant competitive edge over their rivals (Benoit, 2013).                     

4.0 Responsibility to Community

            Communities are interacting with corporations more frequently now than in the past, a development supported by the reduction of trade barriers through international trade agreements, attempts to strengthen the rights of foreign investors and broader processes of national liberalization across many developing nations (Newell 2005).

            Simply, the business has a variety of responsibilities to the community: to prevent environmental pollution and to maintain ecological balance; to increase operational efficiency; to support research and development; to promote small-scale industry; to promote the development of the region in which they operate; and, finally, to take steps to conserve limited resources and to develop alternatives, whenever possible (Mittal 2008). 

BENEFITS OF CORPORATE SOCIAL RESPONSIBILITY

            The advantages of CSR speak effectively about how crucial it is and why you should try to implement it in an organization.

            Collier 2018 stated some clear benefits of corporate social responsibility which are:

1.0   Improved public image. This is important since customers consider your reputation when determining whether to buy from you. Simple things like employees giving an hour a week to a charity demonstrate your company's commitment to doing good. As a result, consumers will view you considerably more favourably.

2.0   Increased brand awareness and recognition. If you're dedicated to moral behaviour, this news will get around. Your brand will become more widely known as a result, of raising brand awareness.

3.0   Cost savings. Your production expenses can be reduced by making some easy modifications in the direction of sustainability, such as using less packaging.

4.0   An advantage over competitors. You distinguish yourself from rivals in your sector by embracing CSR. By taking social and environmental considerations into account, you position your organization as one that is dedicated to going above and beyond.

5.0   Increased customer engagement. You should announce your use of sustainable systems loud and clear. Create a tale out of your efforts and post it on your social media platforms. Additionally, you should showcase your work to regional media in the hopes that they will cover it. Customers will pay attention to this and interact with your brand and activities.

6.0   Greater employee engagement. Similar to consumer involvement, you should make sure your staff is aware of your CSR initiatives. It has been demonstrated that workers prefer to work for a company with a positive public image over one without. Furthermore, you'll be far more likely to attract and keep the best candidates if you demonstrate your commitment to causes like human rights.

7.0   More benefits for employees. When you embrace CSR, your employees might get a variety of advantages. By encouraging activities like volunteering, you foster both personal and professional development and make your company a more positive and productive place to work.                                                                                                               

IMPLEMENTING CORPORATE SOCIAL RESPONSIBILITY

            How is CSR implemented? Small and large enterprises alike should both invest in CSR. When we hear the term CSR, we often picture expansive, international programs that both large and small firms may find difficult to implement.

Collier (2018) cited some corporate social responsibility for small businesses and these are getting involved with local communities like participating in local events, attending fiestas, patronising and buying from local suppliers; volunteering; going green or reducing the amount of electricity used and recycling and upcycling of used materials; alternative transport methods like embracing the benefits of carpooling and taking public transport to work; and lastly to support the development of employees, ensuring that your employees feel happy, healthy, and safe whilst at work.

These are the suggested steps by Hohnen (2007) on how to implement CSR in large companies, first to develop an integrated CSR decision-making structure; prepare and implement a CSR business plan; set measurable targets and identify performance measures; engage employees and others to whom CSR commitments apply; design and conduct CSR training; establish mechanisms for addressing problematic behaviour; create internal and external communication plans; and lastly to make commitments publicly.

CONCLUSION

            Indeed, corporate social responsibility (CSR) is a philosophy, a priority and accountability. It is simply defined as essentially giving back to society. An organization must conduct itself with a sense of social responsibility. It is seen as good practice for the business to consider social and environmental issues, even though it is not required by law. CSR implies that a company cares about broader societal concerns as well as those that influence its profit margins, which will draw clients who share their beliefs. As a result, conducting business sustainably makes sense.         

Reference:

Benoit, V., (2013). Corporate social responsibility in China. 2ed. Singapore: World

Scientific Printers 

Buhmann, K. (2006). Corporate social responsibility: what role of law? Some aspects of law and CSR. Corporate Governance: The international journal of Business in Society, 6(2), 188-202.

Byars, S. M. (2018). Business Ethics. Houston Texas: OpensStax.

Carrigan, M., & Attalla, A. (2001). The myth of the ethical consumer—Do ethics matter in purchase behaviour? Journal of Consumer Marketing, 18(7), 560–577

Collier, E. (2018) How to Implement Corporate Social Responsibility in Your Small Business

Costas, J., & Kärreman, D. (2013). Conscience as a control–managing employees through CSR. Organization, 20(3), 394-415.                                                                                           

Fox, J., & Lorsch, J. W. (2012). What good are shareholders? Harvard Business Review, 90(7/8), 48-57.

Hohnen, P. (2007). Corporate Social Responsibility: An Implementation Guide for Business, International Institute for Sustainable Development

Lindgreen, A., & Swaen, V. (2010). Corporate social responsibility. International Journal of management reviews, 12(1), 1-7.

Mittal, V (2008). “Business Environment and Ethics”, Excel Books Private Limited, pp 22-29. (MBA Paper No. 2.8 Bharathiar University, Coimbatore)

Moorhead, P. (2016). “Cisco’s CSR Program under CEO Chuck Robbins Is Flourishing,” Forbes, March 9, 2016.    

Newell, P. (2005). Citizenship, accountability and community: the limits of the CSR agenda. International affairs, 81(3), 541-557.

Snider, J., Paul, R. H., & Martin, D. (2003). Corporate social responsibility in the 21st century: A view from the world’s most successful firms. Journal of Business Ethics, 48(2), 175–187.

Tian, Z., Wang, R., & Yang, W. (2011). Consumer responses to corporate social responsibility (CSR) in China. Journal of business ethics, 101, 197-212.  

WBCSD (1999), Corporate Social Responsibility, World Business Council for Sustainable Development

 

 

 

 

 

 

 

 

 

 

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