Social Responsibility: Definition and Perspectives

Corporate Social Responsibility (CSR) is the idea that business has: Social obligations above and beyond making a profit. Social obligations are to constituent groups in society other than stockholders and beyond that prescribed by law. Organizations include financial, environmental, and social responsibility in their core business strategies. Triple bottom line is people, planet and profit.

Carroll’s Corporate Global Social Responsibility Pyramid

CSR for global and transnational corporations working from the bottom up, CSR requires voluntary action, the global corporation should:

·         Make a profit

·         Obey the law

·         Be ethical in its practices

·         Be a good corporate citizen

What Is the Role of Business in Society?

The Classical Economic Model (Adam Smith)

An “invisible hand” promoted the public welfare. The public interest served by individuals pursuing their own economic self-interests. According to the classical economic model of business, profitability and social responsibility are the same thing.

The Socioeconomic Model

Business has an obligation to meet the needs of the many groups in society besides stockholders in its pursuit of profit. Stakeholder audit: Systematically identifying all the parties that could possibly be affected by the company’s performance.

Sample Stakeholder Audit for Wal-Mart, the World’s Largest Retailer

Arguments For and Against Corporate Social Responsibility

Arguments For

Business is unavoidably involved in social issues. Business has the resources to tackle today’s complex societal problems. A better society means a better environment for doing business. Corporate social action will prevent government intervention.

Arguments Against

Profit maximization ensures the efficient use of society’s resources. As an economic institution, business lacks the ability to pursue social goals. Business already has enough power. Because business managers are not elected, they are not directly accountable to society.

Toward Greater Social Responsibility

Iron Law of Responsibility

Those who do not use power in a socially responsible way will eventually lose it. If business does not meet the challenge of social responsibility, then government reform legislation will force it to meet its obligations.

Social Responsibility Strategies

Reactive Strategy: is denying responsibility while striving to maintain the status quo by resisting change.

Defensive Strategy: is resisting additional social responsibilities with legal and public relations tactics.

Accommodation Strategy: is assuming social responsibility only in response to pressure from interest groups or the government.

Proactive Strategy: is taking the initiative in formulating and putting in place new programs that serve as role models for the industry.

A Continuum of Social Responsibility Strategies

Who Benefits from Corporate Social Responsibility?

Altruism: The unselfish devotion to the interests of others

Research Findings: There is a positive correlation between industry leadership in environmental protection/pollution control and profitability. Corporate social responsibility is a competitive advantage in recruiting.

Enlightened Self-Interest: A business ultimately helps itself by helping solve social problems.

Corporate philanthropy: The charitable donation of company resources can be good use. Research shows that corporate giving is a form of profit-motivated advertising

An Array of Benefits for the Organization:

Tax-free incentives to employees

Retention of talented employees

Help in recruiting the talented and socially conscious

Help in swaying public opinion

Improved community living standards

Attracting socially conscious investors

A nontaxable benefit for employees from company donations to charitable causes

The Ethical Dimension of Management

Ethics is the study of moral obligation involving the distinction between right and wrong

Business Ethics is narrows the frame of reference to productive organizations and also referred to as management ethics or organizational ethics.

Practical Lessons from Business Ethics Research:

Ethical Hot Spots

·         Balancing work and family

·         Poor internal communications

·         Poor leadership

·         Work hours, work load

·         Lack of management support

·         Need to meet sales, budget, or profit goals

·         Little or no recognition of achievements

·         Company politics

·         Personal financial worries

·         Insufficient resources

Pressure from Above: The problem of superiors pressuring subordinates to achieve results is widespread.

Managers’ responses to pressure from above: Consciously avoid putting undue pressure on subordinates (who may act unethically to relieve the pressure). Prepare to deal with excessive organizational pressure.

Ambiguous Situations: Situations where there are no clear-cut ethical guidelines or ethical codes.
Rationalization: How Good People End Up Doing Bad Things, Perceiving an objectively questionable action as normal and acceptable.

A Call to Action: The deliberate and conscious action of a manager to do the right thing is an ethical and personal matter.

 

How Employees Tend to Rationalize Unethical Conduct

Personal Values as Ethical Anchors

Values are abstract ideals that shape one’s thinking and behavior.

Instrumental value: Enduring belief that a certain way (mode)  of behaving is appropriate in all situations

Terminal value: Enduring belief that a certain end-state of existence (being admired) is worth striving for

Identifying and Acting Upon Your Own Values

Basic personal values are taken for granted. They are not arranged consciously in order of priority.

Managerial Ranking of Values

Terminal Values:

Self-respect

Family security

Freedom

A sense of accomplishment

Happiness

Instrumental Values:

Honesty

Responsibility

Capability

Ambition

Independence

General Ethical Principles:

Self-interests

Personal virtues

Religious injunctions

Government requirements

Utilitarian benefits

Universal rules

Individual rights

Economic efficiency

Distributive justice

Contributive liberty

Encouraging Ethical Conduct

Ethics Training

Amoral managers: Managers who are neither moral nor immoral, but ethically lazy

Key features of effective ethics programs

Support of top management

Open discussion

A clear focus on ethical issues

Integration of ethics into the organization

A mechanism for anonymously reporting ethical violations

Rewarding of ethical conduct

Twelve Questions for Examining the Ethics of a Business Decision

Ethical Advocate: An ethics specialist who plays a role in top management’s decision-making.

Code of Ethics: Published statement of moral expectations requirements for an effective code:

Reference to specific practices

Is supported and equitably enforced by top management

Whistle Blowing: The reporting of perceived unethical matters

The Practice and Study of Management

The systematic study of management did not begin in earnest until after 1900. The Egyptian pyramids required managed effort. Management has not had a systematically recorded body of knowledge until recently. Today, vast amounts of relevant information are readily available in print and electronic media.

An Interdisciplinary Field: The manifold increase in management theory information is due largely to its interdisciplinary nature in drawing from several fields (e.g., psychology, mathematics, economics, history, and engineering).

There are several approaches to the theory and practice of management no universally accepted theory of management. .

The universal process approach

The operational approach

The behavioral approach

The systems approach

The contingency approach

The Universal Process Approach

The Universal Process Approach

Universal process approach assumes all organizations require the same rational management process. Core management process remains the same regardless of the purpose of the organization. The management process can reduce to a set of separate functions and related principles.

Henri Fayol’s Universal Management Process  

Fayol published Administration Industrielle et Générale in 1916. He divided a manager’s job into five functions: Planning, Organizing, Command, Coordination, Control, He developed 14 universal principles of management.

Fayol’s 14 Universal Principles of Management

Lessons from the Universal Process Approach

The management process can separate into interdependent functions. Management is a continuous process. Management is a largely, though not an entirely, rational process. The functional approach is useful because it specifies what managers should do.

The Operational Approach

The Operational Approach

The operational approach is a production-oriented field of management dedicated to improving efficiency and cutting waste.

Frederick W. Taylor’s Scientific Management: Developing performance standards on the basis of systematic observations and experimentation.

• Standardization
• Time and task study
• Systematic selection and training
• Pay incentives

Taylor’s Differential Piece-Rate Plan

Taylor’s Followers

Frank and Lillian Gilbreth

—  Refined time and motion study methods for use in work simplification

Henry L. Gantt

—  Refined production control and cost-control techniques

—  Developed the Gantt chart for work scheduling of projects

—  Early advocate of the importance of the human factor and the importance of customer service over profits

The Quality Advocates

Walter A. Shewhart

—  Introduced the concept of statistical quality control

Kaoru Ishikawa

—  Proposed a preventive approach to quality

—  Developed fishbone diagram approach to problem solving

W. Edwards Deming

—  Based his 14 principles on reformed management style, employee participation, and striving for continuous improvement

Joseph M. Juran

—  Proposed the concepts of teamwork, partnerships with suppliers, problem solving, and brainstorming

—  Developed Pareto analysis (the 80/20 rule) as a tool for separating major problems from minor ones

Armand V. Feigenbaum

—  Developed the concept of total quality control

Philip B. Crosby

—  Promoted the idea of zero defects (doing it right the first time)

Lessons from the Operational Approach

A dedication to finding a better way is still important. Using scientific management does not dehumanize workers. Quality advocates, inspired by the scientific approach, have been right all along about the importance of quality and continuous improvement. The operational approach fostered the development of operations management.

The Behavioral Approach

The Human Relations Movement

An effort to make managers more sensitive to their employees’ needs and arose out of the influences of

—  The threat of unionization

—  The Hawthorne studies

—  The philosophy of industrial humanism     

The Human Relations Movement Pyramid

The Threat of Unionization: The Wagner Act of 1935 legalized union-management collective bargaining, promoting the growth of unions and union avoidance by firms.

The Hawthorne Studies (1924): The study’s results that productivity was strongly affected by workers’ attitudes turned management toward the humanistic and realistic viewpoint of the “social man” model.

The Philosophy of Industrial Humanism

Elton Mayo

Emotional factors were more important determinants of productive efficiency than were physical and logical factors.

Mary Parker Follett

Managers should be aware of how complex each employee is and how to motivate employees to cooperate rather than to demand performance from them.

Douglas McGregor developed Theory X and Theory Y.

Theory X: Management’s traditionally negative view of employees unmotivated and unwilling workers.

Theory Y: The positive view of employees is energetic, creative, and willing workers.

McGregor’s Theories X and Y. 

Organizational Behavior

Organizational Behavior is a modern research-oriented approach seeking to discover the causes of work behavior and to develop better management techniques.

Lessons from the Behavioral Approach

People are the key to productivity. Success depends on motivated and skilled individuals committed to organizational objectives. Managerial sensitivity to employees is necessary to foster the cooperation needed for high productivity. Has been criticized as being vague and simplistic.

The Systems Approach

A system is a collection of parts operating interdependently to achieve a common purpose.

In the systems approach:

• The whole is greater than the sum of its parts
• Use of Analytic (outside-in) thinking and synthetic (inside-out) thinking
• Seeks to identify all parts of an organized activity and how they interact

Barnard’s Early Systems Perspective

Chester I. Barnard wrote Functions of the Executive

Characterized all organizations is cooperative systems. Defined principal elements in an organization are willingness to serve, common purpose, communication and strong advocate of business ethics.

Barnard’s Cooperative System

General Systems Theory

General Systems Theory: An interdisciplinary area of study based on the assumptions that everything is part of a larger, interdependent arrangement.

Levels of systems: Identification of systems at various levels helps translate abstract systems theory into more concrete terms. Each system is a subsystem of the system above it.

Levels of Living Systems is Closed Versus Open Systems

Closed system: A self-sufficient entity

Open system: Depends on its surrounding environment for survival

New Directions in Systems Thinking

Organizational learning and knowledge management – Organizations are living and thinking open systems that learn and engage in complex mental processes.

Chaos theory – Every complex system has a life of its own, with its own rule book.

Complex adaptive systems - Self-organizing

Complex Adaptive Systems and Classical Management Systems Approach

Lessons from the Systems Approach

Managers now have a greater appreciation for the importance of seeing the whole picture. Manager should not become preoccupied with one aspect of organizational management while ignoring other internal and external realities. The systems approach tries to integrate various management theories. Criticism is short on verifiable facts and practical advice.