Social Responsibility of Management

Social Responsibility of Management

Beginning 20th century, mission of business

enterprises was totally economic: profit

Emerging view point of governments & social

activists
since businesses derive their existence from

society, they have some obligations toward it

Social Responsibility of Business? Keith Davis refer to businessmans decisions & actions taken for reasons, at least partially, beyond the firms direct economic or technical interest (few decisions
other than profit making and growth).

Social Responsibility of Management

Operational definition: management is responsible to

the organization itself & to all the interest groups with which it interacts.
Managers must consider impact of their decisions on

environment, i.e. soil, water &air: pollution of natural resources- a major concern
Besides awareness of various laws & regulations,

managers must incorporate ecological concerns in their decision making

Decision as to, whether companies should extend their

social environment ,requires careful examination of arguments for & against?

Social Responsibility of Management

Arguments for Social involvement of business Organization received its business from society, it must respond to changing needs of society. Better social environment benefits both society as well as business. Society gains from better work force, better consumption of products & services. Business benefits from better work force, better consumer of products & services.

cont.

Social Responsibility of Management

Social involvement
results in organizations attracting less attention from

regulatory agencies. Gives them greater freedom & flexibility in operations creates favorable public image, impacts bottom line by attracting customers, employees & investors

Business has immense innovation talent &

financial resources, it could find solutions for problems which other institutions (govt policies, bodies) failed Business involvement may be easier to help hard core unemployed than cope with social unrest (disturbance) later

Social Responsibility of Management

Arguments against Social involvement of

Business
Primary task of business: economic activity - Social

involvement could reduce economic efficiency

In ultimate analysis, society will have to bear burden of

social involvement through higher prices

By raising prices, social involvement can weaken

international competitiveness of a company e.g. American cos selling in international markets competing with cos in low wage countries with less social benefits.

Social Responsibility of Management

Business people lack requisite skills to deal with

problems of society
Business has no accountability to society. Unless

accountability can be established, business should not get involved.

Ethics in Management
Refers to rules/ principles that define right or

wrong conduct
Dictionary defines ethics: discipline dealing

with what is good & bad with moral duty & obligation.
Personal ethics rules by which an individual

lives his/her personal life.

Ethics in Management
Business ethics - concerned with truth & justice, has

various of aspects in home country and abroad expectations of society fair competition advertising public relations social responsibilities consumer autonomy and corporate behaviour

Ethics in Management
Responsibility of Top Management
Create an organizational environment that fosters

ethical decision and actions.

Means applying and integrating ethical concepts with

daily actions i.e. top managers to act as role models

Ethics in Management
Employees will behave in ethical manner;

It can be accomplished in three ways:

by establishing an appropriate company policy or a

code of ethics
common)

by using a formally appointed ethics committee ( less by teaching ethics in management development

programmes (MDPs) (seldom used)

Ethics in Management
Code of Ethics
Primary values and ethical rules, a co. expects its

employees to follow
A formal document that states an organizations

statement of policies, principles or rules that guides behavior

But publication of code of ethics not enough; some cos

require employees to sign code and include ethics criteria in performance appraisal

Ethics in Management

Code of Ethics
Managers should encourage ethical behaviour &

publicize it Employees should be encouraged to report unethical practices

Factors that can raise ethical standards
Pubic disclosure and publicity Increased concern of well informed public

Increase the professionalism of business managers

by education

Govt regulations

Ethics in Management
Status in India
Laws steadily tightened ,overseeing agencies for

compliance Important ones are:

Establishment of SEBI to curb manipulation of share prices on

stock exchanges
Incorporation of code of corporate governance for directors of

public companies

Ethics in Management
Status in India
Requirement of CEOs/MDs to sign exhaustive statement

of compliance to statutory obligations in every Board meeting

Increase in no of independent directors & placement of

higher responsibility on them

Introduction of Audit Committee with an independent

Director as chairman for compulsory clearance of balance sheets

Greater responsibility on shoulders of statutory