Introduction
Although the primary objective of business organizations is the making and maximization of profits, it is always good for companies and other business organizations to uphold ethics in their operations and generally be socially responsible.
Despite this fact, some companies have faced insurmountable problems due to their failure to incorporate the ideas of Corporate Social Responsibility in their policies. These instances have served the purpose of confirming to other companies and business organizations that Corporate Social Responsibility is essential for the success of any business organization.
Corporate Social Responsibility touches numerous aspects of life, all of which are meant to conserve resources and ensure the good of the public. As the needs of the consumers/public are catered for, the socially responsible company also benefits in numerous ways. This paper looks into the importance of ethical behaviour and Corporate Social Responsibility to business organizations.
Demand for CSR and Ethical behaviour
Barely twenty years ago, companies were not keen on social responsibility and thus they operated in ways that were profit oriented. With time, the effects of irresponsible corporate behaviour were continually experienced until it became clear that companies needed to be socially responsible.
For instance, companies in the manufacturing sector were releasing a lot of greenhouse gases to the atmosphere which aggravated the problem of global warming. The adverse effects of global warming, like earthquakes, floods, hunger, hurricanes etc, made administrative authorities to be very vigilant on operations of business organizations.
The press also continually became attentive to companies that did not observe social responsibility and the result of this was that companies strived to protect their image by being socially responsible. Companies in the manufacturing sector have therefore been trying to be environmentally friendly and thus their effluents are closely monitored to ensure that they do not cause harm to the environment.
Since the introduction of the ideas of social responsibility, the scope of social responsibility has broadened to cover areas that were never covered before (Kotler, 2005, p. 126). These include the responsibility of companies to, not only ensure environmental conservation but also to, raise living standards of their consumers, engage in charity work and the like.
Most of the ideas of social responsibility discussed above are essentially voluntary except the ideas of environmental conservation. The ideas do not have profit-oriented motivation but companies that engage in them build their profit-making foundations in one way or another.
This is the main benefit associated with CSR although it is in most cases difficult to quantify it. This is so because the benefits that are directly associated with ethical behaviour and Corporate Social Responsibility are not directly associated with profits (McManus, 2006, p. 20). The two establish the foundations of profit generations which in turn make the business organization generate more profit.
Benefits of Corporate Social Responsibility
The benefits of upholding ethical behaviour and operating in a socially responsible manner are multifaceted. For instance, a company that operates ethically is likely to have a better management than a counterpart that does not value ethical behaviour.
Thus in a company where organizational policies favour mutual respect among employees the company will have minimal employee collisions and will most likely have greater productivity and thus the company will maximize its profits. Other ethical-related issues will likewise be avoided (McNamara, 2005, p. 59).
Similarly, a company that upholds Corporate Social Responsibility will enjoy many advantages due to better relationships with its consumers and administrative agencies. An example of such advantages is the fact that a socially responsible company is bound to have a lot of goodwill which will indubitably translate to greater revenue.
This is because a company that is respected and appreciated by its customers will have an increased number of customers which will lead to more sales. Secondly, a company that upholds CSR will be mindful of the kind of products that it sells to its customers.
This means that products will be environmentally friendly and they will also be designed with the health of the consumer in mind. This implies that the company will not have problems with administrative bodies related to environmental pollution and degradation. The company will therefore save a lot of money which could be otherwise spent on court cases and it will also get limited customer complaints meaning that its net sales will be higher.
Additionally, a company that values Corporate Social Responsibility will be respected by the government in which it operates and thus the company is likely to get policy-related favours from the government (Gregory, 2007, p.35). It may even get subsidies to aid it in its operations since the government will be guaranteed that the welfare of the company translates to better living standards of its citizens.
Disadvantages of unethical behaviour
Although the incorporation of the ideas of CSR in organizational policies is somehow voluntary, companies have a moral obligation in implementing the same. Those that fail to adhere to the provisions of CSR experience a lot of problems that make them lose a lot of revenue and status.
The worst kind of social responsibility to ignore is that of environmental conservation. Companies that fail to adhere to the provisions of ethical behaviour and CSR related to the preservation of the environment are bound to experience a great deal of problems. First of all, such companies get a very negative publicity which makes consumers of their products to start consuming products from other companies.
This results in substantial reduction of the consumer-base of the company which in turn affects the profitability of the company. Such companies may also fall victims of public protests which lead to disruption of the normal operations of the company. This results in less productivity hence less profitability.
In the same way, companies that concentrate in profit maximization and forget their responsibility towards their employees and consumers alike are bound to suffer major drawbacks related to lack of CSR. For instance, if a company does not give its employees fair wages for their involvement in its operations, it may experience a high employee turnover which may have serious repercussions to its production and profitability.
This is because the company will be required to spend its revenue on recruitment and selection of new personnel and spend additional resources on training. The company will also be likely to experience problems related to mistakes committed by recruits and it may also experience slow productivity due to the inefficiency of inexperienced personnel (Samuelson, 2004, p.38).
On the other hand, a company that does not put in place sufficient measures to ensure consumer protection against poor quality products will experience adverse effects on its profitability. Apart from being likely to lose a lot of customers, such a company may have to spend a lot of resources on law suits filed by consumers who may take unhealthy products from the company.
In the same way, the company may face stiff penalties imposed by regulatory bodies which may make it unable to continue its operations well. For instance, if a company engaging in the manufacture of drugs produces drugs that have serious side effects, the company may be closed down or fail to get important certifications. This may make the operations of the company a challenge.
How companies can improve their CSR
There are a number of suggested approaches of CSR in the discussion above. Most of the ideas mentioned above have also been expounded to show their benefits and the repercussions that could result from failure to implement them. One such approach to CSR is the conservation of the environment in the course of running the business organization.
Although the main focus of the environmental conservation ideas discussed above is on the operations of the organization, the same can be approached from a different perspective. That is, the company can do more than just ensuring that its operations do not negatively affect the environment. This can be achieved by employing a variety of approaches which may include advocacy for environmental conservation and giving support to environmental conservation efforts by others.
This support may be in form of special recognition by awards or financial support. The company can also participate in the same by partnering with regulatory bodies to ensure companies and individuals who do not comply with the rules of environmental conservations are appropriately dealt with.
Another discussed issue is the application of CSR from a health perspective. Companies need to not only ensure that their products to consumers are healthy but they should also ensure that they participate actively to health provision efforts. This may be achieved by making direct contributions to health campaigns, supporting behaviour change campaigns advocating for healthy living, sponsoring awareness campaigns for unpopular ideas of health and allowing their employees to donate their time in such campaigns.
There are also a number of other ways in which companies can be socially responsible. These include the allocation of a certain percentage of product sales to charity and helping the needy as a way of giving back to the community.
Companies may also incorporate within their policies social-based reward events for their employees as a way of showing their appreciation for the involvement of the employees in generation of revenue. Such events may include leisure trips, day offs, dinners, etc. These are bound to impact the motivation of the employees in a major way (Bartol et al, 2008, p. 35).
Role of leadership and management in CSR
Corporate social responsibility as the duty of organisations has to be incited by the top management or leaders of an organisation. The leaders have the role of instilling the need to get back to the society in their subordinates. They have to strategise and make sure that the set objectives for being responsible to the society are achieved.
A major function of the top management is to make sure that the subordinates deal with people from the society in an ethical way. The advantage of having the top management responsible is because of the reason that they are highly listened to and obeyed. Leadership and management are mostly used in organisations where authoritative style of governance is used. In that people have to be pushed to work as they cannot do anything productive on their own.
Examples of companies
Evidence of the great need to incorporate CSR in the policies and operations of companies and other business organizations has been evidenced by a myriad of companies. This has been achieved through the success of companies that appreciate CSR and the problems faced by companies that in one way or another do not uphold the ideas of CSR.
An example of such companies is BP. Despite the fact that the recent BP oil spill was somehow accidental, the same shows the laxity of the company to be socially responsible. The oil spill has severely affected the environment and life especially marine life.
The company suffered a major loss due to the spill but it is yet to face more problems due to its ignorance of CSR. It is no doubt that the spill has substantially affected the status of the company. The company’s customers have lost their trust in the management of the company and the U.S. government has also expressed serious concerns over the problem. The company is thus bound to lose a substantial number of its customer’s world over.
One of the companies that have successfully applied the ideas of corporate social responsibility is Chevron. The company has dedicated a huge sum of funds in an AIDS patient support programme in South Africa. This can be seen as an effort to help people live healthier lives as discussed in the text above.
The company is also concerned about current problems the world is facing and thus it has invested in a solar demonstration which is aimed at investigating ways in which solar energy can be used in the future. This can be seen as a response to the energy crisis facing the world today and thus it is oriented towards CSR. The company is also concerned about the intellectual welfare of people and thus it has formed strategic partnerships aimed at encouraging female students to take courses oriented towards science and engineering.
This can be seen as a good social responsibility step aimed at helping the community as well as ensuring sustenance of the industry. Chevrolet is among the few companies that are known for their efficient use of energy and thus they contribute minimally to the proverbial problem of global warming. This can be seen as a social responsibility step aimed at environmental conservation and thus the company is conscious of the need to conserve the environment for future generations.
Conclusion
As discussed in the essay above, Corporate Social Responsibility is a practice that benefits both the community and the company that practices it. The several ways in which CSR can be implemented have been discussed and the weight of each of the methods emphasized. For instance, environmental conservation is the most important part of CSR due to the past instances of environmental degradation by companies.
Ethical behaviour has also been highlighted as an important part of any successful business organization and reasons for the same given (Bartol et al, 2008, p. 35). One of such reasons is the fact that ethical corporate behaviour reduces organizational problems and builds the goodwill of the business organization.
Given the benefits that come with CSR and the disadvantages that are related to the same, companies should ensure that they set up appropriate and sufficient strategies for implementation of CSR. This is because failure to do so may result in crippling consequences to the companies.
Thus companies should set aside a portion of their capital or revenue to finance CSR costs because implementation of CSR is, in actual fact, an investment. Companies should also make sure that they uphold high standards of ethical conduct and incorporate the same in their policies for easy administration of ethical behaviour. This is because, as discussed, ethical behaviour has a lot of advantages and benefits that work to the good of any business organization.
Bibliography
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Gregory, M. (2007). Ethics in management: the good, the bad and the ugly. Journal of Management, pp. 21-54
Kotler, P. (2005). Corporate Social Responsibility. Journal of Management, pp. 103-150.
McManus, N. (2006). Ethical Behaviour, Social Responsibility and Accountability. Harvard Dissertation.
McNamara, B. (2005). Corporate Social Responsibility. University of California, pp. 13- 67
Samuelson, G. (2004). Integration of Ethical values in company policies. Journal of Management, pp. 32-39.