Introduction
Corporate responsibility narrows down to business ethics that business entities practice. It has three major aspects including ethical behavior of staff, good corporate governance, and transparency in corporate dealings. Each company usually has its own set of core values, which touch and affect every stakeholder of the business entity.
Though the main objective of business organizations is to maximize profits, they cannot leave out the service they owe to the public, shareholders and the community in which they operate. Therefore, corporations are held responsible by the governments, as well as the public.
Corporations should try to make a good image as they have to consider how they are viewed by the world at large regarding how they deal with customers, shareholders, and employees (Mullerat & Brennan, 2011). Therefore, corporate responsibility does not only impact on the local community, but also on the world affecting the social, economic, and environmental factors of life.
For maximum profitability, companies have to manage their corporate responsibilities properly. Failure to respond, they face heavy charges for damaging the environment. In addition, the employees get detached to their jobs. Furthermore, they may have conflicting interests with the business entity and loss of customers to competitors who have their responsibilities checked (Blowfield & Murray 2011).
Corporate responsibilities
According to Cannon (1994, p. 20), corporate responsibilities include various aspects that include:
- Corporate social responsibilities:
These are social responsibilities by a business entity to the surrounding community such as cleaning the streets, participating in games with the local community, and sponsoring needy students to get an education.
- Environmental responsibility:
The business entities have a corporate responsibility to keep the environments in which they operate healthy, clean, and safe for the entire living organisms to exist without any problems.
- Dialogue and Transparence:
The entities owe honesty and transparency to the stakeholders. The business entities should hold meetings with the stakeholders regularly to ensure that they are well conversant with the dealings of the organization. The financial books of the organization should be available to all stakeholders.
- Responsibility of employers:
Employers should treat all employees fairly and with respect. They should ensure that they cooperate with local governments by paying taxes due to them. They should allow global diversity in their entities such as allowing employees from all walks of life and accept their different talents and skills. They should also reward them accordingly without discrimination (Hasson 2009).
Managing Corporate responsibilities
To manage corporate responsibilities, business entities need to have in place a quality strategy that can enable them to manage these responsibilities. The strategy should be based on integrating corporate responsibilities with the business strategies (Mullerat & Brennan, 2011).
This will include focusing on the stakeholders’ engagement and their satisfaction and systematically measuring and managing corporate responsibility performance in the business entity. The strategy of managing sites responsibilities plan, a corporate responsibility management system, a policy framework and its guiding principles (Tuccille 2003).
Guiding Principles
The business entity ought to have principles that are anniversary accepted by all the stakeholders. The principles should be based on the areas of human rights. Mostly, this touches on the general equal treatment of stakeholders regardless of opinion, gender, race, ethnic group or status.
Labor touches on the treatment of the labor force in the business entity. The principle on the environment should be geared towards avoiding environmental pollution be it through noise, air, and water or land pollution. The anti corruption principle is the guiding the entity about any corrupt deals. Notably, corrupt deals may lead to failure of the business entity (Cannon 1994).
Policy framework
This element expresses policy obligations in critical aspects of corporate responsibilities. Human rights policy may come clear regarding indigenous people, use of water and climate changes in the environmental policy. Policy framework ensures the entity’s corporate responsibility (Cannon, 1994).
Corporate responsibility management system
Business organizations have many activities. Thus, it is important for them to have a mode or method of communicating their expectations and measuring their performance in corporate responsibility. The health and safety management system is measured against the international standards or through other internationally accepted standards that ensure worker health and safety of the personnel.
The environmental corporate responsibilities are also measured against International standards that protect the environment. The system of ensuring continuous improvement in corporate responsibilities to have a competitive edge in business (Cannon 1994).
Setting the corporate responsibility plan
To succeed in managing corporate responsibilities, a specially identified approach is required in the business operations. The approach has four elements that guarantee proper management of Corporate Responsibilities (Business Roundtable 1981).
- Engagement:
This is where by any developments regarding the business entity is communicated to all stakeholders. They are also involved in the decision making processes and all the ongoing activities of the entity. Engagement of stakeholders maintains the spirit of transparency and honesty in the organization.
- Evaluation:
This is an analysis of the engagement’s feedback, the community aspirations and expectations, resources and the entity’s impact on the community.
A systematic analysis is done on socioeconomic data and other crucial information in order to improve on the corporate responsibility strategy. Evaluating finds out the social and economic impacts of the business entity in the surrounding community. It also gets to know the perceptions of stakeholders.
- Action:
They are strategic initiatives based on the evaluations of stakeholders’ interests and concerns. Gauging these initiatives with the international standards is also critical. The actions are designed to assist the business entity in acquiring more benefits, as well as benefits for stakeholders and for the community in which the operations take place (Barrett 2009).
- Monitoring:
Regular checkups should be done on the corporate responsibility initiatives to ensure their effectiveness. Both qualitative and quantitative measurements should be done to ensure progress and areas that require improvement (Effiong, Akpan, & Oti, 2012).
Governance
Management of corporate social responsibilities demands the input of every employee in a business entity. To help focus on the key objective of the business, there should be a body set aside to manage the corporate responsibilities.
The body should have a structure just like in other departments as it is a crucial body in an organization and plays a crucial role of maintaining a social license to operate (Business Roundtable 1981).
Measuring Performance
Progress need to be checked regularly so as to gauge whether the entity is improving, lagging behind or stagnating in matters of corporate responsibilities. Corporate responsibility management performance is measured through three strategic ways (“United Nations Conference on Trade and Development” 2008).
- Lagging Indicators:
The department mandated with managing corporate responsibilities is expected to deliver by meeting, and if possible exceed the environmental, health and safety regulatory requirements or measure up to the set standards.
There are various ways in which the achievement of these standards can be measured. This can be achieved through lagging indicators. Enforcement actions can also be used to measure the achievement of these standards. The indicators are not there if the entity performs up to expectations (“United Nations Conference on Trade and Development” 2008).
- Leading Indicators:
Usually, it is for health band safety of employees. It also includes internal inspections. In addition, it includes employee training on various aspects (Hasson 2009).
- Auditing:
Performance is assessed against the set standards and expectations of the corporate responsibilities. This is done through a comprehensive internal auditing program which thoroughly measures success and identifies areas that need improvement. The audit is carried out regularly such as in every two years.
Performance is also measured through other ways such as internal perceptions. Performance may also be measured by assessing community feedback and perceptions through stakeholder surveys and other formal and informal ways (Idowu & Filho 2008).
Conclusion
Managing corporate responsibilities have many benefits ranging from the entity’s profitability, stakeholder satisfaction and achieving a healthy environment. All business entities should keep corporate responsibilities for their own good and the good of the nation at large.
Poor practice of corporate responsibilities can be very expensive. In this case, the misdeeds pile up, and they have to be corrected at some point, which is a very expensive venture. In this case, it may have cost the organization a lot time and resources and valuable stakeholders of the entity.
Reference List
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