User:Satarupa/Temp/Social Responsibility of Managers.doc

Social Responsibility of Managers

Objective

Objective of this lesson is Explain the concept of social responsibility of business Identifying theoretical framework of SRs of managers Recognize the responsibility of business towards different interest groups.

Concept of Social Responsibility

• Social responsibility is a doctrine that claims that an entity whether it is state, government, corporation, organization or individual has a responsibility to society.
• This responsibility can be negative, in that it is responsibility to refrain from acting or it can be positive i.e. responsibility to act.
• Social responsibility is voluntary; it is about going above & beyond what is called for by the law (legal responsibility).
• Social responsibility adopts the idea of being proactive instead of reactive towards a problem.
• Social responsibility means eliminating corruption, irresponsible or unethical behavior that might bring harm to the community, it’s people or the environment concerned.

Definition

In the words of Andrews, “ By social responsibility, we mean the intelligent & objective concern for the welfare of society that restrains individuals & corporate behavior from ultimately destructive activities, no matter how immediately profitable, & lends in the direction of positive contributions to human betterment, variously as the latter may be defined.”

Features of Social Responsibility

• SR contains three types of behaviour – Positive, Neutral & Negative.
• Every person in the society has the social obligation to fulfill SR.
• It involves fulfilling obligations towards various parties (Directly or indirectly related to business) concerned with the functioning of business.
• The standards fixed for fulfilling obligations are decided as per the social norms.

Social responsibility requires identification of various interest groups which may affect the functioning of the business. Normally various groups associated with business are:

Shareholders : The first responsibility of management is towards it’s shareholders. Management is expected to use it’s resources effectively & to protect the interest of shareholders.

Workers : Management should treat workers as other cart of the wheel. It should adopt a progressive labour policy. Also it should pay fair & reasonable wages.

Customers : Management should not mislead the customers by false, misleading & exaggerated advertisements.

Creditors/Suppliers : There should be healthy & co-operative inter business relationship. Management should provide accurate & relevant information to creditors & suppliers.

Government : Management should be law abiding. It should pay all the taxes correctly & on time. It should not corrupt public servants.

Society : It should set up socially desirable standards of living & avoid wasteful expenditures. It should play a proper role in civic affairs.

Importance of SR in business

• Public Image - The activities of business towards the welfare of the society earn goodwill and reputation for the business. The earnings of business also depend upon the public image of its activities. People prefer to buy products of a company that engages itself in various social welfare programmes.

• Government Regulation - To avoid government regulations businessmen should discharge their duties voluntarily. For example, if any business firm pollutes the environment it will naturally come under strict government regulation, which may ultimately force the firm to close down its business. Instead, the business firm should engage itself in maintaining a pollution free environment.

• Survival and Growth -Every business is a part of the society. So for its survival and growth, support from the society is very much essential. Business utilizes the available resources like power, water, land, roads, etc. of the society. So it should be the responsibility of every business to spend a part of its profit for the welfare of the society.

• Employee satisfaction - Besides getting good salary and working in a healthy atmosphere, employees also expect other facilities like proper accommodation, transportation, education and training. The employers should try to fulfill all the expectation of the employees because employee satisfaction is directly related to productivity and it is also required for the long-term prosperity of the organization. For example, if business spends money on training of the employees, it will have more efficient people to work and thus, earn more profit.

• Consumer Awareness - Now-a-days consumers have become very conscious about their rights. They protest against the supply of inferior and harmful products by forming groups. This has made it obligatory for the business to protect the interest of the consumers by providing quality products at the most competitive price.

Reasons behind adopting SR by Managers

• Compelling force: Business managers fulfill their social responsibility because of the fear of public interference in business through government.

• Persuasive force: Businessmen have been persuaded to consider their social obligations

• Favourable force: The new age manager are well educated & fully acquainted with the expectations of the society. They give the required weightage to social & human values.

• Changes in business environment: The change in environment which have compelled the business to assume social responsibilities include:

1. Rise of consumerism.
2. Growth of labour movement
3. Increase in level of literacy
4. Improved communication & transport
5. Legal provision against exploitation of workers & consumers.

• Need for favourable public image: Modern business is aware of the need of good public opinion of their business to stand apart in the competition.

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Work in progress, expect frequent changes. Help and feedback is welcome. See discussion page.