health organizations in washington dc

Corporate Social Responsibility

Meaning of CSR: – Social responsibility is fundamentally a philosophy or a vision about the relationship of business and society. It is treated as an investment and not a cost. It is a process of continuous improvement, not a fad, which begins small & grows and expands overtime. It is inextricably linked to profitability, as there can be no social responsibility without profits.

Importance of CSR: – This is a time of more Turbulence for a business & accelerating change. The challenges faced by today’s business include the following.

• Globalization of markets, consumer preferences, financial flows. Globalization is having momentous effects on the economies of all countries and on corporation in most sectors.
• Increasing intensity of competition: - The Global completion today has created more challenges and instability
• Technology: – Rapid technological changes are transferring the markets, enabling greater customization of production, & contributing to high labor displacement.
• Shift from Industrial Economy to a knowledge & information based economy. Human capital has become more important resource.
• Environmental challenges caused by pollution & resources depletion, Business are called upon to play an important role in meeting these challenges.
• Life style changes, expectation on the part of employees, customers and communication as a whole changing

Hence as the world business environment changes, so do the requirements for success & complititiveness. Because of the forces at work, building deeper and more strategic relationship with customers, supplies, employees, communities and other stakeholders can become central to competitiveness & survival. Building these relationships can form the foundation of new, progressive & people centered corporate strategy. This brings us to the increased importance of CSR.

Now having understood the meaning & importance of CSR let us understand the responsibility of corporations towards its stakeholders. Hence CSR is all about how to manage these responsibilities.

 

Stakeholders

 

     Internal                                                                                                      External

 

- Shareholders                                                                                               – Consumers

- Employees                                                                                                   – Suppliers

- Management                                                                                                - Creditors

                                                                                                                       - Competitors

                                                                                                                       – Environment

INTERNAL STAKEHOLDERS:

 

(i) Shareholders: – Share holders are the members of the company who help to achieve the company’s goals by investing in the business. They are entitled to the share in the profits of the company. This share of the profits is given to the shareholders in return for their investments in the form of shares. Hence the organization must honor the trust of the shareholders, therefore the responsibilities of the organization towards shareholders are:-

1. Managing company effectively in order to secure fair & competitive return on the owners’ investment.
2. Disclosing relevant information to shareholders.
3. Conserving, Protecting & increasing the shareholders asset.
4. Respecting the shareholders requests, suggestion, complaints & formal resolution.

 

Also, shareholders, also have certain obligation towards the organization which include.

 

1. Maintaining good relationship with management.
2. Exercising their voting rights.

 

(ii) Employees: – The relationship between employee and organization is considered to be important by society, because employees contribute their efforts and time towards the development of organization, which in turn improver society. In return of their work employees’ not only expect wages, but also security. Most Japanese firms provide security to their employees by offering lifetime employment.

Both business & employees have certain responsibilities towards each other. To foster a sense of belonging among all employees, organization should maintain a healthy work environment, where the employees & employee fulfill their responsibilities.

Some specific responsibilities of organization toward their employees are

1. To provide adequate compensation
2. To provide working conditions, that respect each employee’s health & dignity.
3. Open & honest communication with employees.
4. Listen & act to employees’ requests, suggestion, ideas & complaints wherever possible.
5. Generate equal treatment & opportunity regardless of gender, age, race & religion.
6. Encourage & assist employees in developing skills & knowledge that are required for accomplishing the task.

(ii) Management: – Any decision taken by the management has an impact on the stakeholders. On the one hand, management’s stakes are like that of employees, with some explicit & implicit employment contract. But, on the other hand, management are entrusted with the duty of safeguarding the welfare of the corporation. In short, the role of the management involves in balancing the multiple claims of different stakeholders.

 

EXTERNAL STAKEHOLDERS:

(i) Consumers: – Consumers / customers exchange resources for the products of the firm and in return receive the benefits of the products. Customers help in survival of the company. By paying attention to the customers needs, management automatically addresses the needs of suppliers & owners.

            The responsibilities of corporations towards their consumers are supplying right quality, right quantity product / service at right time, at right place and at right price.

Few responsibilities of organizations towards the consumers are

1. Producing goods / service according the needs.
2. Improving standard of living by producing goods & services of high quality.
3. Treating customers fairly in all aspect of business transactions.
4. Customers’ satisfaction in essential for the success of a corporation. Customers increase sales of a product by spreading positive “word of mouth†about the company product or brand.

(ii) Suppliers: - Often, suppliers are not included in the list of a firm’s stakeholders. But suppliers play a pivotal role in the success of any business since raw material they supply will determine the final products quality & price.

In this era of global competition, ability to control costs rather than the ability to increase sales in the key to profitability. Good relationship with suppliers can reduce costs.

In many instances, major companies have refused to use certain suppliers because of unethical act. Levi Strauss, the famous clothing firm refused to use suppliers from china because of allegations covering the use of forced child labor by Chinese suppliers.

A company’s relationship with suppliers and subcontractors must be based on mutual respect. When dealing with suppliers, organization must.

1. Seek fairness & truthfulness in all activities, including pricing & licensing.
2. Ensure that business & activities are free from coercion & unnecessary litigation.
3. Foster long-term stability in the suppliers’ relationship in return for value, quality, competition & reliability.
4. Share information with suppliers & integrate them in the planning processes.
5. Pay suppliers on time & in accordance with agreed terms & trade.
6. Seek, encourage & prefer suppliers & subcontractors whosr employment practices respect human dignity.

(iii) Creditors: - Creditors play an important role in organization. Usually organization buy goods on credit from suppliers, organization often delay in repaying credit to the creditors. The late payment of creditors has become a common problem all over the world. In Aug 1992, trade indemnity conducted a quarterly survey of 700 UK firms. The survey revealed that large firms with a turnover of 50 million pounds were paid on an average, 15 days late, while small business firms with a turnover under 25 million pounds were paid, on an average, 29 days late. It is the responsibility of the organization to make timely payment for goods that have already been delivered.

(iv) Competitors: – Business Corporations are equally obliged to other business firms as they are towards stakeholders. In this era of competition the firms compete with each other to grab a major share on all possible fronts. In this connection, the competitive practices adopted by firms can sometimes be questionable.

Therefore the responsibilities of the organization towards the competition are

1. Refrain from either seeking or participating in questionable payments or favors to secure competitive advantage.
2. Respect both tangible & intellectual property right.
3. Refuse to acquire commercial information by dishonest & unethical means.

(iv) Community: - The community gives the business the right to build or rent facilities, benefit from the tax revenues raised in the form of local services; infrastructure etc. In return for these services, the firm should act in a responsible way. The firm can’t expose the community to unreasonable hazards in the form of pollution and toxic waste.  A firm’s responsibility towards the society includes.

1. Respecting human rights.
2. Supporting public policies and practices that promote human development through harmonious relation between businesses.
3. Collaborating with such activities that aim at improving the standard of health, education, workplace safety and economic well being.
4. Promoting and stimulating sustainable development and playing a leading role in preserving and enhancing the physical environment and conserving the earth’s resources.
5. Encouraging charitable donations, educational and cultural contribution and employee participation in community & civic affairs.

Role of Business in society:

Critics of the role of business in society argue that,

1. Corporation care little for the welfare of the workers, and given the opportunity will move production to sweatshops in less regulated countries.
2. Unchecked, companies will squander scarce resources.
3. Companies don’t pay the full cost of their impact. For example, cost of cleaning pollution often fall on society in general. As a result profits of the corporations are enhanced at the expense of social or ecological welfare.
4. Regulations in the best way to ensure that companies remain socially responsible.

Present day businesses are expected to shoulder much more social responsibility. The effectiveness of the organization now a day depends on its ability to develop itself into a social organization. Corporate responsibility is considered the building block for any organization. As a result, organizations are evolved overtime to perform no of tasks in society. These are

(i) Financial tasks: – Corporations are required to assure shareholders that they are acting in their interest. Thus the organizations need to be transparent in their financial matters, so that investors can invest with confidence.

(ii) Economic & Production tasks: – The tasks related to the creation & maintenance of wealth are referred to as economic & production tasks. All businesses that make up commercial world are associated with economic & production tasks. Companies in trying to maximize returns for shareholders may monopolize markets by buyouts, mergers, & unfair practices like market manipulations. Economically responsible corporations will always refrain from monopolizing the market.

 (iii) Maintenance tasks: – The examples of such activities are educational, religious & health welfare services. These are helpful in transmitting information to society, communicating knowledge & shaping the culture of the society. For example Microsoft Corporation announces donation of more than $1.7 million to software to ten national non profit organizations.

(iv) Adaptive tasks: – It means how organization adopts to the changes in the society. Organizations create products that are useful for society and these products are designed in accordance with changes in consumer preferences.

(v) Management tasks: – Corporations are expected to support and promote human rights, not to suppress basic freedom of speech, association etc. In some countries, businesses encounter problems because of the violation of human right. Since the primary responsibility of any organization is to operate efficiently, respecting the interest of the stakeholders. Companies can achieve this by upholding local laws in which they operate & must frame policies that are towards corporate social responsibility and should be available to all the stakeholders.

(vi) Environmental tasks: – Environmental tasks are necessary to curb certain unethical practices. Most companies have none established regulations to limit pollution by their factories. These all essential to prove a company’s commitment to CSR. Most of the industry associations have also established environmental codes of conduct. Companies have to develop detailed guidelines, policies to govern their activities and behaviors. These standards have to become part of the company’s everyday practice.

The Social Challenge:

            A business is viewed as a profitable process of production, distribution & sale of goods & services. The idea of business having certain responsibilities beyond profit making gained importance in 19th century.

            Private sector organizations can’t perform effectively in all the corporate responsibility activities like social tasks, economic tasks that include creation of job etc. Not all the organizations can perform effectively in fulfilling their tasks to the community. There are shortages in certain areas & limitations on application elsewhere, but their scope can be expanded by mutually beneficial partnership between companies & non profit organization for improving the community. In fulfilling these social responsibilities companies must select projects carefully & then ensure that sustained involvement & quality management backs them.

            Clutterbuck has proposed a systematic approach for managing such activities as follows.

            A company should first audit its resources and capacity so that it can add real value to its activities. It means,

1. Set practical, clear & achievable goals.
2. Identify primary aim of the program
3. Clearly identify what not to support.
4. Have fixed budget for specific program.
5. Appoint specialist and other staff for organizing and delivering the support.
6. Install system for report evaluation, feedback & change.
7. Processed information obtained from these activities have to be updated on a regular basis.

Besides taking up specific projects for fulfilling their social responsibilities, the corporate sector is also expected to create wealth & jobs. Different stakeholders of the company have different expectations of the company.

Table shows the expectation of the major stakeholders of a company.

Stake holders

Expectations

Primary

Secondary

Owners

Financial returns

Added value

Employees

Pay

Work satisfaction

Customers

Supply of goods & services

Quality

Creditors

Credit worthiness

Security

Suppliers

Payment

Long-term relationship

Community

Safety & Security

Contribution to community

Government

Compliance

Improved competitiveness

 

Fulfilling these expectations is a challenge for the organization. In Britain the success of the organization is based on how well it is accepted by the local community. Sometimes aim of the industry and community doesn’t match. This can result in hostility from the local community. To avoid hostility and to gain the support of the local groups companies can undertake activities that promote the welfare of the local community. The body shop owned by Anita Roddick won the goodwill of customers around the world by convincing them that the products were natural & that no animals have been used for testing their products.

Enterprises also have to face political pressure. Today there are many consumers groups that all building awareness among the general public about the responsibilities of corporation.

Standards & Values:

            Business operating with social responsibility should have standard rules & regulations for efficient functioning. There are various examples where organization have undergone ethical dilemmas for e.g. When CFC was introduced for the usage in refrigeration, it had no knowledge of the long-term environmental impact.

            Another example is in recent days the coca-cola has been criticised for having pesticides in the bottles, & also it was criticized for on other two major courts, the use of environmentally harmful hydroflurocarbons (HFCS) in Coca-Cola refrigerator & the one of environmentally harm caused by discarded coke bottles. In response to these, Coca-Cola announced it was committed to phasing out HFC refrigerators by 2004. These examples illustrator that, organization may not always be aware of the consequences of using a particular component in manufacturing a product. As implications and consequences of this decision become more evident manager are faced with challenge of ethical dilemmas. By establishing clear value systems organization can internalize responsibility.

To avoid ethical dilemmas manager can follow the approaches and mentioned:

1. Set a clear example
2. Publish code of ethics
3. Use reward and punishment mechanism
4. Include thick in all activities.
5. Reinforce policies through training & development
6. Establish openness & transparency into decision making process

To become a sum full with this, organizations have to liberalize behavior and at the same time ensure that employees behave responsibility

Through leadership at all levels, sustain a culture where ethical conduct is recognized valued and exemplified by all employees.

Example:

GE code of conduct  

1. Obey the applicable law and regulations governing our business conduct worldwide.
2. Be honest, fair and trustworthy in all yours GE activities and relationships.
3. Avoid all conflicts of interest between work and personal affairs.
4. Foster an atmosphere in which fair employment practices extend to every member of the diverse GE community
5. Strive to create a safe work place and to protect the environment.

The Accountable business: The later 1990s have seen a massive growth of interest in corporate responsibility both among major corporations and across society. Concern about the social and ethical implications of organizations perceived as performing unusually well or badly.

Corporate performance on social and ethical, as well as financial, accounts can’t be hidden at least the large corporations. Demands for transparency, accountability & public reporting are steady increasing.  As royal Dutch/ Shell have recognized, business has moved from a “trust me†world to “tell me†and increasingly “show me†world.

For the poor performers, especially the big ones, there is no place to hide, hence accountability looks at how business develop a corporate strategy that responds to stakeholders expectation, while ensuring long term profitability.

A process model for managing corporate responsibility and accountability

1. Identity company values & aspirations : This involves understanding what the company’s foundation values and missions are, understanding how the vision differs from the current reality, and making top level commitment and leadership visible throughout  the organizations
2. Identifying shareholders & issues on which to focus : There are clearly far too many stakeholders and far too many issues to handle in detail. Hence it is necessary to identify the key stakeholders & the most important issues so that attention can be focused on these. This selection process be clearly identified & it should be documented for selecting a particular issue.
3. Select indicator & targets: This means select what to measure. Clearly it is also important to select targets so that performance can be measured & improved with time.
4. Data collections & analysis: For the purpose of an external report, it is helpful to balance quantitative data and stakeholder’s testimony. Existing information can be combined into a suitable audit framework & methods from other fields, such as environmental assessment, can be used to gather information on social issues.
5. Disclosure, performance appraisal & reporting: If a report is to make impact, it is important to be prepared to address controversial topics and to discuss the “undiscussable†– It is possible to take outside stakeholder by surprise by the honesty & openness of the published report.
6. Verification & review : External verification adds considerable value to a request & ultimately might be combined with a verification of financial environmental report. It provides and opportunity for comparison with external good practice and helps to give assurance to stakeholders that consultation procedures & other process are reliable. In addition to enhancing external credibility it allows recommendation on strength and weakness and areas for management action to be identified and appropriate changes put in place so that performance can be improved next time around.

 

Examples:

CSR initiative at INTEL

Overview: – Intel, challenge the status quo in everything they do. Over the past years Intel has worked to be more clear about what corporate responsibility means to them, By being clear about their priorities and the way they communicate them.

2005 highlights

Towards Education

1. Trained more than 800,000 teachers as part of INTEL teach to the future development program – for a total of more than 3 million trained worldwide since 2000.
2. Strengthened professional developments with several new Intel teach to the future program offerings.
3. Reached 1, 35,000 learners through Intel learn program.  Intel’s after school program in government funded community technology centers.
4. Opened the 100th Intel computer clubhouse in Washington DC
5. Celebrated achievement of more than 1,400 young scientists from record 45 countries the ninth annual Intel International Science engineering fair.

Towards Environment:

1. Began to publish quarterly environmental health & safety (EHS) performance indicator
2. Announced that, energy efficiency will be key focus in product development. For Ex. The INTEL core Due processor is 35% more energy efficient that Pentium M Processor
3. Worked with industry peers to reduce energy consumption of note book LCD screens by approx 40%.
4. Reduced energy consumptions by 15% per production unit from 2004.
5. Further reduced hazardous materials such as lead in products, and recycled 57% of chemical waste & 75% of solid waste.

Towards Community:

          Set new records for employee volunteerism and coordinated more than 35 projects involving thousands of Intel employees to support global earth day at INTEL sites around the world.

1. Launched the Digital transformation initiative for the Middle East.  A comprehensive multi years  program expanding economic education & technology related support throughout  the region
2. Piloted the community PC & farmer PC, which are designed to meet the specific needs of rural remote & agrarian based communities in developing geographies.
3. Provides digital health care technology to village resource centers and mobile clinics  in India & china
4. Provided substantial financial,  employee & technology support for disaster  relief

Intel comments:

             As a part of our effort to be leader in corporate responsibilities, we believe in providing our stakeholders with accurate and thorough information regarding our performance on key social & environment issues. We are proud of the work we do in support of the environment, education & our communities. Our goal is to be an open & transparent company.

ITC’s  E-Choupal Initiative:

             ITC has come-up with a path breaking e-choupal intervention to provide information power to millions of farmer & rural folks in their vernacular languages. Information on weather forecasts, expert knowledge on best farming practices, agricultural input etc, are provided to the farmers. ITC’s e-choupal initiative has recently won the first world business award instituted by the international chamber of commerce at  UNDP & HRH prince of Wales international business leaders forum.

           ITC has also invested in rain water harvesting to bring the much required irrigation to the parched dry lands.

           ITC has been empowering rural women & helping them to evolve as entrepreneurs.

           ITC has also invested money for improving condition of village schools & make them more interesting for rural kids.

       Hence, ITC has been able to create a major impact in terms of its image among rural folks, which is slowly building the faith of rural consumers in its products & services.

 Conclusion:

           As the world business environment is changing, the requirement for staying & succeeding in business is also changing. As a result large corporations are emphasizing the maintenance of strategic relationship with different section of the society. Hence the corporate social responsibility embraces multiple stakeholders. In today’s world corporations can’t isolate themselves from society in which they are operating, rather they are linked to the social, ecological & human fabric & therefore they are responsible in varying degree to all stakeholders. Companies with good social & environmental records perform better in the long run than those that don’t behave responsibility.

            The article discussed about the various tasks of the organization. The social challenges of the organization have been discussed also the stanadard & values that an organization have to follow have been discussed.

            Finally it is discussed about how to measure the social responsibility. What are the different steps which can be used to measure performance.Lastly the paper discussed the 2 success stories.

About the Author

Anand D. Malaji
BE(Mech),MBA(operations)

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