Chap 13. Ethics & CSR

8/6/2019 Chap 13. Ethics & CSR

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Chapter Thirteen

Business Ethics and socialResponsibility of

organisations


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I ntroductionWhat is Social responsibility?Two views:The classical View :this view says thatmanagements only social responsibility is tomaximise profits. M.Friedman argues thatmanagers primary responsibility is tooperate the business in the best interests of the stockholders.


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I ntroductionThe So ci o ec onom ic view : The view thatmanagement s social responsibility goes

beyond making profits to include protectingand improving societys welfare.Thisposition is based on the belief thatcorporations are not independent entitiesresponsible only to stockholders. They alsohave a responsibility to the larger societythat endorses their creation through variouslaws and regulations and support them bypurchasing their products and services.


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S ocial ResponsibilityC SR can no longer be ignored anethical approach to doing business.C SR It is a relatively new line of studybut its roots go back to some of thekey philosophical debates over ethics,values, equity and equality.


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C S RC SR is viewed as a comprehensive set of policies, practices and programs that are

integrated into business operations, supplychains, and decision-making processesthroughout the company -- wherever thecompany does business -- and includesresponsibility for current and past actions aswell as future impacts.In its simplest terms it is: what you do, howyou do it, and when and what you say.


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C S Rlinked with the principles of Sustainable Development which arguethat enterprises should be obliged tomake decisions based not only onfinancial/economic factors (e.g. Profits,Return on Investment, dividendpayments etc.) but also on the social,environmental and other consequences of their activities.


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C S RThere is a growing body of data --quantitative and qualitative -- that

demonstrates the bottom-line benefits of socially responsible corporate performance.- Reduced Operating Costs- Improved Financial Performance- Enhanced Brand Image and Reputation- Increased Sales and Customer Loyalty- Increased Productivity and Quality- Increased Ability to Attract and Retain

Employees


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C S RReduced Operating Costs :Some C SR initiatives can reduce operating costsdramatically. For example, many initiatives aimed atimproving environmental performance -- such asreducing emissions of gases that contribute to globalclimate change or reducing use of agrochemicals --also lower costs. Many recycling initiatives cut waste-disposal costs and generate income by sellingrecycled materials. In the human resources arena,flexible scheduling and other work-life programs thatresult in reduced absenteeism and increasedretention of employees often save companies moneythrough increased productivity and reduction of hiringand training costs.


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C S REnhanced Brand Image and ReputationC ustomers often are drawn to brands andcompanies with good reputations in C SR-relatedareas. A company considered socially responsiblecan benefit both from its enhanced reputation withthe public as well as its reputation within thebusiness community, increasing a companys abilityto attract capital and trading partners. A 2001Environics International C SR Monitor surveyshowed that the factors most influencing publicimpressions of companies were social responsibility(49%); brand quality/reputation (40%); andbusiness fundamentals (32%).


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C S RIncreased Productivity and QualityC ompany efforts to improve working

conditions, lessen environmental impacts or increase employee involvement in decision-making often lead to increased productivityand reduced error rate. For example,companies that improve working conditionsand labour practices among their suppliersoften experience a decrease in merchandisethat is defective or cant be sold.


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C S RIncreased Ability to Attract and RetainEmployeesC ompanies perceived to have strong C SRcommitments often find it easier to recruit and retainemployees, resulting in a reduction in turnover andassociated recruitment and training costs. Even indifficult labour markets, potential employeesevaluate a companys C SR performance todetermine whether it is the right fit. For example, asurvey conducted by The Aspen Institute Initiativefor Social Innovation through Business between1999 and 2001 found more than half of MBAstudents would seek another job if they found thattheir values conflicted with the business where theywork.


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C S R-Corporate S ocial

ResponsibilitySometimes referred to as corporate citizenshipWorld Business C ouncil for Sustainable Developmentdefines C SR as the business commitment andcontribution to the quality of life of employees, their families and the local community and society overallto support sustainable economic development.C oncept is not restricted to corporations but rather isintended for most types of organizations, such asassociations, labour unions, organisations that servethe community for scientific, educational, artistic,public health or charitable purposes, andgovernmental agencies.


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C S R -casesC IEL GROUPSocial responsibility and community welfare are important values for C iel Groupand in year 2004, the group has taken long term commitment by launchingFondation Nouveau Regard.

The object of the foundation is to help the underprivileged and the drop-outs torecover their dignity and place in the Mauritian community and to become fullyfledged citizen of our country.The foundation will work closely with NGOs which through their specific actionsalso promotes universal values such as tolerance, non discrimination and equalopportunity.The foundation sphere of actions includes: relief of poverty, education & training,health, drugs, alcohol and handicap.

The foundation will, whenever possible and relevant invite NGOS to providetraining and awareness on their objects to the personnel of the C iel group andthe later will be invited to participate in volunteer work and actions.Financial assistance will only be considered on application.


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C S R -CasesBarclays MauritiusProgramme is spending 1% of its profits before tax towards community projects.Barclays sponsorship is about people. There are three schemes from which thecommunities can benefit which involve the employeesRupee for Rupee Matching: Funds between Rs 1,000 & 30,000 raised by eachemployee three times per year during an event, are matched (=doubled).V olunteer 2Day: Each employee can benefit from two free days per year to do

volunteering work. This scheme was launched in May 2004 during our PAMOJAcampaign to motivate our staff. Pamoja is a Swahili word that means 'Together wecan'. We are organising a 'bank of volunteers' that we shall plug in the needs of theorganisations around us.Make A Difference Day: each team of 5 staff benefit form funds to help. In 2003,more than 200 Barclays employees participated in this activity in 12 places aroundthe island & in Rodrigues. They were involved in painting, creating vegetablegarden, fixing furnitureWe are working with other companies under the initiative of the Joint EconomicC ouncil on a project that looks at improving the situation of ZEP schools.

PILS is benefiting from Rs 568,000 for a 7 Days Nationwide C ampaign. APEIM (Association de Parents d'Enfants Besoins Spciaux) received a Rs 1.2mdonation for new buildings in 2003.


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E thicsEthics (from the Ancient Greek " ethikos ",meaning "arising from habit"; also Morality),

a major branch of philosophy, is the study of value, or morals and morality. It covers theanalysis and employment of concepts suchas right, wrong, good, evil, andresponsibility.

H oofman and Moore (1990) define ethics asthe study of what is good or right for people.


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E thicsBusiness ethics is a form of the art of appliedethics that examines ethical rules andprinciples within a commercial context, thevarious moral or ethical problems that canarise in a business setting, and any specialduties or obligations that apply to personswho are engaged in commerce. what is

good and right to business.Debate: There is common perception that thepriority of business is to maximise profits(Friedman, 1970)


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M anagerial E thicsThe term ethics refers to rules andprinciples that define right and wrongconduct.Many decisions thatmanagers make require them toconsider who may be affected in

terms of result as well as the process.


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F our views of ethicsRights view of ethics A view of ethicsthat is concerned with respecting and

protecting individual liberties andprivileges such as the rights to privacy,freedom of conscience, free speech,life and safety. This would include, e.g,protecting the free speech rights of employees who report legal violationsby their employers.


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F our views of ethicsTheory of justice view of ethics A view of ethics which managers impose and enforce

rules fairly and impartially and do so byfollowing all legal rules and regulations.E.ga manger deciding upon providing the samerate of pay to individuals who are similar in

their levels of skills, performance or responsibility and not based on gender,personality, race or personal favorites.


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F our views of ethicsIntegrative social contracts theory- A view of ethics that proposes that ethical decisions

be based on existing ethical norms inindustries and communities in order todetermine what constitutes right andwrong.E.g a manager deciding on the pay

rate for new employees will have to consider the existing wage levels in thecommunity.(integrative social contracts)


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E thical ConsiderationsMore and more companies are, rightly, developing

and publishing value statements and code of ethics.Ethics codes :

Guiding principlesEthical standards expected by employees,examples: C onflicts of interest (Not allowed to do the same

business)

The giving and receiving of gifts (PBL) C onfidentiality Environmental pollution H ealth and safety Equal opportunities Political activity etc


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Types of UnethicalM isconduct in the

Workplace Abusive or intimidating behavior (mostcommon among senior managers)

Misreporting of hours

Lying

Withholding much needed information


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What a formal ethics

program should includeWritten standards of ethical conduct.

Training on standards on conduct.

An ethics office or telephone advice line.

A means to report misconduct anonymously


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I mproving E thical

Behaviour Managers can do a number of things if theyare serious about reducing unethical

behaviours in their organizations. They canseek to hire individuals with high ethicalstandards, establish codes of ethics anddecision rules, lead by example, delineate

job goals and performance appraisalmechanisms, provide ethics training,conduct social audits and provide support toindividuals facing ethical dilemmas.

Documents

Chap 13. Ethics & CSR