BUSN 2060 Corporate Responsibility
kingmarket
Chapter1-SocialResponsibilityFrameworkPP.pptChapter 1 – Social Responsibility Framework
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Social Responsibility
- Social responsibility
- The adoption by a business of a strategic focus for fulfilling the economic, legal, ethical and philanthropic responsibilities expected of it by its stakeholders
- Businesses should look beyond their self-interests and recognize that they belong to a larger group that expects responsible participation.
- Applies to all types of businesses
Social Responsibility
- Adopts a strategic focus
- Requires a formal commitment from top management
- Communicated through mission and vision statements, annual reports, websites, and public relations
- Requires action and results
- Depends on collaboration and coordination across business and among constituencies
- Large companies often create specific positions and departments to support social responsibility programs
Socially Responsible Organization
Managerial
Approach
Business
Ethics
Stakeholder
Management
Social Responsibility Defined
- Economic
- Maintain profitability
- Legal
- Abide by legal and regulatory influence
- Ethical
- Ensure just and fair behavior in the workplace
- Philanthropic
- Promote human welfare and goodwill
Social Responsibility Continuum
Add Figure 1.5 here
Shareholder Value is No Longer Everything
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Business & Stakeholder Relationships
FCA & UAW Unethical Actions
https://www.autonews.com/video/first-shift-ex-uaw-official-accused-accepting-bribes-kickbacks
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Ex – UAW Boss Held at Gunpoint
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Lessons Learned from Economic Crises
- Transparency
- Long-term perspective
- Liquidity
- Limited use of derivatives
- Absence of rating triggers
- Diversification
Global Nature of Social
Responsibility
- Who determines social responsibility on a global scale?
- Host country
- Home country
- Outside organizations
Benefits of Social Responsibility
- Greater trust with stakeholders
- Greater customer satisfaction
- Stronger employee commitment
- Stronger investor loyalty
- Greater profitability
- Countries with greater trust-based institutions foster a productivity-enhancing environment.
- Competitive processes are more efficient and effective.
Social Responsibility Builds Trust
- Trust is the glue that holds organizational relationships together.
- Stephen Covey contends that low trust results in organizational decay and relationship deterioration.
- Political problems and inefficiency
- Most workers feel they can be
trusted more than they can
trust others.
Social Responsibility Improves Customer Satisfaction
- Focuses on customer satisfaction and strengthens trust. This is especially key in service organizations.
- 70% of consumers indicated they would switch to brands associated with a good cause if price and quality were equal.
What happens when consumer– organizational trust is breached?
- Seventy-five percent of consumers say they would avoid or refuse to buy from certain businesses.
- Consumers may avoid products from companies that treat their employees unfairly.
World’s Most Ethical Companies
http://ethisphere.com/worlds-most-ethical/
5 - Year Ethics Premium: 14.4%
128 Companies
6.75 Million Employees
50 Industries
$3.02 Trillion in Revenues
21 Countries
$6.05 Trillion in Market Cap
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Social Responsibility
Strengthens Employee Commitment
- The greater a company’s dedication to employees, the greater the likelihood that employees will take care of the organization.
- Failure to care for employees results in lower loyalty and commitment.
- Employees’ perceptions are affected by:
- Safe working conditions, competitive salaries, and contractual fulfillment
- Social programs, including work-family relationships, stock ownership, community service
What happens when
employee loyalty is breached?
- Quality is compromised.
- Service is compromised.
- Efficiency decreases.
Strengthening
Employee Commitment
- Employee stock ownership plans (ESOPs)
- Rewards employees for contributing to and gaining from organizational success and allows them to gain from it
- Employee-centered programs
- Health care benefits
- Health clubs
- Child care and elder care
- Cafeteria benefits plans
Social Responsibility
Contributes to Investor Loyalty
- Investor relationships require dependability, trust, and commitment.
- Shareholders are concerned about ethics, social responsibility, and corporate reputation.
- Half of investors sell their stock
within one year.
