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CHAPTER 1

Social Responsibility

Framework

Social Responsibility

Framework

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95% of Respondents Agree

U.S. corporations should have more than one

purpose. They also owe something to their

workers and the communities in which they

operate, and they should sometimes sacrifice

some profit for the sake of making things

better for their workers and communities.

Source: "How Business Rates: By the Numbers, Business

Week, Sept. 11, 2000, pp. 148-149.

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What do you believe organizations

should be responsible foraccomplishing?

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Social Responsibility Defined

Social responsibility

The adoption by a business of a strategic focus

for fulfilling the economic, legal, ethical and

philanthropic responsibilities expected of it byits stakeholders

Businesses should look beyond their self-

interests and recognize that they belong toa larger group that expects responsible

participation.

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Social Responsibility Defined (cont.)

Applies to all types of businesses

Small businesses

Large businesses

Sole proprietorships

Multinational corporations

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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 anddepartments to support social responsibility programs

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Fulfills societal expectations

Provides a return on investment for owners

Obeys the law and regulatory agencies

Acts in a just, fair, and correct manner

Promotes human welfare and good will

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TOTO Corporate Responsibility Committee

Strctre

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!yramid of Social Responsibility

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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

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Social Responsibility Continm

Add Figure 1.5 here

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Who are the key

stakeholders of the organization?

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Requires a stakeholder orientation

Customers

Employees

Investors

Stockholders

Suppliers

Government

Communities

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Sta"e#olders

Those constituents who have a stake in,or

claim on,some aspect of a companys

products, operations, markets, industry, and

outcomes

Companies that operate with a stakeholder

orientation recognize that business and society

are interpenetrating systems, in that eachaffects and is affected by the other.

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$oltion of Social Responsibility&'9s*'9+s

1940s

Economic dominance of corporations

Total autonomy of top management

1950s60s Few formal governance procedures restraining

management actions

Organizational charitable giving expanded

(charities, arts, culture, and community) Laws are passed that require protection of the natural

environment, safer products, promotion of equity,

and supportingworkplace diversity.

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$oltion of Social Responsibility&'9,s*'9-s

1970s

World competition, bankruptcies, mergers and

acquisitions

1980s

Flatter organizations (downsizing)

More business scandals

Empowerment of lower-level employees

Focus on profitability and economies of scale

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$oltion of Social Responsibility&'99s*s

1990s

Less employee loyalty and increased job hopping

Growth of temporary employment

Greater interest in ethics and social responsibility 2000s

Special interest groups, companies, human rights activists,

and government strive to balance economic and social goals.

Major scandals damage the global economy.

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/essons /earned from $conomic

Crises

Transparency

Long-term perspective

Liquidity Limited use of derivatives

Absence of rating triggers

Minimal counter-party exposure Diversification

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0lobal 1atre of SocialResponsibility

Who determines social responsibility

on a global scale?

Host country

Home country

Outside organizations

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2anaging Social Responsibilityin 3ome and 3ost 2ar"ets

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4enefits 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.

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Social Responsibility 4ilds Trst

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.

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Social Responsibility 4ilds Trst(cont.)

All organizational members should share a

sense of trust.

Trust should exist between departments

within a firm.

An Ethics Resource Center study shows that

93% of employees who say trust is

frequently evident in their organization

report satisfaction with their employer.

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To Trst or 1ot to Trst

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Social Responsibilitymproes Cstomer Satisfaction

Focuses on customer satisfaction and

strengthens trust. This is especially key in

service organizations.

Seventy percent of consumers in a

Cone/Roper poll indicated they would

switch to brands associated with a good

cause if price and quality were equal.

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6#at #appens 7#en consmer*organi8ational trst is breac#ed

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.

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Social ResponsibilityStrengt#ens $mployee Commitment

The greater a companys 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-familyrelationships,stock ownership, community service

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6#at #appens 7#enemployee loyalty is breac#ed

Quality is compromised.

Service is compromised.

Efficiency decreases.

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Strengt#ening$mployee 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

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Social ResponsibilityContribtes to nestor /oyalty

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.

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Social Responsibility$n#ances $conomic !erformance

Does business conduct relate to a

nations overall economic conduct?

Economic well-being is promoted by:

Trust and a sense of community

Rigor in the legal and ethical systems

Consistent exercise of authority within society

Social institutions that foster access,

productivity, and economic growth

Positive attitudes about work, innovation,

savings, and profits

A t# f ll i i

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Are t#e follo7ing companiesconsidered socially responsible6#y or 7#y not

Procter & Gamble

Washington Mutual

Starbucks General Motors

Avon

AIG

McDonalds

Coca Cola

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:rame7or" for StdyingSocial Responsibility

Chapter 2

Strategic Management of Stakeholder Relationships

Chapter 3

Corporate Governance

Chapter 4

Legal, Regulatory, and Political Issues

Chapter 5

Business Ethics and Ethical Decision Making

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:rame7or" for StdyingSocial Responsibility (cont.)

Chapter 6

Strategic Approaches to Improving Ethical Behavior

Chapter 7

Employee Relations

Chapter 8

Consumer Relations

Chapter 9

Community Relations and Strategic Philanthropy

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:rame7or" for StdyingSocial Responsibility (cont.)

Chapter 10

Technology Issues

Chapter 11

Sustainability Issues

Chapter 12

Social Responsibility in a Global Environment

01thorne b&s 4e ch01

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