Social responsibilities
Social responsibility is accepting responsibilities to the various publics of an organisation which go beyond contractual/legal requirements.
Social responsibility is expected from all types of organisations.
Legislation is sometimes required to force social ends. Organisations should avoid the need for legislation by taking earlier self-regulating action.
Responsibilities, ethics and values
Responsibilities are owed by an organisation to various stakeholder groups. It is society who decides whether they are going to take their responsibilities. An organisation also has responsibilities to obey the law, and to act ethically.
Ethics refers to an accepted code of conduct within a society. Accepted code of conduct may differ in between nations.
Values represent what an organisation stands for. An organisation holds values which society considers good or bad.
Social responsibility and business objectives
Institutions like hospitals exist because they are desirable social objectives by government and the public. However, how far does it leave businesses?
Milton Friedman argues that management of a business has the only social objective of maximizing wealth for its shareholders. The arguments include:
- The assets of the company are the shareholders’ property. Management has no right to reduce the return to shareholders;
- Management’s job is to maximise wealth as this is the best way that society can benefit from business’s objectives;
o Maximising wealth increases the tax revenues available to the state to meet socially desirable objectives;
o Trickle down effect on the disadvantaged members of society;
o Shares are owned by pension funds;
- Social responsibility reduces competitiveness;
- Social responsibility has an opportunity cost;
- Economists state that resources are allocated most efficiently by price mechanism.
Anglo-Saxon view of corporate activity:
- Rights of legal ownership take precedence over all other interests;
- A business’s only relationship with the social environment is an economic one.
Henry Mintzberg argues that simply viewing organisations as vehicles for shareholder investment is naïve
- Organisations are rarely controlled by shareholders;
- Large corporations manipulate markets;
- Businesses receive government support;
- Strategic decisions have wider social consequences. The firm produces two outputs:
o Goods and services;
o Social consequences of its activities.
Social responsibility is a way of recognising the social cost of their activities.
These external costs are met out of general taxation but has the effect of spreading the cost amongst other individuals and businesses.
Businesses should give to charity and sponsor events because:
- Giving charity is a way of encouraging a relationship with the public;
- Charitable donations and sponsorships are a medium of establishing public relations as it reflects well on the business.
Social responsibility in the long term benefits the organisation. Enlightened self-interest leads to ethical decisions which avoids conflict between objectives of the organisation and ethical obligations.
Ecological improvements cost money. Savings at the margin become more expensive. People regard a company in a better way if they see it doing something to make the world a better place.
Responsibilities to employees
Principles have to be converted into practice, and should take the form of good pay and working conditions, and good training and development schemes. It should also extend into:
- Recruitment policy;
- Redundancy and retirement policies.
Recruitment of new staff has to be done carefully. Dismissals will be inevitable in large organisations but recruitment methods should keep these to a minimum.
Staff who are about to retire should be provided for in their retirement
- Organisation might have a pension scheme;
- Organisations provide training courses for employees who are coming up for retirement to help them plan their future.
Redundancies are a difficult problem .there may be occasions when parts of the business have to be closed down. In such a situation the organisation may:
- Redeploy as many staff as possible;
- Retraining.
For those made redundant the organisation should take steps to help them get a job elsewhere by:
- Counselling individuals;
- Provide retraining;
- Arranging job fairs;
- Providing good redundancy payments.
Responsibilities to customers
Ethical responsibilities to customers are those of providing a product/service of quality and dealing honestly and fairly with customers. These responsibilities coincide with the organisation’s marketing objectives.
Organisations have run into trouble over their failure to respond to a customer’s wider needs.
Responsibilities to suppliers
Responsibilities of an organisation towards its suppliers are expressed in trading relationships:
- Organisation must not use its power unscrupulously;
- Organisation should not delay payments to suppliers;
- Information obtained from suppliers should be confidential;
- All suppliers should be treated fairly
o Giving potential new suppliers a chance to win business;
o Maintaining long-standing relationships with suppliers.
Responsibilities to competitors
Responsibilities regarding competitors are not only about ethics. There is law involved which includes fair trading, monopolies, mergers, anti-competitive practices, abuses of market position and restrictive trade practices.
Competition is not as intense as might be expected. Co-operation between competitors occurs in many industries.
Responsibilities towards the competitors
An organisation is responsible for:
- Upholding the social and ethical values of the community;
- Contributing towards the well-being of the community;
- Responding constructively to complaints from local residents/politicans.
There is a line to be drawn between:
- Socially desirable objectives;
- Organisation’s moral duty.
The societal marketing concept
True marketing is rarely practised, and the proper wants of the consumer are ignored. There is reason that states that the goods and services of organisations are against the long-term interests of society. This is due to the fact that certain costs are not identified.
Marketing should aim to maximise customer satisfaction within the constraints the firm has towards society and to the environment. There is a need to make efficient use of the world’s scarce resources:
- Products consume energy which could be made more efficient;
- It is possible to extend the life of certain products;
- Products may be built smaller which thus use less materials.
Kotler suggests that the societal marketing concept should replace the marketing concept.
The societal marketing concept is a management orientation that holds that the key task of an organisation is to determine the needs and wants of target markets and to adapt the organisation to delivering the desired satisfactions more effectively and efficiently than its competitors in a way that preserves/enhances the consumers’ and society’s well-being.
Ethics
Marketing ethics and social responsibility are not the same.
Society wants but does not demand that organisations not act in a way that will harm the public.
Marketing ethics are on the other hand functionally specific and relate to morality rather than society’s interests.
Morality is an individual judgement about what is right and wrong. Marketing ethics affect customers. Marketing ethics concerns marketing decisions while social responsibility is about marketing decisions.
An ethical issue is defined as an identifiable problem , situation/opportunity requiring an organisation to choose from several actions that must be evaluated as right/wrong, ethical/unethical.
Ethical codes
Businesses specify the ethical standards they are following. Some have established an ethical code which is a formal declaration of their principles and rules of conduct.
Such codes do not provide specific guidance and sometimes conflict with the priorities of the commercial world.
Ethical standards of individuals may force them to act against the organisation of which they are part. Whistle blowers are individuals who feel they must adhere to these principles when it goes against the interests of the employer.
Businesses adhere to moral principles which are utilitarian i.e. moral behaviour which produces the greatest good for the greatest number. When benefits exceeds costs the behaviour is ethical. It is however often used to justify behaviour which appears to be unethical/social consequences.
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