Social Responsibilities of Management
The term social responsibilities can be defined as the obligation of
management towards the society and others concerned.
Reason for SocialResponsibilities: Business enterprises are
creatures of society and should respond to the demands of society. If the
management does not react to changes in social demands, the society will either
force them to do so through laws or will not permit the enterprise to survive.
Therefore the longterm interests of business are best served when management
assume social responsibilities. The image of business organization liked with
the quality of its products and customer service and the extent to which it
fulfills the expectations of owners, employees, consumers, government and the
community at large. For longterm success it matters a great deal if the firm has
a favourable image in the public mind. Every businessenterprise is
a organ of society and its activities have impact on the social scene.
Therefore, it is important for management to consider whether their policies
and actions are likely to promote the public good, advances the basic values of
society, and constitute to its stability, strength and harmony.
Increasing concern for the social responsibility of management, it is now
recognized that besides taking care of the financial interest of owners,
managers of business firms must also take into account the interest of various
other groups such as employees, consumers, the government and the community as
a whole. These interested groups are directly or indirectly affected by the
pursuit of business activities and they are the stake-holders of the business
enterprise.
Responsibility towards
owners: The
primary responsibilities of management is to assure a fair and reasonable rate
of return on capital and fair return on investment can be determined on the
basis of difference in the risks of business in different fields of activity.
With the growth of business the shareholders can also expect appreciation in
the value of their capital.
Responsibility towards
employees: Management
responsibility towards employees relate to the fair wages and salaries,
satisfactory work environment, labour management relations and employee
welfare. Fair wages should be fixed in the light of labor productivity, the
prevailing wage rates in the same or neighbouring areas and relative importance
of jobs. Managers salaries and allowances are expected to be linked with their
responsibility, initiative and skill. But the spread between minimum wages and
highest salaries should be reasonable. Employees are expected to build up and
maintain harmonious relationships between superior and subordinates. Another
aspect of responsibility towards employees is the provision of welfare
amenities like safety and security of working conditions, medical facilities,
housing, canteen, leave and retirement benefits.
Responsibility towards consumers: In a competitive market, serving consumers is supposed to be
a prime concern of management. But in reality perfect competition does not
prevail in all product markets. In the event of shortage of supply there is no
automatic correction. Besides consumers are often victims of unfair trade
practices and unethical conduct of business. Consumer interests are thus
protected to some extent with laws and pressure of organized consumer groups.
Management should anticipate these developments, satisfy consumer needs and
protect consumer interests. Goods must be of appropriate standard and quality
and be available in adequate quantities at reasonable prices. Management should
avoid resorting to hoarding or creating artificial scarcity as well as false
and misleading advertisements.
Responsibility towards the Governments: As a part of their social responsibility, management must
conduct business affair in lawful manner, honestly pay all the taxes and dues,
and should not corrupt public officials for selfish ends. Business activities
must also confirm to the economic and social policies of the government.
Responsibility towards the community and society: The socially responsible role of management in relation to
the community are expected to be revealed by its policies with respect to the
employment of handicapped persons, and weaker sections of the community,
environmental protection, pollution control, setting up industries in backward
areas, and providing relief to the victims of natural calamities etc.
Other related topi
business ethics, the study and evaluation
of decision making by businesses according to moral concepts and judgments.
Ethical questions range from practical, narrowly defined issues, such as a
company's obligation to be honest with its customers, to broader social and
philosophical questions, such as a company's responsibility to preserve the
environment and protect employee rights. Many ethical conflicts develop from conflicts
between the differing interests of company owners and their workers, customers,
and surrounding community. Managers must balance the ideal against the
practical—the need to produce a reasonable profit for the company's
shareholders with honesty in business practices, safety in the workplace, and
larger environmental and social issues. Ethical issues in business have become
more complicated because of the global and diversified nature of many large
corporations and because of the complexity of government regulations that
define the limits of criminal behavior. For example, multinational corporations
operate in countries where bribery, sexual harassment, racial discrimination,
and lack of concern for the environment are neither illegal nor unethical or
unusual. The company must decide whether to adhere to constant ethical
principles or to adjust to the local rules to maximize profits. As the costs of
corporate and white-collar crime can be high, both for society and individual
businesses, many business and trade associations have established ethical codes
for companies, managers, and employees.
Need or Importance of Business
Ethics
Image Credits © Sameer Akrani.
1.
Stop business malpractices : Some unscrupulous businessmen dobusiness malpractices by indulging in unfair trade practices like
black-marketing, artificial high pricing, adulteration, cheating in weights and
measures, selling of duplicate and harmful products, hoarding, etc. These
business malpractices are harmful to the consumers. Business ethics help to
stop these business malpractices.
2.
Improve customers' confidence : Business ethics are needed to improve the customers'
confidence about the quality, quantity, price, etc. of the products. The
customers have more trust and confidence in the businessmen who follow ethical
rules. They feel that such businessmen will not cheat them.
3.
Survival of business : Business ethics are mandatory for the survival of business.
The businessmen who do not follow it will have short-term success, but they
will fail in the long run. This is because they can cheat a consumer only once.
After that, the consumer will not buy goods from that businessman. He will also
tell others not to buy from that businessman. So this will defame his image and
provoke a negative publicity. This will result in failure of the business.
Therefore, if the businessmen do not follow ethical rules, he will fail in the market.
So, it is always better to follow appropriate code of conduct to survive in the
market.
4.
Safeguarding consumers' rights : The consumer has many rights such as right to health and
safety, right to be informed, right to choose, right to be heard, right to
redress, etc. But many businessmen do not respect and protect these rights.
Business ethics are must to safeguard these rights of the consumers.
5.
Protecting employees and shareholders : Business ethics are required to protect the
interest of employees, shareholders, competitors, dealers, suppliers, etc. It
protects them from exploitation through unfair trade practices.
6.
Develops good relations : Business ethics are important to develop good and friendly
relations between business and society. This will result in a regular supply of
good quality goods and services at low prices to the society. It will also
result in profits for the businesses thereby resulting in growth of economy.
7.
Creates good image : Business ethics create a good image for the business and
businessmen. If the businessmen follow all ethical rules, then they will be
fully accepted and not criticised by the society. The society will always
support those businessmen who follow this necessary code of conduct.
8.
Smooth functioning : If the business follows all the business ethics, then the
employees, shareholders, consumers, dealers and suppliers will all be happy. So
they will give full cooperation to the business. This will result in smooth
functioning of the business. So, the business will grow, expand and diversify
easily and quickly. It will have more sales and more profits.
9.
Consumer movement : Business ethics are gaining importance because of the growth
of the consumer movement. Today, the consumers are aware of their rights. Now
they are more organised and hence cannot be cheated easily. They take actions
against those businessmen who indulge in bad business practices. They boycott
poor quality, harmful, high-priced and counterfeit (duplicate) goods.
Therefore, the only way to survive in business is to be honest and fair.
10.
Consumer satisfaction : Today, the consumer is the king of the market. Any business
simply cannot survive without the consumers. Therefore, the main aim or
objective of business is consumer satisfaction. If the consumer is not
satisfied, then there will be no sales and thus no profits too. Consumer will
be satisfied only if the business follows all the business ethics, and hence
are highly needed.
11.
Importance of labour : Labour, i.e. employees or workers play a very crucial role in
the success of a business. Therefore, business must use business ethics while
dealing with the employees. The business must give them proper wages and
salaries and provide them with better working conditions. There must be good
relations between employer and employees. The employees must also be given
proper welfare facilities.
12.
Healthy competition : The business must use business ethics while dealing with the
competitors. They must have healthy competition with the competitors. They must
not do cut-throat competition. Similarly, they must give equal opportunities to
small-scale business. They must avoidmonopoly. This is because a monopoly is harmful to the consumers.
What are Business Ethics?
Meaning
Ethics is a branch of social science. It deals
with moral principles and social values. It helps us to classify, what is good
and what is bad? It tells us to do good things and avoid doing bad things.
So, ethics separate, good and bad, right and
wrong, fair and unfair, moral and immoral and proper and improper human action.
In short, ethics means a code of conduct. It is like the 10 commandments of
holy Bible. It tells a person how to behave with another person.
So, the businessmen must give a regular supply
of good quality goods and services at reasonable prices to their consumers.
They must avoid indulging in unfair trade practices like adulteration,
promoting misleading advertisements, cheating in weights and measures, black
marketing, etc. They must give fair wages and provide good working conditions
to their workers. They must not exploit the workers. They must encourage
competition in the market. They must protect the interest of small businessmen.
They must avoid unfair competition. They must avoid monopolies. They must pay
all their taxes regularly to the government.
In short, business ethics means to conduct business with a human touch in order to give welfare to the society.
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