Independent Owner/Entrepreneur of Sylvan Learning Center of Temecula. Ensuring the educational success in Temecula, California gettyNow more than ever, there is a growing importance for companies to ramp up their focus on social responsibility. "Social responsibility," in simple terms, means a business’s obligation to pursue achievable and good long-term goals for its people and the world at large. I've observed a number of successful companies today that use social responsibility as a way to give back to society and thank customers for their loyalty. This can come in the form of projects, movements or empowerment of individuals. Whatever form these corporate ventures take, they are definitely a win for both the company and the community alike. I've also seen that some companies are taking the lead and venturing into humanitarian projects ranging from the construction of roads to the alleviation of poverty. Because corporate social responsibility is not compulsory, many companies might not feel the need to engage in it. However, there are several reasons I believe it is important for companies to prioritize social responsibility. CSR can help you attract and retain employees. One of the major reasons people apply to various companies is because of their CSR strategy. From my perspective, a CSR strategy shows a company is compassionate and treats all people, including employees, well. And a business that is committed to improving the world is likely to attract more talent. This shows how important employees take social responsibility. CSR efforts also help foster a more productive and positive work environment for employees. It promotes volunteering and positive efforts from employees. CSR can improve customers' perception of your brand. The competition in the business world of today is stiff, and it can be quite challenging for a company to set itself apart in the eyes of customers. However, businesses that take social responsibility seriously can win consumers, as well as develop a platform to market and earn their audience's attention. Simply put, social responsibility can help people see your company as a positive force in society. The projects you and your team take on can help raise awareness for important causes and keep your business top of mind. CSR is also important when it comes to branding. To have a successful brand and retain customers, businesses must create trust with their target audience, and I believe having a CSR strategy can help build a good reputation — and, in turn, earn trust and loyalty — among clients. Consumer loyalty goes a long way in helping a business stay afloat. Part of what makes a functioning business is your customers; without them, your business simply would not exist. For their loyalty, consumers expect brands and businesses to not be all about making a profit, but to give back to society. According to a 2015 survey by Nielsen (registration required), more than 50% of consumers are willing to pay more for a product or service if the business prioritizes sustainability. This tells me that consumers will opt for and stick with companies that aren't just profit-oriented. CSR shows a sign of accountability to investors. Businesses that are socially responsible can also appear more attractive to investors. In my experience, investors in a business have one common goal: to have greater returns than invested funds. I view businesses that are able to manage finances while still helping their communities as accountable and transparent in their dealings. According to a 2016 report by Aflac, investments in CSR are not typically viewed by investors as a waste of money, but rather an "indicator of a corporate culture less likely to produce expensive missteps like financial fraud." The study said 61% of investors consider CSR a sign of "ethical corporate behavior, which reduces investment risk." CSR saves money. You might not expect a CSR strategy to improve your bottom line because it typically requires investment in projects. However, as mentioned above, many customers are willing to pay more for products from a socially responsible brand, and CSR can help attract and retain employees. Given that turnover can cost companies thousands of dollars, this is worth noting. CSR can enable you to better engage with customers. From my perspective, CSR can help your business better engage with customers. Many forms of CSR involve businesses interacting directly with members of society, who may also be customers or potential customers. You can get direct feedback on what you are doing right and what your company needs to improve on. Word-of-mouth is still an effective form of advertising, and customers who have been part of the social responsibility created by a company are able to tell other potential customers about the business. In conclusion, businesses can no longer operate with the sole aim of making profits at the expense of the environment, society, economy, consumers and employees. Companies need to consider how they can give back to society, and this can help you attract customers and keep your best employees. Customer satisfaction and employee retention are the keys to any successful business, after all. Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Learning Objective
No chapter on ethics would be complete without a discussion on social responsibility. People, not only companies, can engage in social responsibility. Being socially responsible shows both social awareness and self-management skills—that is, an awareness of how our decisions affect others. This section will first discuss social responsibility on the corporate level and then social responsibility on the individual level. As we discussed with ethical company standards, it is difficult to separate corporate ethics and corporate social responsibility from individual ethics and social responsibility, since people are the ones making the corporate policies. For purposes of this section, we will first discuss social responsibility on the corporate level and then on the individual level. Since social responsibility was first mentioned in the 1960s, companies have felt pressure from society to behave in a more socially responsible manner. Social responsibilityThe duty of business to do no harm to society. is the duty of business to do no harm to society. In other words, in their daily operations, businesses should be concerned about the welfare of society and mindful of how its actions could affect society as a whole. We know that social responsibility doesn’t always happen, despite the seemingly best efforts of a company. For example, court papers accuse British Petroleum (BP) of gross negligence for safety violations and knowingly failing to maintain the oil rig, which caused the death of eleven workers and leaked oil in the Gulf of Mexico for eighty-seven days. In this case, and others like it, people question the ability of companies to fulfill their duty to society. Ideally, companies should look at four main areas of social responsibility and act ethically in all four areas. In fact, even as individuals we should be aware of these areas of social responsibility, which we will discuss in this section. Those four areas are the following:
Based on these areas, many believe business should go above and beyond the law to act ethically, meet expectations of society, and even go beyond by donating profit back to the communities in which the businesses operate. As we mentioned at the start of this section, businesses are not the only ones who engage in social responsibility. Since people run businesses, often we see business social responsibility initiatives that are directly related to individuals in the organization. For example, the Body Shop founder, Anita Roddick, cared deeply for the environment and for animals, and as a result, her organization (now owned by L’Oreal) focused on environmentally friendly products and products that did not test on animals. This is an example of how social responsibility in organizations can be a direct result of the individual’s care and concern.
Figure 5.5 The Four Areas of Social Responsibility Companies should strive to meet all areas of social responsibility. (click to see video) Erik Joule, senior vice president of merchandising and design for Levi Strauss, discusses social responsibility issues. More recently, social responsibility has been looked at as going above and beyond even philanthropy. Past ideas on social responsibility implied that businesses must trade off social responsibility for profits—in other words, in order to make profit, businesses had to actually harm society. This way of thinking has changed with the idea of creating shared value. This concept, created by Michael E. Porter and Mark R. Kramer of Harvard University, attempts to dispel this myth by presenting a new view on social responsibility. Creating shared value (CSV)Creating shared value is the premise that companies and the community are tied closely together, and if one benefits, they both benefit. is the premise that companies and the community are tied closely together, and if one benefits, they both benefit. For example, if companies donate money to schools, it actually benefits both the community and the company in that a better educated workforce can be profitable for the company in the long run. The idea that social responsibility is something that costs companies money is no longer in favor. In fact, behaving socially responsibly can help a company save money. Small things, such as turning off computers at night, result in cost savings in electricity and are the right thing to do from a social responsibility perspective, too. As Porter and Kramer have pointed out through their research, benefiting the community does not have to be at the cost of the company or of society; both can work in tandem. As we have already discussed, even though we say companies are socially responsible (or not), individuals in the organization are the ones who create policies surrounding social responsibility efforts. As individuals, our emotional intelligence skills, such as social awareness and empathy, can be shown through our use of social responsibility efforts within an organization but also through our personal social responsibility efforts. ISR (individual social responsibility)An individual’s awareness of how personal actions have an effect on the community. is defined as an individual being aware of how personal actions have an effect on the community. ISR can include the following:
Figure 5.6 Some Examples of Individual Social Responsibility Engaging in ISR activities such as these can help us develop our emotional intelligence skills through the use of social awareness—that is, understanding how our actions can affect others and engaging in empathy for others. In addition, we can build our self-esteem and self-perception by helping others and engaging in socially responsible activities. As we have discussed throughout the chapter, to improve human relations skills, we must understand that ethics, social responsibility, and emotional intelligence skills are intertwined with each other. Those who continually develop their emotional intelligence skills will likely engage in ethical and socially responsible behavior, both personally and as leaders of their organizations. Key Takeaways
Exercises
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