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Moloy Ghoshal, MBA,PhD(Pu)
This research paper titled “Corporate That Care-corporate social responsibilities” has been published by Shiva Institute of Management Studies, Ghaziabad on it’s esteemed journal “ International Journal of Management & Sciences vol-2, No-1,July-2006”.
ABSTRACT: Corporate in India, just like any where in the world are striving to improve their image of business through exercising social responsibilities. The objective behind the endeavor is to create an image that they are in the society not just to operate business and earn profit but to become a good corporate citizen . Now a days CSR( Corporate Social Responsibilities) is not a mere philanthropy but become an integral part of strategy. Corporate houses in India has realized that to sustain the success in business, investment in social welfare is no longer an expenditure but a road map to reach into the heart of consumers. It’s became an established fact that corporates that exercising their responsibilities towards society are harvesting a higher returns on a long term basis. Corporates body like TATA, ONGC, BIRLA, NTPC have already established an example in practicing CSR, and built up an image of friend of society in the mind of our citizens. The present article will through light upon various aspects of social responsibility and it’s implication towards the long term survival of companies.
1.1 What is CSR? The question of social responsibility of business has been controversial, at least for some times. To look at the social responsibility of business in specific terms, one needs to recognize the fact that different sections of society- shareholders, employees, 1
consumers, government and the society as a whole-are associated with business in different ways, some directly and some indirectly and the interest of different sections are affected by the business decisions and activities in different ways and different measures. There fore we can say that the question whether business have social responsibilities to fulfill is an ethical one and the answer to an ethical question is a matter of opinion and the individual perception about an ethical issue.
Ethical problems are truly managerial dilemma, because they represent a conflict between an organisation’s economics performance and it’s social performance or we can say obligations to business. Unfortunately, the dilemma of management is that these obligations are costly. It is possible of course to ignore the balance between economic and social performance and to argue that the managerial dilemma does not exist. Ethical issues are complex as well as interesting. Let us first understand what does it mean by CSRCorporate social responsibility (CSR) is the alignment of business operation with social welfare. It takes into account the interests of stakeholders in the company’s business policies and actions. It can also be define as, ‘commitment of business to contribute on a sustainable economic development, welfare of employees and their families, the local community and society as a whole, to improve their quality of life by providing different amenities like hospital, school etc’. So we can say CSR is the manner, a company operate it’s business which meets or exceed the ethical, legal, commercial and public expectation that society has from the company.
1.2 Areas to franchise CSR:
Environment and Ecology: the exhaust from a diesel engine contains approximately 900 chemical compounds. Most of these compounds have been identified but the environment effects of only a few of these compounds have been studied and it has been found that some of these compounds have very negative impact on the road side vegetation. Now here comes the ethical dilemma. The companies manufacturing diesel engine have two alternatives, either to stop production, which result increase in unemployment and decrease in economic development or they can develop a catalytic converter to reduce or eliminate the harmful compound and then raise their price, which leads them out of the competition from market. Here comes the role of government to establish a regulatory body which will determine an industrial wide standard so that all producers will compete with the same cost and price structure. The companies should also follow the principle of 4Rs(reduction in waste, reuse, recycle and recovery) to manage waste of water, energy and other scare resources. In China organic waste from thousands of small straw pulp mills is used as agricultural fertilizer. In Kalundborg , Denmark, a coal-fired power station, an oil refinery , a plastic board factory, a pharmaceutical plant and the municipality have created an ‘industrial symbiosis’ by exploiting each other’s waste streams. Health and well beings: good health is the most precious wealth of human being and we should ensure that. Generally what we found that temperature, humidity, noise levels are too high; ventilation and lighting may be too low and dust and fumes are still found in most of the heavy and small manufacturing plants, like innumerable number of sponge iron factories in West-Bengal, the stone crashing mines of Rajasthan , the tanneries of Kanpur and Kolkata to name a few.
The government should enact different laws not on pen and paper but in reality. The companies should establish policies to ensure health and safety of all the employeeswhich must be known to employees. They should involve employees in business decisions that affect them; consult employees on how to handle a down turn in the business if layoffs are avoidable. Establish a open book policy for training, retirement planning and dependents care.
Education and social upliftment: To eradicate illiteracy is a greater challenge for the nation and as responsible citizen the corporate houses can not deny it’s role in this direction. The corporate houses should setup primary as well as higher education facility in the village and urban area, so that along with the noble mission of urbanization, the education level, attitude and the habits of the villagers must be changed. Along with the conventional education mission, the business houses should also facilitate to set–up adult education programme so that who were deprive from basic education in their schooling days can get the opportunity to enlighten them with knowledge. The business houses may sponsor for new buildings, computer, laboratories, toilets, play grounds etc for already established schools and colleges. In the direction of social upliftment the business house make an effort to create an awareness regarding hygiene, cleanliness, prevention of dieses, female and child health care etc.
2 Implementing CSR:
There is no one-size-fit-all method for implementing CSR approach; each firm has it’s unique characteristics and circumstances that will affect how it views it’s social responsibility; and each will vary on it’s awareness of CSR issues and how much work it has already done towards implementing a CSR approach. But we can’t deny the importance of successful and systematic implementation of CSR-in harmony with the firms mission, objectives, business culture, environment, 4
risk profile and operating conditions. What I do feel is that it requires a broad framework for implementing CSR which will be built on existing experience as well as knowledge of other fields such as quality and environment management. The framework would follow the well known “plain, do, check and improvement” model of total quality management under the guideline of international organisations like ISO. The framework must be flexible enough and the firms are encourage to adopt it as appropriate for their organisation. The implementation framework comprises six key tasks viz conduct a CSR assessment, develop a CSR strategy, develop CSR commitments, implements CSR commitments, verify and report on progress and finally evaluate and improve. In recognition of the fact that firms are at different level of sophistication and development with respect to CSR, it is understood that firms may choose to forego a particular aspect or task when it has already been undertaken. The implementation framework:
When? (Conceptual phase) What? (Task delineation) How? (Checkpoints on the journey) Assemble a CSR leadership team Develop a working definition of CSR Review corporate documents, processes and activities Identify and engage key stakeholders
1.Conduct a CSR assessment
2. Develop a CSR strategy
Build support with senior management and employees Research what others are doing prepare a matrix of proposed CSR actions Develop ideas for proceeding and the business case for them Decide on direction, approach and focus areas
3. Develop CSR commitments
Do a scan of CSR commitments Hold discussions with major stakeholders Create a working group to develop the commitments Prepare a preliminary draft Consult with affected stakeholders
4. Implement CSR commitments
Develop an integrated CSR decision-making structure Prepare and implement a CSR business plan Set measurable targets and identify performance measures Engage employees and others to whom CSR commitments apply Design and conduct CSR training Establish mechanisms for addressing problematic behaviour Create internal and external communications plans
5. Verify and report on progress
Measure and verify performance Engage stakeholders Report on performance
6. Evaluate and improve
Evaluate performance Identify opportunities for improvement Engage stakeholders
Cross-check: One cycle completed
Return to plan and start the next cycle
The framework is intended to help board of directors, managers, employees and others to assess a firm’s effects on society, and the challenges and opportunities associated with taking these impact into account in decision making and business activities.
3. Measuring CSR:
It is general practice in business that things that can’t be measured often get overlooked, CSR is no exception. Effective CSR can cut costs and boost sales. But focusing only on financial measurers overlooks true value. CSR can also improve your reputation, boost customer loyalty and motivate employees; which leads to reduce absenteeism and reduce staff turnover. At the same time customer loyalty could increase level of repeat purchasing. Measuring CSR initiatives is important to ensure effective implementation of planned strategy to determine future action plans. Each company can design measuring strategies ,based on their selected CSR focus areas. There are several ways to measure impact of CSR initiativesMeasurement of community initiatives: following points should be considered in this purposeCash value of community support, Impact of evaluations carried out on community programmes, Project progress,
Perception measures, Positive and negative media comments.
Measurement of work place initiatives: The points to be consideredWork place profile, Staff absenteeism, Legal non compliance, Staff grievances, Staff turnover.
Measurement of environment initiatives: the following points should be kept in mind for measuring environmental impact:
Overall energy consumption, Water usage, Quantity of solid waste produced, Used of recycle materials, Environment impact.
Measurement of market place initiatives: the following points should be considered in this respectNumber of product complaints regarding products and services, Advertising complaints upheld, Complaints about late payment of bills, Upheld cases of anti corruptive behaviour, Customer satisfaction levels, Consumer retention.
Examples: Let us see the performance of some big Indian corporate houses who have already proved their excellence in this field. ONGC- as a responsible corporate citizen it promote education, health care and entrepreneurship in community and support water management and disaster relief in the country. In this endeavor ONGC is committed to allocate fund equivalent to 0.75% of net profit of previous year.
BPCL- started it’s endeavor in this direction in the year 1984 along with the philosophy “to give back to the society/community our best”. HINDALCO- to make the life of young widows better, Hindalco initiated a widow remarriage scheme which is truly path breaking. Along with the help of village influentials, Hindalco manage to get more than 300 widows remarried, thereby bringing the smile back on the girl’s faces. Hindalco also stresses to discourage child marriage. TATA-Motors- the Indian leading auto maker has won golden peacock award for CSR for the year 2004. The other awardees for CSR in private sector along with TATA-Motors are the Times Foundation, Rail Wheel Factory and ONGC. The award for excellence in corporate governance went to Gail India ltd, Shipping Corporation of India Ltd and ICICI bank. Other big names in this field are Aditya Birla Group, Greater Noida Industrial Development Authority, SAIL, Subros Ltd, NTPC and the list continue, which shows the success of a noble endeavor. Conclusion: CSR is gaining ground in the world bank group work portfolio. Client governments are realizing that CSR can help to improve their national competitiveness and companies are using good standers to meet the lending condition of the IFC ( International Finance Corporation)- the private arm of the world bank. CSR has become the password not only to overcome competition but to ensure sustainable growth. It has been supported not only by the shareholders but stakeholders by and large encompassing the whole community. Corporate virtue is in, is the slogan and why not? As it offers so many advantages including hike in profits.
Exercising social responsibilities is no doubt a noble mission; still only the big business houses are practicing it voluntarily. But our aim is overall development of the society, which is a mammoth like task and no one government or few business houses are sufficient to accomplish the mission. What the author suggest, the Government should pass a bill and make it mandatory for all large scale business houses to contribute a particular percentage of profit for social upliftment if not possible directly, it must be through some NGOs. Last but not the least the philosophy of CSR is best articulated by the Chinese proverb: “ Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”
References: The Ethics of Management-LaRue Tone Hosmer, UBS New Delhi. Managerial economics- Dr. D.N.Dwivedi, 6th edition, Vikas Publishing House(P)Ltd www.bsdglobal.com www.strategis.gc.ca www.timesfoundation.indiatimes.com The Economic Times, March17th and April 28th 2006.
Title: CORPORATE THAT CARE.-Corporate social responsibilities. Name of the Author: Prof. Moloy Ghoshal Designation: Asst. Director. Name of the Organisation: Institute of Productivity and Management. 1- Kalyanpur,G.T.Road,Kanpur-208026(U.P) Email:firstname.lastname@example.org Web: www.ipmkanpur.edu.in Mob: 09839102543 Ph: (0512)2573783/84. Fax: (0512)2570151
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