Engineering Economics and Management 2130004 Unit10 Corporate Social

Engineering Economics and Management (2130004) Unit-10 Corporate Social Responsibility Prof. Vijay M. Shekhat vijay. shekhat@darshan. ac. in +91 9727235778 Computer Engineering Darshan Institute of Engineering & Technology

Outlines § Corporate Social Responsibility • Meaning • Importance § Business Ethics • Meaning • Importance Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 2

Corporate Social Responsibility (CSR) § CSR is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. § CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social requirements while at the same time addressing the expectations of shareholders and stakeholders. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 3

Characteristics (Nature) of CSR 1) Concerned with social prestige 2) Applicable to both private and public sector 3) Balance between individual and social interests 4) Continuous process 5) Two-way process 6) Spirit of trusteeship 7) Essential for the growth of business Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 4

1) Concerned with Social Prestige § Business is an activity connected with the production, sale or distribution of a commodity or services with a view to satisfy diverse needs of the society. § The more effectively a business unit provides to the needs of society, the greater will be its social reputation. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 5

2) Applicable to Both Private And Public Sector § The concept of social responsibility of business is universal. § Every business unit has certain social responsibilities. Whether it functions in the private sector or in the public sector. § For getting success, business need to earn respect from society whether it is public sector or private sector. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 6

3) Balance Between Individual and Social Interests § The business unit has to maintain a balance between its own interests and those of the society. § A firm that concentrates only on personal gains at the cost of social interests cannot survive for long time. § Similarly a firm that gives too much importance to social interests at the cost of personal gains cannot survive and must close down sooner or later. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 7

4) Continuous Process § Social responsibility is a continuous process. So long as business functions, it must full fill its responsibilities towards the society. § It has to provide society with the commodity or services continuously. § It has to maintain the quality of its product for ever. § It has to maintain the prices of its product at its genuine level. § It has to follow welfare — oriented activities continuously. § Any disturbance in this continuous process would risk not only the social status, but the existence of the business unit. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 8

5) Two-Way Process § As a business firm has to fullfill responsibilities to the various sections of the society, at the same time society has to fulfill some responsibilities to the business firm too. § It is the responsibility of the society to create and maintain an atmosphere which is favorable to the functioning and growth of business firm. § How can a business firm fulfill its responsibilities to society unless it earns enough profit? Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 9

6) Spirit of Trusteeship § The idea of trusteeship was proposed by Tolstoy, Ruskin and Mahatma Gandhi. § According to this principle, the managers of business are only the trustees of their property and it is their moral duty to use and manage all of their property for the welfare of the society. § No individual has any right to hold any property for personal gain only and to use it against the interests of society. § All resources must be fully utilized for production of goods and services. § As far back as in 1927, a top industrialist had remarked, “We consider ourselves to be the trustees of our wealth, which is to be managed only for the benefits of workers and consumers” Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 10

7) Essential for the Growth of Business § A business firm that neglects the expectations of the society cannot succeed. § Caring attitude of various sections of the society is essential for the success of business. § The co-operation of the workers, good wishes of the local population and attachment of the consumers are essential to the growth of business unit. § Therefore, the manager of business must not neglect their duty towards all these section of society. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 11

Advantages (Importance) of CSR 1) Satisfied employees • Employees want to feel proud of the organization they work for. • An employee with a positive attitude towards the company is less likely to look for a job elsewhere. • It is also likely that you will receive more job applications because people want to work for you. 2) Commitment with stakeholders • It enables enterprises to predict better and take advantage of fast changing expectations in society as well as operating conditions. • This means it can also act as a driver for the development of new markets and create real opportunities for growth. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 12

Cont… 3) Creating long-term employee, consumer and citizen trust • By addressing their social responsibility, enterprises can build longterm employee, consumer and citizen trust. • This helps to create an environment in which enterprises can innovate and grow. 4) Costs reductions • Companies can reduce the costs by hiring the right person at the right job with effective retention strategies. • Because retention cost is lesser than recruitment cost. • Organizations can also implement energy savings programs through energy audits. • Effective CSR can assist the companies in managing possible risks and responsibilities very effectively. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 13

Cont… 5) Win new business opportunities for sustainable future • The business must be in a constant interaction with customers, suppliers and other parties that affect the organization. • Because of continuous interaction with other parties, your business will be the first to know about new business opportunities. 6) Reducing the social effects of the crisis • CSR also helps to reduce the social effects of the crisis, including job losses, is part of the social responsibility of enterprises. • CSR offers a set of values on which we have to build an organized society and to look for sustainable economic system. • It aims to create conditions favorable to sustainable growth, responsible business behavior and long lasting job creation through CSR. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 14

Ethics § Management ethics is the ethical (proper/right) treatment of employees, stockholders, owners and the public by a company. § Employees should be treated well, whether they are employed here or overseas. § Ethics and ethical behaviors are the essential parts of healthy management. § From a management perspective, behaving ethically is an integral part of long-term career success. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 15

Advantages (Importance) of Ethics 1) Satisfying Basic Human Needs • Being fair, honest and ethical is one the basic human needs. • Every employee desires to be such himself and to work for an organization that is fair and ethical in its practices. 2) Creating Credibility • An organization that is believed to be driven by moral values is respected in the society. • Infosys, for example is perceived as an organization for good corporate governance and social responsibility initiatives. • This perception is held far and wide even by those who do not even know organization is doing what business. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 16

Cont… 3) Uniting (bonding) People and Leadership • An organization driven by values is respected by its employees also. • They are the common thread that brings the employees and the decision makers on a common platform. • This goes a long way in aligning behaviors within the organization towards achievement of one common goal or mission. 4) Improving Decision Making • A man’s destiny is the sums total of all the decisions that he/she takes in course of his life. • The same holds true for organizations. • Decisions are driven by values. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 17

Cont… 5) Long Term Gains • Organizations guided by ethics and values are profitable in the long run, though in the short run they may seem to lose money. • Tata group, one of the largest business corporations in India was seen on the border of decline at the beginning of 1990’s. 6) Securing the Society • Often ethics succeeds law in safeguarding the society. • The law is often found acting as a mute spectator, unable to save the society and the environment. • Technology is growing at such a fast speed that when law comes up with a rule we have a newer technology with new threats replacing the older one. • Law may not help society but ethics can. Unit-10 Corporate Social Responsibility Darshan Institute of Engineering & Technology 18

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