Advantages and Disadvantages of Corporate Social Responsibility - Essay Example

Corporate Social Responsibility (CSR) Name Institution Date Corporate Social Responsibility (CSR) Introduction Corporate Social Responsibility (CSR) refers to doing business in a way that accounts for the social and environmental impact. It is the continuing dedication by company to operate ethically and contribute to economic enhancement while improving the quality of living of the personnel and their families as well as of the local community and society at large. CRS aims at taking on accountability of the company for its dealings and promote a positive impact through its actions on the surroundings, customers and workforce, community, stakeholders and anyone who may be affected by the business. In this paper I am going to review CSR in reference to its advantages and disadvantages to the business practicing CSR. Advantages of Corporate Social Responsibility When Corporate Social Responsibility is well implemented in a company it could bring various benefits to the business. When managers engage employees in environmental practices, and other social responsibilities, the connection involved lead to increased operational efficiency. According to Smith (1990), employees who get much attention from there bosses are in a better position to recognize inefficiencies and propose improvements. Enlightening workers on CSR will therefore increase profitability by sustaining greater efficiency through less wastage of resources. The practice of corporate social responsibilities helps to improve the supply chain management of a company. When employees are well familiarized with sustainability practices, right through the supply chain, it poses as an enhancement to the efficiency of the workers and help them to work together to meet the goals of the company such as quality measures among others. It also strengthens the relationship between a firm and its suppliers by setting up values and objectives which are then met by this collaboration. Customer maintenance rates, opinion scores and other statistics show how customers’ attitude responds to a company’s operations. A company which undertakes social responsibilities is more likely to discover this and make suitable correction to its operations than those that avoid CSR. Companies which have a well practice of CSR tend to have good public relation due to the use of the opportunities given by social responsibility of employees sharing information online using traditional media which doesn’t cost the company on expensive advertisements. This enables free publicity and the business benefits largely from this. The practice of CSR helps a company to build up reputation as responsible and this leads to a positive customer perception towards your business and this brings a lot of benefits to the business like: making it easier to recruit new staff and with this good reputation employees are able to stay for longer in the firm thus reducing the cost and disruptions of recruitment and retraining. Sustainable responsibility makes a company more competitive and reduces the risk of unexpected damage to your character and sales. It is due to this good correlation with the society and local authorities initiated by the activities linking them, which creates an affirmative publicity for the company. This makes investors who are acquainted with this more willing to fund your business (Smith, 1990). A CSR plan requires a free, community based approach. The entity must keep in touch with its clients, suppliers, and any organization that can affect the business. It’s through this interaction that a business comes to the knowledge of any new business opportunities and this means more opportunities to the company. CSR program in a business helps to reduce the cost since it does not necessarily cost money itself. On the other hand if it is conducted properly, it helps the company to reduce its costs by, saving all investments made to advertise its products since CSR takes charge of that, employee retention and more efficient workforce and other methods and this savings could be used to expand the business or invest in other programs. Employees who work in companies which have a well conducted CSR program tend to be more satisfied because of the good treatment they get in terms of good pays, better working conditions. This creates a good attitude towards the company and this keeps employees in the company for longer. CSR is greatly concerned on taking good care of the workers in terms of good payments, favorable working conditions, and health and retirement policy. This poses as a motivation to the workers who then work whole heartedly thus increasing productivity and the profits of the company at the same time. Customer’s perception is more positive towards companies which supports and engage in social and environmental activities to improve the society and is more likely to buy products and services from that company. Customers therefore maintain the brands due to the satisfaction that they get from this company which gives it a competitive advantage to others.CSR practice in a company helps it to create a better image for itself and its products because the consumers believe the company to be ethically responsible in products made of quality materials and manufacturing techniques that do not pose a threat to the environment. Companies which deal with sustainable responsibilities encounter less governmental interruptions than companies who do not practice ethical responsibilities. This leads to fewer chances of sanctions, fines by the government which may even seek out opinions from this company on determining policy in the company’s field. The practice of CSR much deals with environmental preservation and reducing harm brought about by the operations of the business, such as reduction of pollution, use of eco-friendly stuff, reduction of waste among other ways. This conservations as a benefit to the environment also makes a great impact to the consumers and all group watching the operations of the company including the government. Disadvantages of Corporate Social Responsibility CSR implementation is associated with costs and additional expenses. Paying for environmental programs, more staff training, and efficient waste management programs are just but a few examples of costs related to CSR. With this expenses having been already incurred, the use of CSR may not bring about any quantifiable financial results. Consideration of CSR poses a big challenge to the company of a possible pessimistic opinion of shareholders who may not approve of the expenses of operating under CSR procedure because their initial requirement is to have a bigger value of their shareholdings. Wälder (2008) argues that the use of CSR poses a competitive disadvantage to companies which practice it compared to the companies which do not practice it but instead retains the cash which would otherwise been used in taking care of the community and use it in other business undertakings and make profit from it. CSR practices tend to cause unfair and bias practices caused by individual opinions used in making the decisions on how to spend the finances on various projects and this may end up being done where they are easily seen by the public instead of where they can best make an impact or where they are most needed. Companies practicing social responsibility may face a change of being unappreciated by the community that it serves. This may come out in the form of criticism by competitors, public and this discourages the company and may later withdraw from the projects. This leads to loss on the finances already invested in those projects. The consequences that emerge from the practice of social responsibilities are different from those expected in the beginning. For example investing in programs that turn out to be unproductive or unlawful like; attempting to solve a specific social problem which is being catered for by the government at the same time. This may not make a great impact on the public. Companies which engage in social responsibilities face a great challenge such as scrutiny from clients and competitors who criticize their actions. If they invest in socially and environmental efficiency projects, their competitors could invest in projects that give profits but are less beneficial to the environment since the issue is already taken care of by this other company. If this company later withdraws it charity to the society in cases of financial hardships, this may be then termed as insensitivity to the public concerns leading to a change in public perception towards the company (Wälder, 2008). Conclusion Having reviewed the advantages and disadvantages of Corporate Social Responsibility in companies, it is evident that companies that engage in CSR tend to act responsibly with regard to the community which basically is the main level in the supply chain. Therefore by creating this good relationship, create trust in the society and higher chances of the company’s survival. Regardless of the shortcomings that come along with the practice, the benefits that come along with it are preferable. A company which practices CSR is more likely to benefit more and advance compared to others which do not apply it in its operations. This is because by conducting social and environmental projects, the relationship that the company creates with the suppliers, clients, customers, government and the public at large is good and largely contributes to the existence and survival of the business . Companies should there fore consider investing in these projects for the good of the environment because it conserves it, the people welfare and for the economy as a whole. Bibliography Smith, N. C 1990, Arguments for and Against Corporate Social Responsibility, Excerpted from Morality and the Market, Routledge, New York. Wälder A. G 2008, Corporate Social Responsibility, GRIN Verlag, Santa Cruz. Read More