Corporate Social Responsibility - Essay Example

?Introduction The concepts of ethics as well as corporate social responsibility (CSR) have gained prominence during the contemporary period and they are very important in the day to day operations of any business. As such, this essay seeks to critically analyse the given case study whereby Gino Duncan, the CEO for DM Bicycle Company wants to focus his CSR efforts on finding a cure for his daughter’s disease. A close analysis will be carried in order to establish if Gino has gone too far with regards to the interests of the company as well as the measures that can be taken to reach an amicable agreement to resolve the situation. The essay will start by explaining the meaning of the two concepts, ethics and social responsibility. The main body of the essay will be structured using the STAR format. According to Kotler & Armstrong (2004, p. 127), “written regulations cannot possibly cover all potential marketing abuses and existing laws may be difficult to enforce. However, beyond the written laws and regulations, business is also governed by social codes and rules of professional ethics.” Therefore, companies that are enlightened always encourage their managers to focus on doing the right things always for the betterment of the company. It is imperative for businesses to try to create a balance between the goals of the organisation as well as its CSR initiatives. Careful consideration should always be taken given that there are often conflicting interests whereby certain situations can give rise to disagreements about the right course of action that can be taken in a given situation. Ethics Basically, business ethics refers to the values, principles and standards that operate within business and these attempt to make a distinction between something that is morally good from bad (Rossouw, 2004). As such, values can be described as the “essential and enduring tenets” that help define the company and are “not to be compromised for financial gain or short term expediency,” (DesJardins, 2006, p.5). Cultural environments in which organisations operate shape the values of the organisations given that there are many forces that affect the way people behave such as perceptions about situations, preferences as well as attitudes which influence people to behave in a particular way (Kotler & Armstrong, 2004). It can be noted that there are different types of values in the organisation such as financial, political, historical as well as cultural. Corporate social responsibility On the other hand, the concept of corporate social responsibility (CSR) suggests that there is need for an organisation to establish goodwill with the values and norms of a particular society in which it would be operating. Whilst there is no agreed definition of the concept of CSR, it has been defined as a function that transcends but includes making profits, creating jobs and producing goods and services that satisfy the needs and interests of the stakeholders (Oketch 2005 as cited in Smith 2003). Strydom (2004, p.11) suggests that “CSR is the concept that maintains that businesses are part of the larger society in which they exist and are accountable to the society for their operations.” This means that there is need for the organisations to try to build a relationship between the goals and objectives of the organisation, needs and interests of the stakeholders and the society at large. This concept is also related to ethical issues in the organisation. Situation In this particular case, Gino, the CEO of DMBC intends to divide the windfall of the company between the new CSR program focused on Batten disease and employee bonuses. This follows the diagnosis of his daughter with Batten disease and this is the major reason why he is pushing for this initiative. However, of notable concern is that the company had not given any pay rises to the employees for almost three years and in some instances, it had been forced to cut salaries for the employees but it seems that Gino is more concerned about the welfare of his daughter at the expense of the employees. The company is expecting to get high profits and this is the reason why Gino is pushing for this initiative which is primarily meant to benefit his daughter. Given this situation, it can be noted that a conflict has arisen which entails that an amicable solution has to be found to address it. A conflict can be described as disagreement or misunderstanding over something (Kleynhans, 2007). Importance of CSR It is undoubtedly true that every organisation has its own objectives and is compelled to do good things to the employees, stakeholders as well as the society at large. Thus, the concept of social responsibility entails that the organisation ought to do good things to the society as part of establishing goodwill. However, there will be need to establish a noble cause before embarking on an initiative and this ought to benefit the majority of people not just a few people. CSR strategy is often driven by leadership and is meant to stimulate positive employee performance which enables the organisation to create a sense of trust among the members in order to stimulate positive employee performance while at the same time cultivating a sense of trust among the members of the community at large. According to Guarnieri, & Kao (2008) it is imperative for an organisation to establish goodwill with the members of the society as well as the employees for better performance of the organisation as a whole. The success of the company is determined by the performance of the employees and the way it is perceived by the members of the society. Task According to the case study, Batten disease “is an inherited neurological disorder that affects two to four children out of every 100,000 born in the U.S. each year,” They usually start exhibiting the symptoms between the ages of five and ten and it leads to blindness or mental impairment. Whilst it is a noble cause to fight against this disease, it can be noted that its effects are not widespread given that it only affect between two to four children out of 100 000 born in US each year. This is a negligible number such that the organisation cannot channel a huge chunk of its profits towards the fight against this disease given that only a small number of people are affected at a given period. In other words, the initiative will benefit only a few people and does not benefit the majority of the people. The concept of CSR posits to the effect that the organisation must do something good for the benefit of the majority of the people as well as other stakeholders (Strydom, 2004). However, in this case, it can be seen that the CSR initiative is driven by individual and personal interests which are not a true reflection of corporate responsibility. According to Randall (1994, p.101), “the better the relationship, the more trust that will be created and it will be easier to solve the difficult issues which may arise.” Therefore, fulfilling the interests of people who are important to the operations of the organisation is the basic tenet of corporate social responsibility. Ethically, leaders are not expected to abuse their power to pursue personal agendas that do not satisfy the majority of the people. A close analysis of the case study shows that Gino is mainly concerned with the welfare of her daughter and this does not reflect the interests of the company as well as the employees. As such, moral within the organisation is likely to decline if this initiative is implemented given that it will adversely impact on the welfare of the employees whose salaries are at times cut and have not received a pay rise for a long period of time. Action- Decision making Based on the following decision model, it can be noted that Gino has gone too far though his idea is noble hence Carolyn should try to stop him since this is likely to impact negatively on the operations of the organisation. Any action taken with regards to the CSR initiatives of the organisation should reflect its broad objectives not personal interests as this will be in violation of the core values of the company. Decision making is a process that ought to reflect the ideas of different stakeholders within the organisation so as to be able to create a mutual understanding which is a basic tenet in ensuring the viability of the organisation in the long run (Schultz, 2005). The decision making model illustrated below is effective in dealing with this situation. Fig 1 This is a step by step approach used to solve problems as well as making decisions that affect the overall performance of the organisation. In this particular case, the problem is that Gino’s initiative does not reflect the interests of the organisation hence its implementation is likely to impact negatively on the welfare of the employees. This is likely to cause problems to the company which can affect its viability given that there will be no consensus among all the stakeholders to reach such an agreement (Schultz, 2005). Review/results Stakeholder approach In some cases, there is a tendency by some leaders to give priority to issues that can negatively impact on the organisation. In as far as the concept of ethics is applied to business, there should be conformity with the set organisational goals such that the interests of the stakeholders are not affected (Weiss, 1994). Whilst contributing towards a noble cause like assisting the needy, there is also need for mutual understanding such that the decision will be shared among all the stakeholders involved so as to minimise chances of conflicts which are seen as counterproductive in most instances. In this particular case, it can be authoritatively said that Gino has gone too far and is prioritising the interests of his daughter at the expense of the company at large. The stakeholder approach to business in relation with ethics is very important in this case given that an agreement that will be reached will be based on common understanding among all the stakeholders. Basically, the stakeholder approach is an analytical way of observing and explaining how different facets of business affect the interests and needs of the stakeholders (Bowie & Duska, 1991, as cited in Weiss, 1994). Decisions that are in conflict with the interests of the stakeholders are likely to cause conflicts within the organisations hence the action that must be taken in this case must be a true reflection of the needs and interests of the stakeholders. The organisation must always act in the best interests of the stakeholders while at the same time maintaining the principle of moral rights whereby any organisation can distinguish between something that is good from bad. This approach is very helpful in that it clearly spells the direction upon which the organisation can follow towards the attainment of its set goals. Employee morale will also be boosted which helps the company to effectively operate. As such, Carolyn should try to stop Gino for the sake of the company though his initiative is noble. As it stands, it seems as if he wants to use his power and authority to influence decisions that are meant to benefit his own cause not that for the company and the stakeholders at large. Some studies have indicated that companies which do not constantly stay in touch with their stakeholders are likely to fail in their bid to achieve their organisational goals. Best practice On the other hand, the concept of best practice is very important in the operations of the organisation given that it will seek to accommodate the interests of all the stakeholders involved as well as the society at large. There are likely chances that mutual understanding will be promoted if the organisation uses orthodox means towards the attainment of its set goals and objectives. The concept of best practice is mainly concerned with transparency and fulfilment of the organisational goals in a manner which is satisfactory to all the stakeholders involved (Schultz, 2005). If Gino’s decision is forcefully implemented, there are likely chances that there will be more conflicts in the organisation which can affect its viability hence there is need for Carolyn to try to stop him for better results of the company in the long run. Conclusion Over and above, it can be noted that the concepts of ethics and social responsibility are regarded as very important during the contemporary period in the day to day operations of any organisation. The viability of the organisation is mainly dependent on its ability to distinguish between something that is good from bad and its ability to plough back to the society it will be operating in so as to create mutual understanding between the organisation and the stakeholders. In the given cases study, it can be noted that Gino has gone too far and must be stopped since his ideas are meant to benefit his daughter mainly at the expense of thousands of workers. Bibliography DesJardins, J. An introduction to business ethics, 2nd Edition, Boston: McGraw Hill International Edition, 2006. Guarnieri, R & Kao, T Leadership and CSR – a Perfect Match, People & Strategy, 2008, Vol. 31 Iss. 3, pp. 34-41. Kotler, P. & Armstrong G. Principles of Marketing, NJ: Pearson Education International, 2004. McIntosch, M. & Smith, P. Visions of ethical business, Financial times, Prentice Hall in association with Price Water House Coopers, 1999. Rossouw, D. Business Ethics: 3rd Edition, CT, Oxford 2004. Smith, C. Corporate Social Responsibility: Whether or How? California Management Review, Vol. 45, Iss. 4, 2003 pp. 52-76, Accessed 02 May 2011, http://jmo.e-contentmanagement.com/archives/vol/15/issue/1/article/2734/evaluating-the-impact-of-corporate-social Randall G. Trade Marketing Strategies: The Partnership between manufacturers, brands and retailers. London: Butterworth-Heinemann, 2004. Schultz, H. Organisational behaviour. Van Schaick Publishers: CT. 2005. Strydom J. Marketing. 3rd Edition, Cape Town, Juta & Co Ltd, 2004. Weiss, J.W. Business ethics: A managerial, stakeholder approach. California: International Thompson Publishing, 1994. Read More