Corporate Social Responsibility Models - Essay Example

Corporate Social Responsibility Models Grade 24 February CSR is a well known term in the business practices since 19th century, though the paradigms have changed with the passage of time (Carroll, 1979). It stands for Corporate Social Responsibility, which means the corporations have certain responsibilities which are social in nature. The initial CSR theories, known as seminal theories, focused on CSR activities as organisations are social entities hence should cater for the society. The mid range theories assumed CSR as an obligation whereby it was linked with economic objectives. The contemporary theories highlighted the concepts of ethics and invited the deep consideration over the issue by enforcing the concept of corporate citizenship. The common examples of CSR activities include initiatives for green and clean environment, charity for disabled, education for special children, health and safety awareness programs etc. This paper explains the concepts of CSR with the perspective of Co-Op Bank. ROLE OF CSR IN ORGANISATIONAL IMAGE CSR has strong impact upon the profitability and image of the organisation. It helps the people realise that organisations do not operate for profit only, but it has genuine social concerns as well. The organisation attracts much favourite approach in the target market by sharing its profits with the society in which it is operating. Through sharing the revenue with the ones who are basically revenue generating entities, the organisations win loyalty of its customers. CSR portrays the positive ethical image of the organisation (Meehan, Meehan & Richards, 2006). It shows the organisation has concern for values, morality and ethics. It reveals organisational policies that are linked with consideration towards society as well. It also depicts concern for the ones who are directly or indirectly helping the organisation to prosper. They are called stakeholders of the organisation and CSR is closely linked with them. OVERVIEW OF CO-OP BANK The Co-Op Bank is part of Co-operative Group of companies which are operating in England. The Bank is registered in England and Wales (Co-Op, 2012). It is the leading bank in the market which sustained in the huge financial crisis of 2008. Through careful operational policies and long term concern for customers and profitability, the ranking of Co-Op Bank largely went unaffected with the tough global recession. Stakeholders of Co-Op Bank Having registered operations in England and Wales, the number of Co-Op Bank’s stakeholders is high. Below is the list of few important stock holders. 1. Financial institutions like banks, stock markets, insurance companies etc 2. Individual and corporate customers of England and Wales, both lenders and borrowers 3. Financial Regulatory Bodies 4. Credit Rating Firms 5. Partners of Co-Op Bank i.e. which link their services with the online network of Co-Op Bank e.g. telecommunication companies, utility companies, shopping malls etc 6. Partners of Co-Op Bank which provide car financing and mortgage services through Co-Op Bank etc 7. Employees 8. Shareholders, Management and Board of Directors 9. Facilities Developers, Machinery, Equipment and other services providers 10. Environment and Society CSR OF CO-OP BANK As mentioned earlier, the stakeholders of the organisations have close link with the organisational CSR activities. Organisations keep in view the major heads of customers, employees, suppliers, community and environment while designing and conducting their CSR activities. The purpose of considering all the stakeholders is to ensure that no step or policy of the organisation is hurting the interest of any stakeholder, yet organisation is protecting all of them to maximum possible extent. At times, organisation is on the horns of dilemma to make decisions. It becomes very difficult to ensure a win-win situation for all the stakeholders. A common example in banking sector is related with balancing the gains of creditors and debtors. The interest of one party hurts the other’s interest, yet both of them are the customers of the Bank. Such situations demand answers to three questions, what is legal, what is balanced, and what is ethical. The consideration of ethics is serious evidence of organisational concern with CSR. The concern of stakeholders with CSR of Co-Op Bank is described below under the heads of consistency, connections and commitments. These three concepts help organisations increase their operational focus, broaden profit orientation and improve management systems. Consistency As mentioned earlier, CSR helps target market understand that organisation is ready to share its hard earned revenue with the ones who are the source of revenue and deserve consideration by the organisation. It defines the organisational operations which not only perform the functions of corporation but also fulfil the need of society. It helps define profit different from its conventional approach of monetary gains. It introduces the factor of goodwill which creates loyalty and positive word of mouth. The term consistency defines the persistent approach towards core stakeholders’ interests and those of general society and environment. It means that protection of the interest of stakeholder and betterment of society go hand in hand. This all should be incorporated in the functions of business. In the context of Co-Op Bank, it is evident from their Ethical Plan which was launched in 2011 and is alive in 2012. In this plan, they included the goals of betterment of their customer communities, environment protection, poverty reduction and encouraging youth to play effective role in development. The important point to mention here is the reflection of these plans in the business targets. Co-Op Bank extensively lends finances in the projects which comply with these goals. Connections Business has many stakeholders, whose demands are increasing with globalisation. The recession is further paving ways for increased cooperation rather than competition. In this regard, it is mandatory to leave considerable portion of profit for the partner as well as those who help the organisation in growing and excelling. Connections make it possible. As mentioned earlier, business is not only about maximizing monetary gains. It is equally concerned with positive image, goodwill, and loyalty of both customers and employees. Co-Op Bank designs its CSR activities to invite participation of as many communications of the society as possible. For instance, the effective management of youth programs and research and development initiatives enable Co-Op Bank to offer credits at less profitable returns with eliminated factor of bankruptcy. By offering its finances to the projects of animal welfare, which is quite a neglected field in the corporate world, the Bank ensures not only concern for general public but also competitive advantage for itself. Commitments The corporate world is notorious for projecting lucrative but false image of its offerings. The promotional offers and advertising campaigns call for serious consideration of high level officials so that it may not hurt the organisational image and customers’ satisfaction in any case. Commitment is not only linked with quality of the product or service offered. Its canvass is broad enough to include commitment with vision, mission and goals of the organisation and the welfare of stakeholders. It is commitment with standard operating procedures of the organisation. It is commitment with complying with any requirement that support the organisational goals and stakeholders’ interest. The biggest evidence of Co-Op Bank’s commitment with its organisational philosophy and values is its unaffected rating during the global recession of 2008. The continuity of CSR plans is yet stronger evidence. It happens in corporate sector, that organisations curtail their CSR budget as they do not consider it their primary function (Sethi, 1975). The general perception towards CSR is an additional burden over the financial position of the organisations which they get rid of at first available chance. CONCLUSION Co-Op Bank is found suitable for investing money, when analysed on the grounds of CSR. It clearly understands the essence of CSR and willingly fulfils it. In my opinion, the customer can be suggested to invest in the Co-op Bank as they conduct their business in a ethical way. REFERENCES Carroll, A.B. (1979) ‘A Three-Dimensional Conceptual Model of Corporate Performance’. Academy of Management Review 4, (4) 497 – 505 Meehan, J., Meehan, K. & Richards, A. (2006) ‘Corporate social responsibility: the 3C-SR model’. International Journal of Social Economics 33, (5/6) 386-398 Sethi, S. P. (1975) ‘Dimensions of Corporate Social Performance: An Analytic Framework’. California Management Review 17, (3) The co-operative., 2012, Our Plan. Join The Revolution [Internet]. Available from < http://www.co-operativebank.co.uk/servlet/Satellite/1193206375355,CFSweb/Page/Bank > [24 Feb 2012] Read More