Corporate social responsibility (CSR) is highly relevant to the corporate scene, but companies must synchronize them with their shareholder interests in order to increase their chances of survival.
Position on Aaron Feuersteins views
In the current business environment, it is not wise to hold such a view. Business landscapes have become ruthlessly competitive. If a CEO embarks on a venture that will benefit the larger community without creating a direct positive effect on profits, then other companies will run it out of business. They will be in a position to offer lower prices for their goods than the concerned firm, thus making it less attractive to consumers.
If such endeavors continue in the long run, then the company may be forced to shut down. As such, the organization would be unable to safeguard either the communitys interests or the shareholders interests.
For self preservation, companies must prioritize shareholder value over and above corporate social responsibility (Carrillo, 2007). If managers fail to do this, then the external environment will make that decision for them. The company may either be taken over by a stronger firm, or consumers will simply buy products from the competition.
Most CEOs have the primary responsibility of enhancing shareholder value. If they do not achieve that, then they face the risk of removal by these very shareholders. Such a reality may not be true for family-owned businesses; however, most corporations in the world today have numerous shareholders who have the power to oust or retain a CEO.
If one chooses to engage in a corporate responsibility initiative that does not add shareholder value, then that person is already making the decision for shareholders on how to spend their money. This is definitely not a CEOs call.
Therefore, I would say that corporate social responsibility should come second to shareholder interests. No CSR strategy should erode shareholder value. Nonetheless, if the initiative can co-exist or even enhance shareholder value, then companies should embrace it.
Jack Welchs vision versus Feuersteins vision
At this point in time, profit maximization is what Malden Mills requires. The firm needs to focus on becoming competitive again. Therefore, Welchs philosophies are more appropriate for the organization. Firms ought to improve social well being while serving their own interests. If taking care of the community or employees will create a fatal effect on shareholder value, then the former strategy should be forfeited.
In Malden Mills industry, it is clear that a ruthless approach to profitability is necessary because failure to focus on this aspect is what led to Maldens problems in the first place. Social welfare is not unimportant, but in the current corporate climate, it should enhance shareholder value. Several firms have embraced corporate social responsibility primarily because it is profitable to do so (Hsieh, 2009).
For instance, manufacturing companies chose to use green energy because conventional energy prices soared. Therefore, they increased profits and also enhanced social well being through decreased pollution.
These two strategies need to be in alignment with each other. Malden Mills went bankrupt and can only stretch its research and development strategies so far. It needs to take a bold approach to cost cutting and profit optimization.
Conclusion
Jack Welchs vision will take this company because it has stagnated and even gone bankrupt owing to excessive CSR leanings.
References
Carrillo, E. (2007). Corporate governance: shareholders interests and other stakeholders interests. Corporate Ownership and Control 4(4): 222-235
Hsieh, N. (2009). Corporate social responsibility and the priority of shareholders. Business Ethics Journal 88: 553-560
This report will outline the best practices for corporate social responsibility in hospitality that will ensure improved efficiency and effectiveness. This report will analyze the importance of incorporating practices of corporate social responsibility in hospitality, as well as some examples of best practices in CSR. CSR plays a huge role in developing the hospitality industry.
Background
CSR is a concept in which organizations involve all environmental, social, and economic concepts in their business operations. These organizations should also integrate CSR in their interaction with employees, shareholders, customers, public authority, and consumers as well as the surrounding environment in which they are situated. CSR entails the way a business is run and its core values. Professionals in the hospitality industry have the ability to undertake best practices, which will have positive impacts on communities in the surrounding environments.
An organization in the hospitality industry has a great impact on the economy within the environment in which it operates. The relationship which the organization will develop with its stakeholders, who include, employers, community, and the environment at large, is an important determinant for the development of a particular area. Generally, relationships, which include CSR and sustainability as vital aspects of their strategies, ensure efficiency and effectiveness (Turner, 2010).
Various best practices of CSR may be undertaken within the hospitality industry to ensure efficiency and effectiveness. Best practices of CSR have to be developed within an organization ensuring all employees are familiar with their specific characteristics. CSR policies should be organizational driven based on common environmental, ethical, ecological, and social principles.
Environmental
Conservation of water and energy as well as solid waste management are major environmental concerns in the hospitality industry. Professionals should develop appropriate mitigation measures that will ensure these environmental impacts are reduced. The hospitality industry should develop partnerships with government and environmental agencies. These partnerships will help in the reduction of energy consumption of their facilities (Chen, et.al, 2012).
Forming partnerships are also regarded as a means of demonstrating credibility and accountability regarding environmental conservation claims. Organizations in the hospitality sector should form partnerships with environmental authorities that will assist and encourage them to practice the conservation of resources.
A great example of the best practice for CSR being incorporated into an organizations core strategy, setting goals to be the most resource-efficient organization, and at the same time ensure the provision of high-quality services and facilities. Organizations should approach CSR initiatives in the same way as their set goals, especially on ensuring a great focus on employees as social initiatives and also as means of stimulating the economy and social CSR performance (Idowu and Filho, 2009). Organizations should develop training programs for their employees regarding ecological sustainability as well as the wise use of resources such as energy and water.
Social
The hospitality industry will have positive impacts on the local and regional environments if it is managed in a sustainable manner. Some best practices for CSR in the hospitality industry include a focus on staff training and retention as well as the health, safety, and lifestyle of staff. High employee turnover and a high proportion of an unskilled workforce are a characteristic of the hospitality industry. These factors provide little room for internal advancement. The hospitality sector is a great employer and source of economic stimulation for the local communities.
The manner in which organizations interact with their employees is a great determinant of their interactions with the surrounding community since these organizations tend to employ individuals within the local community. Therefore, if employment within the industry is unstable, employment in the local community will also be unstable, and this will have a great impact on development. Organizations that aim at solving this issue should provide training to employees who hope to build their careers within the hospitality sector.
Organizations should also develop programs for retaining employees. Retaining employees is a good approach for social practice and business at large since every improvement in employee turnover would lead to cost savings (Chen and Clarke, 2012).
Another important practice involves developing a health and healthy lifestyle program which includes incentives for employees as well as programs for staff members who wish to maintain healthy lifestyles. Incentives will motivate employees and they will, in turn, provide high-quality services to consumers as well as ensure high productivity within an organization. A healthy lifestyle program will ensure employees get assistance based on any health issues they may be experiencing. Employees will also be taught on important health issues and the impacts of lifestyle choices they make.
Economic
The economic impact in hospitality on its surrounding environment greatly depends on its financial success. Organizations within the hospitality industry should develop long-term views and sustainable business models for them to have positive impacts on the environments in which they operate. The manner in which organizations approach their employees is important in ensuring economic stability as well as long-term financial success. This issue is of great importance especially as it will ensure the hospitality industry survives in the current economic environment faced by declining earnings.
This suggests that professionals in the hospitality industry have to incorporate best practices for CSR in order to stay in business. Social responsibility is emerging as a differentiating factor in the hospitality industry as consumers are becoming more careful regarding areas and the manner in which they spend their money. Therefore, each organization has to ensure they adopt best practices that will retain and attract large customer crowds.
Organizations have to be aware of the social and environmental issues affecting environments in which they operate to ensure the interests of the local community are met. Key Learning Points This report provides an introduction to CSR and outlines its benefits to the hospitality industry. The report has provided three facets of CSR which can be used by professionals in the industry.
The following aspects are crucial CSR aspects that will ensure efficiency:
Employees have to be empowered, trained, and engaged in all facets of CSR.
Employees should be treated well and have stable employment and fair wage as this will ensure positive impacts within the local community.
Professionals within the hospitality industry are the originators of CSR
Developing skills within employees will assist them to become successful in the future as well as ensure economic and social benefits in the local environment.
CSR initiatives should be focused on all aspects of the hospitality industry.
Resource conservation will ensure a reduction in utility bills and solid waste reduction will also reduce the hauling fees. Resource conservation and waste management are important aspects since customers have great consideration for CSR and eco-friendliness in their choices.
References
Chen, J, Legrand, W. and Sloan, P. (2012). Eco- advantage in the Hospitality Industry. New York , NY: Routlegde.
Chen, W. and Clarke, A. (2012). International Hospitality Management. New York, NY: Routledge.
Idowu. O. S. and Filho, L. W. (2009). Professionals Perspectives of Corporate Social Responsibility. New York, NY: Springer.
Turner, J. (2010). Sustainability and Corporate Social Responsibility in Hospitality. Web.
Social Responsibility (Corporate Social Responsibility) refers to the formulation of policies by companies geared at protecting the surrounding community and the environment from the negative effects of its operations (Connor 1). It could be in the form of disposal of industrial waste, control of gases from polluting the atmosphere, control of products which could negatively affect the morals of the surrounding community, etc.
Care must be taken not to confuse mistake corporate charity for Corporate Social Responsibility. While corporate charity engages companies in donations and creation of good opportunities for the society, Corporate Social Responsibility is obligatory and it is concerned with the non-interference of communities and the environment by the activities carried out by business enterprises (Rooyen 1).
Social responsibility is a very important input in the creation of sustainable development. This makes companies and businesses that practice social responsibility to achieve a competitive edge that makes them more successful. Success in the business world goes hand-in-hand with the attainment of sustainable positive changes (Rooyen 1). It follows, therefore, that the practice of social responsibility is very instrumental in the achievement of success in businesses.
On the other hand, social responsibility can be viewed as an additional cost. This is because companies spend money to ensure that the environment and surrounding communities are not affected by their effluents, noise, etc. In as much as the cost incurred in social responsibility can be viewed as an investment (Connor 1). The returns from the investment are speculative and it is difficult to quantify them in terms of revenue. Companies have therefore been slow to adopt the ideas of Corporate Social Responsibility in their policies.
Lenovo is one of the companies embracing the spirit of social responsibility. It deals with Personal Computers and it is fully committed to the maintenance of ethical behavior in the business arena and investment in social welfare of its customers and the community as a whole. It also has policies promoting environmental conservation. The company protects the welfare of its customers by producing safety-oriented products (Rosethal 1). Their products are thus both safe to the users and also to the environment after they are disposed of.
Obviously, this kind of investment in additional safety precautions has cost Lenovo a lot but it is a good investment since it has helped it in achieving a sustainable competitive edge in the computing industry. Most of the companies in the computing industry are not usually concerned about the safety of their products.
Products that are unrecyclable are made and normally characteristic of this industry and since the products cannot decompose, they become a hazard after they serve their user (Rosethal 1). Lenovos idea to incorporate social responsibility in the manufacture of its products can thus be viewed as a competitive idea that will have long-term positive effects on the profitability of the company (Connor 1).
Although Social Responsibility is costly, it brings forth goodwill which, in turn, makes a company achieve a competitive edge (Rooyen 1). The company can also be more proud of their achievements if their processes do not harm the environment and the surrounding communities. It is, therefore, of great essence that companies are aware of the effects their processes and products have on the environment. They should also try the best they can to mitigate or eradicate these effects.
The concept of corporate social responsibility (CSR) seems to have largely intertwined in the business environment within the past decades. Whereas, some time ago, the idea of ethical conduct and responsible performance used to be treated seriously by large corporations only, today, these aspects have become an essential strategys part of any organization. According to some specialists, the intention to receive the status of an ethically grounded company might be connected with the development of social media and the Internet, which has made the details of any corporate activity much more transparent and accessible to the public (Popa and Salan 139). Thus, more and more companies consider CSR to be a useful tool for both creating a respectable image and improving their competitive ability.
The Role of Stakeholder Management
Meanwhile, although the majority of stakeholders formally claim that CRS is one of their primary concerns, the experience shows that little effort is done to achieve some significant results in practice. Numerous researchers state that most of the ethically-related efforts are still focused on various types of charity, while the following activity initially implies a broad range of directions, including the environment care, the human rights preservation, and honest cooperation, to name but a few (Popa and Salan 141).
Therefore, managers often tend to make a common mistake they put a particular focus on the needs of one stakeholder group, neglecting those of the others. One should necessarily point out that considering all the stakeholders interests plays a key role in the formation of a profound ethical policy. Hence, globally speaking, one should act equally responsible towards suppliers, customers, society, staff and all the other participants of the collaboration process in order to become truly socially responsible.
Whereas the necessity of developing an effective CRS policy seems to be undoubted, the means of accomplishing this task are widely debated. Thus, one of the key challenges in the relevant field is finding a solution that will help to involve all the employees in the process. In other words, the principles of CRS must be strictly followed not only by the top managements department but by all the staff. At first sight, one might assume that the easiest way to cope with the problem for a company is to introduce some official Code of Ethics or another document of a similar character.
However, one should be prepared for the fact that the efficiency of this tool will not be necessarily high. Thus, Popa and Salan suggest that such measures are rather favorable, though ultimately insufficient. According to the researchers, one of the most effective methods to provide employees social responsibility is to charge them with the tasks that initially exclude any possibility of making an unethical decision (Popa and Salan 141).
The Role of Ethics Officer in the Organization
The success of a particular ethical policy largely depends on the way one manages to monitor its pursuit. Hence, it is significant that all the employees are ethically grounded while facing the most ambiguous situations. Due to the development of modern informational technologies, one has a lot of opportunities to audit the staffs performance and remain aware of the most critical problems in a particular department.
The simplest way to check whether subordinates stick to the fundamental ethical principles is to turn the Internet source into a feedback tool. Enabling the customers to share their opinion on the staffs performance will not only assist in defining the key drawbacks of the workforces approach but will also become a powerful motivation for the subordinates to conduct themselves in a professional and businesslike manner.
The assumption that social media and the Internet represent highly effective tools for the improvement of ethical sustainability in a company is widely shared by different analysts. Thus, Popa and Salan introduce an example of the Public Eye Awards, the ceremony that is aimed at pointing out the companies with both the best and the worst CSR performance. The specialists believe that such social recognition plays an important role in encouraging an organization to devote more attention to their ethical strategies (Popa and Salan 142).
Popa and Salan state that general business culture is the determining factor of the CSR policys efficiency (141). The problem is that the responsibility of developing this culture is often assigned to the managers that are too busy to treat this matter properly. In this case, one of the possible solutions is the employment of the Ethics Officer, who will be in charge of handling all the ethical problems within the organization. The principal responsibilities of such an officer are to make sure that the ethical policy is properly installed and that the employees orderly adhere to its principles. Theoretically, the following specialist is to become the provider of the highest ethical culture as well as to represent an intermediary between the corporate interests and those of the external stakeholders.
Nevertheless, one should note that the tasks assigned to the Ethics Officer are rather problematic to be accomplished in practice. The major difficulty is that the relevant specialist depends largely on the general ethical policy that the shareholders pursue; thus, if the top management of a company tends to neglect the base principles of ethics and is likely to practice fraud, tax avoidance or environmental pollution, the Ethics Officer has few opportunities to improve the situation considerably.
Therefore, the effectiveness of the Ethics Officer as a warrantor of CRS standards maintenance is rather questionable. Some specialists tend to believe that naming the Ethics Officer is an ultimately formal measure that is insufficient for providing a truly efficient ethical strategy (Popa and Salan 141).
Conclusion
In conclusion, one should point out that the concept of CSR is a complex notion that consists of numerous minor aspects. Thus, the presence of particular operational efforts related to organizational ethics does not necessarily imply the fact that the relevant company is socially responsible. In restrained terms, a companys efforts aimed at maintaining ethical sustainability might be determined by the willingness to hide some irresponsible actions. In such cases, the relevant efforts lack a true ethical implication and, thus, have no direct connection with the CSR concept.
There are also instances where organizational ethics does not coincide with the general principals of CSR. Hence, for example, a company might conduct a highly responsible ethical policy within its workforce and, at the same time, show careless behavior towards the environment or the society. In the meantime, other companies might, on the contrary, lack the formal Ethic Codes but show the performance that respects the interest of all the stakeholders. On the whole, CSR concepts might serve as a fundamental base that a company should rely on while working out its organizational ethics policy.
Works Cited
Popa, Mirela and Irina Salan. Corporate Social Responsibility versus Corporate Social Irresponsibility. Management & Marketing 9.2 (2014): 135-144. Print.
The medium-sized manufacturing firm has been in operation for some time. It has been having a healthy cash flow as illustrated in the case study. However, it has neglected one very essential thing. It does not fully honor Corporate Social Responsibility. They discussed the new ultramodern plant with the perspective in mind that it was going to generate more income for the business. Henry, the Controller guided them into understanding how the costs would go up due to the upgrade. Bob, the President, compares his companys adherence to the industrial laws with its closest competitor. The competitors did not have waste treatment facilities, yet they were operating. Bobs firm had one, but they needed to upgrade it due to the upcoming ultra-modern project. According to the management, they would only do more if their competitors were doing the same for the environment. They wanted to break the law willingly.
Main body
The company was supposed to meet all the set standards. It could even do more because the federal regulations required were just the minimum standards. With the new plant, they would still comply with federal standards. The federal regulations were supposed to help them understand the importance of obeying the laws. But the industry had fairly high standards, which the environmentalists favored and wanted the federal statutes to have some improvements as well. The regulations and industry standards did not require the company to seek to know what its competitors had done. Rather, it should do its best to meet the required minimum norms and regulations. In observance of Corporate Social Responsibility, the company had to maintain a clean and healthy environment. The company must protect the future lives of its employees and citizens by being first in watching over the environment. The workers and the citizens have to enjoy their environment so that they feel proud.
The company must be answerable to society and the state about its CSR so that the future generation can have a clean and peaceful environment free from germs and wastes resulting from its operations. The firm in question has shareholders or owners, and other stakeholders. It is always important to serve the interest of all stakeholders. The shareholders expect positive results from the business and income in the form of dividends. Everyone needs to observe the governments regulations. The community expects job opportunities, a clean environment, and good infrastructure. It is important to honor the interests of the firm as it seeks to meet its obligations. The shareholders need their shares to earn an income. Proceeds can only continue to be realized in the long term if the environment remains clean. If one concentrates on the firm and forgets the situation, it could lead to very damaging results.
Conclusion
The management is still grooming Kirk for the position that his senior holds. As a trainee controller, he needs to learn many things that he did not know. It seems like this is one of his first meetings with the management team. He wonders how the presenters translated his records for clear understanding. He needs to channel his concern through his boss, Henry, by first sharing it with him after the meeting. Henry should explain to him the best way to communicate his ideas. Henry might as well understand him and know how to present it to the other management staff. However, Henry may still continue to hold onto the ideas and views accepted in the meeting. Kirk seems to understand better that environmental issues were crucial. He must then find a way of communicating with the Chemical engineer and the President to help them fully grasp what he thinks is the best way forward.
The promotion of diversity within any workplace can have plenty of benefits to the organization under consideration as well as to employees themselves. However, there may be certain instances in which this notion of diversity becomes controversial; this shall be examined in relation to Variety Store Company and the managers responses.
Whether the managers reply is acceptable
The managers response was quite reasonable given this organizations circumstances. If Variety Store Company was confronted with a situation in which there is a job vacancy that possesses two similar qualified applicants but that one of the applicants is a minority and there is a need to restore balance within the organization, then a manager would be obliged to hire a minority. In other instances, a business may require more minorities in managerial positions if those businesses interact with members from the minorities countries of origin. (Williams, 2009)
In the latter scenarios managers would not be favoring employees because of their race or ethnicity but because of practical business reasons and these decisions would be deemed rather obvious. On top of that, diversity has a huge role in making business environments better prepared for the global marketplace. However, there are times when well-intended employment actions can be taken to the limit. Variety Store Company already hires substantial numbers of minorities into its workforce. If the company is required to deliberately promote its employees solely based on their race rather than their qualifications, then this would imply that the company is engaging in reverse discrimination. Even though the manager may have well-meaning intentions to promote diversity, choosing to promote employees on this quality alone is a dangerous threat to the existence of fairness within the organization. The latter organization is not purporting to be color blind but it has already played its part in recruiting minorities and placing them in positions that it feels they are well qualified for. If these positions are not managerial positions, then it is the duty of the employees themselves to get those qualifications as expecting managers to do this for them would be highly unrealistic.
Whether the manager should give additional or different arguments
The manager should stick with his line of defense. However, he can add that it is unfair to businesses to be expected to hire persons who are less qualified for a job just because of their minority status. In fact, a study carried out in 2005 found that about eighty percent of managers and business executives within the country have been forced to promote or hire applicants with less qualification because of affirmative action. In fact, more and more companies are interested in hiring minorities or females in order to meet these requirements. While some HR departments may use this as a public relations gimmick, others are instead bothered by it because their quality of performance is often impeded as a result of getting underqualified staff. When efforts of promoting diversity become institutionalized i.e. when well-able peers are overlooked by managers in order to increase the numbers of minorities holding certain positions within certain jobs, then this could be grounds for illegal racial discrimination. (Rubin, 2008)
Additional data that the manager should introduce
Numerous lawyers and other HR personnel tend to believe that discrimination in the name of diversity can be tolerated or is even good for the organization. However, just because an entire organization is involved does not make discrimination more legitimate or respectable. When employees work hard to fill certain positions i.e. by undergoing training and dedicating relentless time to an organization, then it is only fair for them to be rewarded through promotional opportunities. However, when a company merely makes one a manager because of their minority status then this is disguised racism. Variety Store Company has played its part in promoting diversity but asking the company to promote minorities based on their race and not their qualifications are neither fair nor favorable businesswise.
Reference
Williams, O. (2009). Multiculturalism inspires commitment. UGA Today
Rubin, J. (2008). Diversity in todays corporate arena. London: Routledge
Management, according to businesses and organizational activities refers to the act of people coming together in order to accomplish set goals and objectives. This is achieved by making use of available resources in the organization effectively and efficiently:
Fundamental Management Concepts And Skills
Management performs operations by use of various functions. The main managerial concepts are explained below and how each of them is applied. Organization is one of the key concepts which involve the implementation of the resources required for successful output of the plans. Staffing on the other hand is the process of analyzing jobs recruits and hiring qualified personnel for available appropriate vacancies. The management also requires Leading or Directing concept, which is deciding what exactly needs to be undertaken in a situation and putting the right people to do it. Controlling is a concept that checks progress against set plans while motivation enables employees to work effectively.
Besides the management concepts, the managers possess some skills that they apply differently in their departments. Technical skill is applied when knowledge specialization is required to be applied in a particular job. When a manager wished to build a power base and establish connections, he uses political skill to achieve his goal. Certain situations can pose a challenge to the management hence requiring the manager to apply the conceptual skill to analyze the complex situation. Interpersonal skill is used when communication, motivation, mentoring, mentoring and delegation is necessary.
Importance of Social Responsibility
Organizations have a moral obligation of helping the society deal with possible problems and contributing to the society welfare at large. It is the ethical thing to undertake as business organizations. Social responsibility further improves the public picture or image of the firm. This means that responsibility to the consumer may actually be seen as no more than just a natural outcome of good or perfect business. By having the good action of social responsibility, the confidence of suppliers and business associates towards an organization is greatly improved hence improving stock price. The organizations help to solve the social problems in the society by providing the necessary resources such as funding and hiring more human work force.
Organization and forces for change
Organizational changes arise when the organization takes time to restructure resources. This entails increasing the abilities required to create value hence making the organization more effective. A declining company always seeks ways of maintaining its customers while a growing organization takes time to design new products. There are certain forces that lead to an organizational change. The organization needs to implement new market strategies so as to be at par with its competitors. Organizational change is also affected by forces brought about by the economy of the country such as recession. The change can also be characterized by political forces. New developments in technology have also lead to organization forces of change. This is because they need to update their technology to match up with the latest technology in the market.
Conclusion
Every action taken in an organization should be accounted for in order to avoid repeat of similar mistakes in future. The management team should be more competent and skilled because their decision will determine the failure or successes of the organization. The managers should therefore possess some particular skills to lead the organization.
In this article, the review intends to ensure that the shareholders are able to get their financial returns at a higher level than they used to get before. This was to be effective as provided by the lands laws. As a result, the corporate executives decided to expand their territory by involving the consumers, employees and the environment as legal stakeholders. The author (Archie B. Carroll), studies the nature of corporate social responsibility with the aim of getting its components so as to characterize it in different ways that will help the top management improve their relationship with the shareholders (Carroll 1991) and as stated by the title, The pyramid of corporate social responsibility toward the moral management of organizational stakeholders, it clearly shows that the executives of the firm are trying hard to ensure that the organizations stakeholders are treated with social responsibility and managements behavior is upright morally. In view of the article, it focuses on the basics of social responsibility being enforced by the act of managers morality. I think this ethical approach of morality is a big step towards achieving the goals of the firm.
Background information
The article achieves its goal by isolating the ethical approach of corporate social responsibility and bringing it to a close relationship with the perspectives that show the three common management ethical approaches. The author also fleshes out the meaning of managing stakeholders in a moral and ethical manner. The article tries to understand the real meaning of corporate social responsibility and as Eells and Walton (1961) puts it, it refers to the problems arising when corporate enterprise casts its shadow on the social scene (Carroll 1991 p.39).The article suggests the possibility of the management getting involved with various responsibilities which will help them understand the shareholders and what they need to get full satisfaction. These responsibilities are the economical, legal, ethical and philanthropic responsibilities. Once the management has ensured that all these responsibilities are fully covered, there is a possibility that the firm will be able to make profit and thus be able to maximize shareholders profits. As stated by Carroll (1979), it is possible for the firms management to make a lot of finances in the process of adapting to the societys rules together with all those firms that are under this law and also those that are in this ethical custom.
This article has several shortcomings arising whereby some legal claims may come up when the management of the firm fails to treat the people they are responsible for in such a way. These legal claims may be raised by the shareholder, the consumer or even an employee. Other than a legal claim, there can arise a moral claim whereby the people involved would want to be treated like everybody else and demand that their views and opinions be put into consideration when the managers are deciding the fate of the firm. This might put the management at a state that they are unable to control the activities of the firm any more. They are at a loss of deciding whom to consider among the stakeholders and their important issues that they should include when making decisions for their businesses. There may also arise a large number of stakeholders with different claims whereby the management is supposed to draw their attention to. It becomes hard for them to manage all these groups without hurting any of them. With this, the management has to put into consideration the issue of legitimacy whereby the stakeholder has the right to make a claim and also their power.
Considering other articles I have come across on the same subject, this article to me is of higher quality because it lays its emphasis on giving out an overview of corporate social responsibility and how the management can control the firms activities by ensuring that they treat their stakeholders with moral responsibility. Other articles leave their readers in suspense such that they are unable to understand the content fully. Writing a review of such an article becomes very hard because of the failure to understand the content. The most convincing point in this article is that the management is able to describe the type of stakeholders they are dealing with; able to get to know them better and analyze their likes and dislikes as well as control the activities of the firm but, am not convinced with the fact that the author of this article declares that the stakeholders responsibility, makes decision- making process hard and consumes a lot of time. I fail to understand how this can be, yet everybody involved with the firm should be responsible in one way or another. By saying this, I have related this subject to a personal experience from another firm where the management based their responsibility on one side, that is, they only considered the well being of the customers without looking at the employees rights. The employees failed to perform effectively, and this led to a drastic downfall of the firm.
Conclusion
In conclusion, I would say that the issue of morality and ethics in managers should be considered when recruiting managers. This is because some managers can be immoral like the case of Charles Keating , where a major accounting firm said this about him, seldom in our experience as accountants we have experienced a more egregious example of misappropriation of generally accepted accounting principles (Carroll 1991 p.39). According to Carroll, their goal is to put into action the ethical types and emphasize on moral management. This will be achieved through taking into consideration the four types of corporate social responsibilities.
References
Carroll, A. B., (1979) A Three-Dimensional Conceptual Model of Corporate Social Performance, Academy of Management, Review, 4, 4 (1979): 497-505. Web.
Carroll, A.B., (1991) the Pyramid of Corporate Social Responsibility: toward the Moral Management of Organizational Stakeholders, Elsevier.
Corporate social responsibility or CSR in short is also referred to as sustainable business relationship and is an integral integration into a business model to function as a self-regulation mechanism where the business monitors and ensures that it complies with the laws, standards of ethics and norms both national and international. (D Wood, Younger).
For a multi-national corporation like Siemens, the approach of corporate social responsibility is a very important part of their business philosophy. Siemens always has an active participation approach to all their corporate social responsibility activities.
Their employees are always willing to give a helping and caring hand to those people who are in one way or another disadvantaged apart from the mere action of giving a fat cheque to cover expenses and serve as funding to the projects. Foote 1999 says For Siemens, devoting their time and expertise to assist the needy children, the youth and the elderly is a part of their identity. It is what differentiates them from other corporate.
Ranging from giving hope to the challenged or caring for the environment, Siemens has always participated in initiatives that require responsibility to be served to the society. Siemens always makes sure to satisfy all their stakeholders. The following are termed as the stakeholders: employees, suppliers, customers, investors, policy makers and the society at large. Brown, Dillard and Russer, Marshall say that,
To employees, the company invests considerable resources in training them, upgrading their professional qualifications, safeguarding their health and assuring their welfare. To supplier, the company aims to promote sustainability by generating long-term value with the help of excellent and innovative suppliers with a strong focus on economic, ecological and socially responsible operation.
To customers, Siemens aims at aligning their business strategies, goals and objectives with the demands of customers as well as with what the customers expect, (Correst, Nathan Bedford). To investors, the company aims at giving the best return on investments that pleases the investors as well as to maintain a good corporate image.
To policy makers, Siemens makes their business decisions based on political decisions and public policy debates. In addition to maintaining business relationships with government institutions and agencies which are customers for our products, solutions and services, we also openly contribute to the shaping of public opinion through various means in our capacity as a corporate citizen, (Davis, Kirk Blomstrom and Dawart, Crowther).
The case against Siemens
Despite Siemens terming themselves as being a global powerhouse in the electronics and electrical engineering , Siemens AG has been curbed by some corruption cases. The company was fined 1.6 billion US dollars. This was the largest fine for corruption in the history of the Anti-corruption cases and also in the U.S. Securities and Exchange Commission (SEC) history.
Evidence was sought signifying that the company was involved in bribing all over the world in several different business sectors. The company (Siemens AG) and its subsidiaries in Venezuela, Argentina and Bangladesh were fined $450 million for allegations concerning corruption as per the U.S. Foreign Corrupt Practices Act (FCPA). Dawart (20).
Foote adds. Siemens which is listed in the New York Stock Exchange is regulated by the U.S. Justice Department and U.S. Securities and Exchange Commission (SEC) despite it being a German company. Siemens further agreed to top up with $350 million to cover charges incurred by SEC. Wills a renown researcher says that, The company (Siemens AG) also paid $569 million to Munich Office of the Prosecutor General to whom the company had in October 2007 paid $285 in fines.
The evidence against Siemens revealed that the company bribed public officials in many business sectors and in many countries in order to be awarded large public contracts. Corruption within the company was so rampant and despite the companys senior officials having this knowledge, they turned blind eye to the corrupt deals and did not do anything to attempt to stop them.
Bribery almost became a part of the checklist in all of Siemens operations across the world. The agreement also made it that Siemens had to be checked for a period of four years by an independent compliance monitory and also agreed to co-operate with the Department of Justice in further investigations of corruption within the company by agent and employees.
If we examine Siemens corporate social responsibility in this case, the company did not stick to their own code of ethics and business conduct. The company also broke one of its core values which are to be responsible. Their value of responsibility states that We are determined to meet and wherever possible, exceed all legal and ethical requirements.
Our responsibility is to conduct all business according to the highest professional and ethical standards and practices: There must be no tolerance for non-compliant behavior (Habisch, Andre and Jan, Jonker. Schmidpeter), This principle of responsibility is meant to act as a crucial guideline to the making of business decisions so by breaking this value and encouraging corruption by not stopping it despite being aware of it, Siemens did not meet its ethical obligations here.
There is no doubt on this. By breaking this principle, the stakeholders were negatively impacted.
The case for Siemens
Despite the court cases and fines concerning Siemens and alleging corruption, the company has however learnt its lesson and there have not been any reports of corruption in its operations. At least by correcting where they had gone wrong, the company still showed that they were willing to be responsible by both handling the situation to curb corruption and agreeing to be accountable and responsible and paying fines.
Siemens AG also launched a $100 million Integrity Initiative. This initiative has been argued by many to be as a result of the court cases concerning corruption since the initiative was started in 2009 after the huge fines that the company had to pay for corrupt deals. According to Wills, The Siemens Integrity Initiative aims to fight corruption and fraud through activities such as education and training.
The company also has a large corporate social responsibility portfolio from all over the globe. They have some corporate citizenship programs in several countries. In South Africa, the company is well known for its AIDS program known as REACH. Siemens collaborates with several partners to support HIV victims by providing cheap health care and providing support to HIV positive employees. The patients receive their medications and/or vaccines and are given counseling and ongoing personal and group support.
Grace, Darmoth and Habisch, Andre says that in Egypt, as part of the Siemens Generation 21 education program, the company supports university education with several projects. Some of the projects include contest to design energy saving systems and idea workshops on energy conservation and reducing carbon footprints.
In Brazil, the company built a high-voltage line round the Brazilian rainforest. The line is 14km long with the aim of keeping to a minimum the projects footprint and to reduce to the most possible minimum, the impact that the project would have on one of the worlds richest fauna and flora habitats.
The project did not involve any heavy machine work. Rather, they used laborers to excavate, pneumatic jack hammers and installed cables by hand or if needed, by helicopter. Wills says. All waste was cleverly handled and no waste was left unprocessed or unmoved.
According to Donations, employee volunteer work and partnerships 2008, Siemens is an equal opportunity employer for the different label, when it comes to employment. Siemens has always given the challenged people a level playing ground in conjunction with the Ability Foundation, the physically challenged or those with other disabilities to interviews (Jastram, Sarah and Paluszek, John). These interviewees are given aptitude tests like the others and are not given any special attention or consideration.
The development of corporate social responsibility programs demonstrates that Siemens is fulfilling their obligation to the society and to the environment by developing sustainable development.
Conclusion
Siemens as a company has been involved in both the positive and negative influences in relation to their stakeholders that is the employees, society, suppliers, customers, investors, policy makers and the society at large. On the positive side, Siemens had engaged in positive environmental impacts and corporate citizenship roles that have empowered the stakeholders and made Siemens a company that all are ready and willing to be associated with.
On the negative side, Siemens showed a lack of care for their core values and their delayed response in finding and handling the situation had a great negative impact to the stakeholders and in the way our society is wired, despite how much the company attempts to make up for the wrongs, it will be the most difficult thing that the company has done since people will always focus on the negatives more than the positives.
In terms of its core business, through the rampant corruption within the organization, Siemens demonstrated that in order to please their stakeholders, they were willing to do this by any means be they clean or dirty. This is not a good business approach since it usually destroys businesses especially as seen in the huge fines paid to the courts.
Recommendation
I would recommend that Siemens AG stick to its core value of exceeding all legal and ethical requirements and conducting business in the highest professional and ethical standards and having no tolerance for non-compliant behavior (Habisch, Andre and Jan, Jonker Schmidpeter). In this way, Siemens will be able to give full value to all stakeholders in an honest way without jeopardizing anything.
I would also recommend that Siemens AG should continue in its corporate citizenship and in the other good corporate social responsibility initiatives that it has in the past been involved with.
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Though insurance is all about covering and managing risks, the contribution of the collective and obligatory social insurance systems towards developing social responsibility on every individual of a society is not only built up to cover the costs of illness and disability, to assure the households income levels in case of breadwinning premature death, and to provide for a pension during old age. The role is to provide awareness and consciousness individually so as to manage the individual risks.
There was a time when entire collective insurance was provided with premiums and benefits regular differentiation on the basis of income only; today, risk management is provided as well. Circumstances are changing as the public systems are restructured and partially dismantled. Developments during the 1990s have comprised some privatisation of social insurance, while those parts that remain in the public domain have been individualised and exposed to competition in considerable measure. Throughout the development and growth phase, insurance has never been subjected to forget managing their risks through the provision of innovative services and advice.
Thus insurance systems have been motivated by solidarity, they have been characterised by strong collective and mandatory elements in which public involvement has been all-inclusive in many cases and predominant in others, and the profit motive has been entirely absent in most cases, or at least strongly subdued. Insurance systems have treated social responsibility in the same manner as what in the past was commonly referred to simply as the business economic function.
That means todays insurance companies concern about weighing the legal, ethical, moral, and social impact and repercussions of each of their decisions in context with our society. Dyer & Whetten (2006) suggests that In the field of social responsibility, evidence suggests that family-controlled insurance firms serve as irresponsible social actors as compared with other social concerned firms (Dyer & Whetten, 2006).
When Morck and Yeung (2004) examined family-controlled firms in the 27 largest industrialized countries in the world, they found that such family firms were related to various dimensions of societal progress. According to them, these dimensions were none other than the economic development, physical infrastructure, health care, education, quality of government, and social development measured in the context of income inequality (Morck & Young, 2004).
Though in the UK, risk management focuses on public arrangements to provide for the costs of the treatment of illness and to protect against income shortfalls in the event of poor health or premature death, and during old age, but the primary focus is on those families or individuals who are subjected to many challenges in protecting their property. Of course, with social exclusion comes the area of neighbourhood safety and financial crime. Social issues that occur in insurance responsibility are in three areas: Total compliance with international, federal, state, and local legislative laws and acts, moral and ethical standards and procedures under which the firm will operate. The most important one is philanthropic giving.
Philanthropic Activities
According to Anderson (1989), In the area of philanthropy, where there is considerably more latitude of operations in how, when, where, and even if the insurance division wants to contribute money or other resources to worthy causes, the firm must deliberate about and resolve any questions prior to establishing fair and workable guidelines (Anderson, 1989, p. 16). Some of the common charitable and social activities that come under philanthropy include health, education, safety standards and providing equal opportunity regardless of age, gender, sex, caste or creed.
One of the basic problems that Insurance systems face in philanthropic giving is to first determine whether the company wants to give any money at all to social causes and, if so, how much. After a decision to give has been made, questions remain. Which internal and external agencies should receive money and how much? Should the money be distributed equally between all contributing subsidiaries, or should it be spent primarily in a few selected high payoff areas? Should other companies be pushed to give the maximum allowable amount? What strings, if any, should be attached to the funds? Who should be managing risks in such philanthropic activities?
Risks concerns in philanthropy
For an insurance firm, managing risk while contributing to society is a major concern in philanthropy. That means the insurance system is dealing with social responsibility in a parallel manner. On the one hand, it has limited choices of avenues in which to participate in the legal arena, while on the other end, it has to maintain its credibility in the moral and ethical area, and when it comes to philanthropy, there are boundaries.
Alternatives should be chosen in light of the personal values and support of the manager and retention of the inner coherence and health of the organization. Participation and involvement in any area depend on the companys available resources. Once involvement is determined, it must have the complete backing and support of all levels of management if it is to be satisfactorily complemented and enforced. This need for continuous top management and other levels of management participation and support in such programs is reinforced by four separate studies on establishing and implementing social responsibility programs.
Moral and Ethical Standards
The onus is on the firms shoulders to assess its objective in the light of ethical and moral standards and to draw significant boundaries around it. These boundaries make it clear for the company what it is going to tolerate and what not. Here the risk management for the company is to evaluate the level of integrity with continuity so that the areas of vulnerability must be examined with appropriate limits established in each of these areas. For example, an insurance company must consider important points to consider when doing charity. According to Anderson (1989), One way of examining how well the charitable institutions are doing is to look at what percentage of their total budget is spent on fundraising and other expenses and what percentage is spent for actual services (Anderson, 1989, p. 247).
Since not detecting or overlooking violations weakens the fear of punishment, a system of inspection must be implemented and strict levels of punishment enforced for violation of the code. Expenses for implementation and control cannot get out of hand and policing, and enforcement cannot be done in a way that adversely affects the attitudes or the creativity of the employees. The objectives of the company in the area of philanthropic giving should be as clearly defined and explicit as are those in economic policy and strategy. The company should be as firm about what it intends to be and do in this area as it is about the business in which it wants to be involved and the type of people it wants to attract to its organization.
Health Safety Insurance
Health safety standard care is determined by the availability of high-quality medical care to all citizens on a test of professionally judged medical needs and without financial barriers to access. According to Sorell (1998), There are various Insurance forms through which health safety principle is implemented, including that of a tax-based public service as in the UK, tax-financed insurance as in Canada, or legally required compulsory social insurance as in Germany (Sorell 1998, p. 138). That clearly indicates that the same principle can be implemented in different ways in context with the compatibility with the principle of comprehensive, high-quality care that is available to all on a test of professionally judged medical need.
Since the rising cost of health care challenge to the ethical basis of public provision has claimed that health care resources need to be rationed. Therefore insurance firms need to be clear about rationing. Rationing, as Weale (1995) explains, is all about that a health care system must be subjected to an implicit or explicit policy decision to withhold specific measures of treatment or care on the grounds that their economic costs are prohibitive, even though the measures in question are thought to yield some medical benefit (Weale, 1995, p. 831).
Public Service
Insurance aims at least some responsibility for assuring medical care for those citizens who are socially excluded on the basis of caste, colour or creed. In this case, insurance firms are socially responsible for providing resources to those members of the society that are unable to consume sufficient resources to insure themselves or, if they have sufficient money, they are characterised by any disability, which means they allocate inadequate resources to cover their health care needs.
According to White (1995), One solution here is to cope up with such situations through socialising insurance either through the tax system, as in Canada, or through a system of non-profit sickness funds based on compulsory membership, as in Germany (White, 1995, p. 61). White suggests that these are the common ways which contribute towards socialising insurance for the correction of the distributional deficiencies of the health care market (White, 1995, p. 61).
In the case of public ownership of medical care resources in hospitals and health centres, the insurance market must socialise its goal base upon a judgement about the benefits of being able to plan the allocation of resources, including personnel, in a more integrated way than is allowed for otherwise. Private health insurance must consider those facts upon which poor citizens are excluded from coverage on the grounds of poverty or on some pre-existing conditions that make private insurance unaffordable. This does not indicate that user charges do not matter, either to raise revenue or to signal to health care consumers the costs that are being borne, but any such measures ought to be constrained by the principle that no charges ought to make access to health care unaffordable for even the poorest citizen.
Access and Equality to Health Care
It is true that the denial of medical care on the grounds of religion, race, caste, political belief or social position constitutes a lack of equal access. But this is also true that in the Western democracies it is money rather than these factors that is more usually the topic of concern in discussions of access. Therefore it is clear to us that access is not equal if some people are denied care because they cannot afford it. Age factor debate on the distribution of health care engenders more controversy as elderly are denied a treatment because their prospects of benefiting from it are very rare.
This notion would not hold the same significance if younger patients are regarded as a denial of equal access for the treatment. For it is not always the age factor but the likelihood of benefit, that is the ground of the decision. Like if the treatment instead of the elderly patient is applied to the younger patient, it might be a success in yielding fewer life years to younger patients as younger ones may be expected to live longer, then that should be deemed a denial of equal access to the elderly. There is no doubt that denying medical care on the basis of age constitutes unequal access to the citizens, but such unequal access arrangement is not always inequitable or unjust.
Role of Insurance in Finance
Most people believe that though pension balances are properly defined and managed, there is still a need to make the balances as handy as possible, allowing employees to be able to contribute on a tax-deferred basis up to reasonably high limits on top of employers contributions. This would not only help the insurance companies to evoke sense of responsibility among the individuals to encourage them leading to a higher national savings rate, but would also make it easier to provide better pensions. Self-management of pensions ought to be allowed, by providing, for example, a menu of unit trusts from which an individuals pension balances can be drawn.
According to Culp (2001) Financial Insurance sector also plays a significant role in applying consumer protection and product liability laws to financial services by raising standards of disclosure associated with the concepts of what consumers require in order to make informed decisions (Culp, 2001, p. 65). This way the insurance policies are clearly transparent as they represent the companys responsibilities in affecting the relationship with the consumer.
References
Anderson W, Jerry, (1989) Corporate Social Responsibility: Guidelines for Top Management: Quorum Books: London.
Culp L, Christopher, (2001) The Risk Management Process: Business Strategy and Tactics: Wiley: New York.
Dyer W, Gibb & Whetten A, david, (2006) Family Firms and Social Responsibility: Preliminary Evidence from the S&P 500 In: Entrepreneurship: Theory and Practice. Volume: 30: 6: p: 785+.
Morck, R. & Yeung, B. (2004). Family control and the rent-seeking society In: Entrepreneurship Theory and Practice, 28(4), 391-409.
Sorell Tom, (1998) Health Care, Ethics and Insurance: Routledge: London.
Weale, A. (1995) The Ethics of Rationing, British Medical Bulletin 51:4, pp. 831-41.
White, J. (1995) Competing Solutions (Washington, D.C.: Brookings Institution).