Ethics And Social Responsibility

By Dr. Matthew Ogunbukola

Introduction

Ethics and social responsibility play an important role in business management. Organizations, both public and private, feel the need to incorporate corporate responsibility into their organizational culture. Ethics deals with knowing what is wrong and what is right. Business ethics encompasses analyzing ethical decisions, beliefs, and actions in line with business activities. Organizations are expected to show ethical values and operate socially responsibly.

The major issue is that business ethics integrates different sets of ethics. This is the reason why organizations should employ good individuals as workers. Social responsibility deals with business conduct concerning broader social values. It questions the duties of business to the entire society (Sims, 2003). In this light, this paper discusses the importance of ethics and social responsibility and various practices and theories employed in different organizations.

The Importance of Business Ethics

Businesses operate in such a way that their owners can realize some benefits. Business owners are also known as shareholders. Though, other stakeholders are part of critical components of decision-making because businesses must act in a liable and ethical manner and reflect on the potential effects of any choices made. Stakeholders such as dealers, customers, staff, owners, and communities are an integral part of business operations.

Customers, who are also citizens, require affordable quality products. Likewise, other stakeholders expect fair business engagements from organizations. Citizens need to know that the right things are being done for the right reasons. This is because organizations target citizens in their plans for making profits and citizens must observe the conduct of businesses to make the right choices (McNamara, 2010).

Knowing ethical and social norms help citizens to keep organizations in tandem with society’s expectations. Businesses should work in a way that is lawful, beneficial, ethical, and in line with social commands. Ethics in the business enable organizations to maximize profits, utilize business resources, and create support in the market. Ethical values should command what is suitable to pay employees as well as charge consumers.

An organization is therefore required to have a culture that enhances strong values. This will also attract good employees to the company. For example, companies strive to be included in the list of the top 100 firms in the United States issued frequently in Fortune magazine. The most common criteria used are analyzing profit sharing, bonuses, and stock markets. The list also incorporates policies and rewards that refer to work and enhance social responsibility (Griffin, 2008).

Reflection on Business Ethics and Social Responsibility

Social responsibility is an element of ethical conduct. It is improving the community in general. Areas of social responsibility include business giving, ecological and environmental quality, consumerism, government relation, and labor relations. Social responsibility improves the public image of an organization and enhances the local economy.

Trust and an excellent reputation are among the most important assets in any business that can only be realized through social responsibility. Social responsibility also attracts and retains employees who are committed to their tasks, hence improving performance. By doing so, companies can reduce the cost of recruitment.

Moreover, social responsibility increases the customer base and attracts investors. Being a socially responsible organization enables a business to gain a competitive advantage. Developing products that are friendly to the environment adds value and increases sales in business. Investors prefer socially responsible businesses because it is an indication of proper management and a good reputation (The Economist, 2009). However, if a company produces products that are detrimental to the environment, there is a high chance that the company’s image can be destroyed.

The effect of pollution on air, water, and land calls for the need to observe ecological and environmental quality. Companies should clean up the existing pollution, start processes to reduce pollution, control noise, recycle materials, and perform aesthetic improvements. Consequently, social responsibility determines how children behave and thus there is a need to educate children about social responsibility to put a sustainable investment in the future. Children are potential business stakeholders in the future. Practicing social responsibility such as training children and improving health and education broadens their view and persuade them to help others. Teenagers can be asked to take part in volunteer programs in nursing homes, health centers, and schools. This helps to heighten the idea that we are accountable for the state and quality of our societies (Griffins, 2008).

Practices of Corporate Social Responsibility

Ethics and social accountability in the context of business have changed over the last decades. This is due to various ethics scandals that have captured the interest of people. It is vital to talk about some of these scandals. The Salmon Brothers, a sponsor of security, defied Treasury policy in the 1990s by purchasing more than thirty-five percent of a Treasury copy of securities at auction. This business scandal forced three top executives to resign, including other effects.

Coca-Cola, Mitsubishi, and Texaco are some of the companies that received such accusations. At the start of the new century, scandals were persistent in the news. In 2001, Firestone and Ford expressed regret to their customers for continued tire failures. Business ethics crimes are still common in the present days and therefore there is a possibility of changing ethical and social responsibility practices and theories in the future.

From the inference of public interest in social responsibility during the last forty years, two implications can be made. Attention to social responsibility has increased throughout the past three decades. Consequently, attention to ethics and social responsibility appears to have been driven by business scandals. In essence, society has constantly changed its view on the issue with different tastes; some take it seriously and others take it lightly.

Because of the increasing ethical missteps, companies have been undergoing intensive analysis from the public about their performance. Due to many allegations, such as unfavorable care for the customer and environmental degradation, social responsibility has changed dramatically and thus companies are required to offer back to the community. It is believed that individual corporations are like citizens so they should contribute to society (Henn, 2009).

The current organizations in many aspects are part of the society made up of many persons with different views and expectations. This implies that there is new demand for all stakeholders to reorganize their relationships.

For example, according to the President of McDonald’s, Don Thompson, the enduring success of the company relies on customers’ trust and loyalty – in the value and safety of food, in the business processes, and in the firm’s commitment to solving issues presented by the customers (personal communication, June 13, 2010). Those businesses expected to last for long will be concerned with making certain that the evolving requirements are met.

These companies will need to observe legal, ethical, and social requirements while being able to operate in tandem with changing economic conditions. In the past, social responsibility was seen as a practice that can decrease profits and thus contradict the reason for the firm’s existence (Griffin, 2008).

Likewise, most organizations applied the utilitarian principle in solving ethical problems. The utilitarian principle argues that an action should be taken if it brings greater value to the whole organization. Modern organizations take into consideration the rights of every individual. This is known as the moral rights principle of solving ethical problems. Modern firms must observe and preserve the rights of employees, customers, and the whole of society.

In the future, ethics and social responsibility will have a new meaning in the context of business operations. From the current happenings, businesses may be required to be adaptive and interactive. Future organizations will need to observe the changing laws that govern business operations.

As pressure increases from the outside environment, companies will be able to anticipate environmental changes and blend their own goals with those of society. This is an interactive approach that reduces the difference between society’s viewpoint and business routine.

When Things Go Wrong

It is difficult to handle a business crisis but avoiding it or postponing a response could worsen it. Some situations may warrant the advice of a lawyer and a crisis expert. Here are some general practices that could be followed:

• Be open and transparent.

• Prioritize those impacted by the situation.

• Apologize

• Fix the problem.

Conclusion

Social responsibility is part of business ethics that requires managers to be open in their business engagements. Observing ethics and social responsibility improves the company’s image and results to profit maximization.

The whole world would benefit from social responsibility because companies are required to take part in the following aspects: improve environmental quality, provide truthful advertisement, start industries in marginal areas, provide equal employment rights, develop quality products, and enable freedom of participation in company affairs.

As explained in this paper, ethics, and social responsibility requires constant changes in organizational conduct and performance. Since internal and external requirements change, firms likely to survive in the future must observe the changing needs of society and regulations imposed by the government. In essence, since businesses create some problems, they should help solve them.

Ethics influences the decisions we make and the actions we take, from our personal lives to our professional careers, and beyond. We are all part of an interconnected global community. Our contributions to the common good, no matter how big or how small, can have a lasting impact. Choosing an ethical lifestyle will ensure our impact is positive.

Business leaders have a unique opportunity to create and influence the ethical culture of their businesses and among their stakeholders. Even bringing ethics into your business mindset will help you approach situations more ethically. And if you are unsure how to create an ethical culture in your business, leading by example is a great way to start. It’s as simple as being good and doing good.

Work Cited

Griffin, A. (2008). New Strategies For Reputation Management: Gaining Control of Issues, Crisis & Corporate Social Responsibility. Philadelphia, USA: Kogan Page Limited.

Henn, K. (2009). Business Ethics: A Case Study Approach. New Jersey: John Wiley & Sons, Inc.

McNamara, C. (2010). Complete Guide to Ethics Management: An Ethics Toolkit for Managers. Free Management Library. Web.