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Ethics and Social Responsibility

Corporate social responsibility (CSR) is an ethical, deliberate set of actions and activities, which are normally geared to make an impact on the business or company’s activities. Corporate social responsibility is widely practiced by many corporate entities. However, the question that needs an answer is that of a relationship between CSR and company’s profit increase, efficiency in the work place, employee satisfaction, and customer and investor confidence. This report not only answers those questions but also affirms that CSR is critical for the increase in efficiency in work place. In addition, it is a great marketing tool for brand visibility and penetration for both big and small companies. Efficiency in work place and company profits are very critical for sustainability and CSR provide an opportunity to increase profits and efficiency among employees.

Corporate social responsibility (CSR) is critical in modern corporate business strategy. An old cliché Charity begins at home adequately summarizes corporate social responsibility at work. Companies should actually show responsibility to their workers by taking a good care of them, before extending their best intentions outside the work place. It is the ultimate responsibility of human resource managers or the employer to design ways and modalities of treating employees in a way that they look forward to coming to work every day. Employees are the best public relation officers, and therefore they should be accorded the best. This will not only reward their efforts, but also endear them to the company. The term Corporate Social Responsibility is a multifaceted concept which calls for a greater meaning, rather than simple. Many people see CSR to be corporate public relations; however, CSR has a deeper meaning, which transcends many spheres of business and human welfare. Corporate Social Responsibility is a “process of operating a business that meets or exceeds the ethical, legal, commercial and public expectations that society has of business” (GSI, 2006). It is important to note that HR practitioners and managers, who employ CSR at the workplace, should have a broad view of employees and human welfare (GSI, 2006). In this regard, if the business has a long-term goal to deliver a sustainable value, human capital is very important in strategically implementing the prudent management practices that work towards the company’s business goals. This is a report on the study carried out on the impact of corporate social responsibility and efficiency in work place. In addition, the study critically looked into ways of how business ethics and social responsibility could be used to increase efficiency, the effect that it can have on the reputation of the company, and the effect it can have on the company’s relationships with employees, investors, and customers.

This report highlights the impact of corporate social responsibility in the work place and how the business can implement ethics and social responsibility to improve its reputation among employees, investors, and customers. The report also provides insightful information on corporate social responsibility, which lays down the guideline which can be used by the company in reviewing and designing different corporate policies.

The study employed the use of secondary information, majorly peer-reviewed journals and case studies. This methodology was deemed relevant to the topic of the study and the information the company required on the claim that CSR increase efficiency in the work place, as well as how CSR impacts the company’s reputation and relationship with employees, investors, and customers.

CSR increases efficiency in a company. Employees who are motivated talk well about their company. This makes the employees feel part and parcel of the company, as well as work hard and efficiently on their tasks. Thereby, efficiency is critical for the company’s growth and development.

Analysis: Efficiency in a work place is fundamental in running a successful company. It is important for a company to engage in activities which promote efficiency among the company employees. These activities tend to reward, motivate, and recognize the employee as one of the strongest pillars of the company.

It is found that enthusiastic CSR initiatives raise chances for the company getting in the FTSE4Good, Dow Jones Sustainability Indexes, and others (Robins, 2011). This has an impact on an instant increase in the company’s market value as a result of a positive perception from the customers and investors. That recognition came in more profits, which made the investors happy. However, it is also found that most companies’ executives still hesitate to apply what they have known on corporate social responsibility being concerned with their companies’ profitability (GSI, 2006).

Analysis: Listing in FTSE$Good or Dow Jones Sustainability Index improves the overall image of a company. This is important in customer attraction and retention, as well as in boosting investors’ confidence.

It is found that CSR improves company revenues and profits (Robins, 2011). First, it is found that most executives are well aware that CSR can improve profits and they understand that CSR enhances respect for their company in the marketplace, which can result in higher sales, enhance employee loyalty, and attract better personnel to the firm (Robins, 2011). On the other hand, Robins (2011) affirms that, “CSR activities focusing on sustainability issues may lower costs and improve efficiencies at the work place”.

The research on CSR’s relationship with business profits is rapidly growing. For example, Cristiana Manescu, in her work, “Economic Implications of Corporate Social Responsibility and Responsible Investments”, noted that, “the results [of her thesis] reveal that CSR activities do not generally have a negative effect on profitability, but that in the few cases where they have a positive effect, this effect is rather small” (Robins, 2011). In addition, other studies on CSR complement the finding with additional evidence.

Friedman, (1970, p. 33) explains that,

A meta-analysis of 52 studies (which represent the population of prior quantitative inquiry) yielding a total sample size of 33,878 observations gives out a findings that points out  that corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility, is likely to pay off.

It is equally important to point out that, “CSP (corporate social performance) appears to be more highly correlated with accounting-based measures of CFP (corporate financial performance) than with market-based indicators, and CSP reputation indices are more highly correlated with CFP than are other indicators of CSP” (Luck, 2006, p.81).

The research points out that, CSR, “offers potential benefit to corporate profits, however there is another unanswered problem, and that relates to causation” (CSR, 2012). Does the presence of large profits result in higher expenditures on CSR or does CSR itself create larger revenues? The study found that, “the direction of causation remains an open question which is good and a good CSR provides good resources to spend on CSR (Detomasi, 2008, p. 808). The study also established that, “whether profitable companies feel rich enough to splash out on CSR or CSR activity itself brings profits” (Friedman, 1970).

According to the mentioned study, the benefits associated with CSR have prompted big corporate entities nowadays to get involved in CSR (Lee, 2008, p.55). It is prudent to note that “that is clear admission of how important CSR might be to their bottom line, no matter how difficult it may be to define CSR and link it to profits” (Lee, 2008, p. 56). The research studies carried out have generally demystified the claims that there is no clear-cut relationship that corporate social responsibility (CSR) directly results in profits, and thus most large companies are actively engaged in it (Garriga and Mele, 2004, p.53).

Analysis: Profit in a company is important for sustainability and growth. CSR increases profit by ensuring that customers identify the company as their best choice, based on CSR activities they get involved in.

CSR boosts the company’s internal and external relationships. It is found that “defining the experience of CSR in relation to different industries is this study, The Economics and Politics of Corporate Social Performance, by David P. Baron, Maretno A. Harjoto, and Hoje Jo, published on April 21, 2009” (Robins, 2011). In this regard, the results also point out that, “For consumer industries, greater CSP corporate social performance is associated with better CFP corporate financial performance, and the opposite is true for industrial industries” (Davis, 1960).

It is also found that CSR has a tight emotional impact on customers, employees, and investors (Luck, 2006, p.80). This is because it makes them feel part of the company. This perception is quite important for sales and growth of any given company.

Keith Davis’s model of corporate social responsibility provides five propositions that clearly describe the need for businesses to take action that protects and improves the welfare of society and the organization (Luck, 2006, p.79)

These prepositions include:

  • Proposition number 1: Social responsibility arises from social power (Davis, 1960, p.71).
  • Proposition number 2: Business shall operate as an open system, with open receipt of inputs from society and open disclosure of its operation to the public (Davis, 1960, p.71).
  • Proposition number 3: The social costs and benefits of an activity, product, or service shall be thoroughly calculated and considered in deciding whether to proceed with it (Davis, 1960, p.71).
  • Proposition number 4: Social costs related to each activity, product, or service shall be passed on to the consumer (Davis, 1960, p.71).
  • Proposition number 5: Business institutions, as citizens, have the responsibility to become involved in certain social problems that are outside their normal areas of operation (Davis, 1960, p.71).

This guideline offers an incredible platform for companies and firms to design CSR initiatives which could propel them ahead of competitors.

Information Analysis

  • Based on the reviewed studies above, CSR promotes company profits
  • It also improves a good relationship among the employees, investors, and customers
  • It forms one of the best marketing tools, thereby improving brand penetration
  • It improves the company’s image both within and outside, hence the company reaps the benefits in sales and profits associated with the good image

In the implementation of any CSR initiative, all companies, firms, or organizations should adhere to the following four major areas of measurement of the success or failure of CSR projects.

  1. Economic function of CSR: This is a measure which gives indication of the economic contribution the company is making to the society and other stakeholders, such as employees, customers, and investors.
  2. Quality-of-life: This measurement modality should indicate whether the quality of life of people in the society is either degrading or increasing.
  3. Social investment: The measurement of social investment is comprised of the capability of a company or organization for investing monetary, human resources and expertise to solve community problems.
  4. Problem-solving: The measurement of problem solving is normally directed to the capability of an organization to design programs which are meant to solve problems in the society.

The projects a company can get involved in to protect and improve the welfare of a community are numerous and diverse. It is now clear that CSR has more to it than just being philanthropic. The concept of CSR is growing very fast in the corporate world. However, it is prudent to note that a company should be vigilant enough to spend money on real projects, which make a difference in the society and position it for greater growth and development.