MANAGEMENT

Management

Management

The formal definition of social responsibility, according to Paul Reynolds, is "management's obligation to make choices and take actions that will contribute to the welfare and interests of society as well as the organisation." (Rashid 2006 42 - 52). However, it is not as straightforward as it may seem. Having social citizenship means putting managerial ethics to practice and work. So how can we measure social responsibility if one company's ethical decision might be viewed as unscrupulous to another? With the competing demands from different stakeholders, CSR is becoming more important in an organisation. Australian companies are starting to recognize that they have a wider responsibility to the communities within which they operate. Research has shown that by implementing social responsibilities, a win-win situation can be achieved between the company and its stakeholders.

It is said that there are two kinds of responsibility in a company - commercial and social. Commercial responsibilities involve running a business successfully, generating profit and satisfying shareholder expectations. Social responsibility on the other hand is being aware of the issues being presented in the community and the working environment. CSR is not a new concept. Some companies have always acknowledged a "wider responsibility towards the community". Such activities in the past have tended to come under "paternalism" and "philanthropy". However, as Richard Welford suggests that corporate social responsibility tends to be much more far-reaching than paternalism or philanthropy. He states that "social responsibility requires us to look at ethics, stakeholder accountability and also our own value systems" (Rashid 2006 42 - 52).

In order for a company to be a social citizen, they must hold a strong belief for ethical decisions and behaviour. Normative ethics uses various of styles to describe the values for directing ethical decision making. As Rashid (2006 42 - 52) identifies that four of these styles are relevant to managers. They are the utilitarian approach, individualism approach, moral rights approach and justice approach. The approaches require an organisation to be just and moral in its methods, in order to produce and promote "the greatest good for the greatest number". CSR takes on this positive approach. It allows the company to satisfy more of its stakeholders if CSR is adopted by the organisation.

From a social responsibility perspective, organisations view their internal and external environment as a variety of stakeholders. A stakeholder is anyone who has a stake in the organisation's performance. They can affect or get affected by the company, so it is very important to keep them in mind when a company makes its decisions. Without them, a company is nothing more than an "inanimate collection of assets and liabilities". McWilliams and Siegel categorize the demands from multiple stakeholders into two main groups. The first one is the "ultimate group" which consists of demands from consumers, employees and suppliers; and the second is the "penultimate group" which is demand from other stakeholders such as the government. (Robbins 2003 136-149)

A company should treat all its demands seriously, regardless of which group has brought it ...