FACILITATOR Prof. Dr. Mohammad Majid Mahmood Art of Leadership & Motivation HRM – 760 Lecture - 27

Corporate Social Responsibility & Ethics-I

CSR & Ethics In the business world, ethics is the study of morally appropriate behaviors and decisions, examining what "should be done”

CSR & Ethics Corporate Social Responsibility (CSR) is the process by which businesses negotiate their role in society

Corporate Social Responsibility  Organizations have obligations to society beyond their economic obligations to owners or stockholders.  Social responsibility relates to an organization’s impact on society

Recent Evidence of CSR Interest An Internet search turns up 100,000 plus responses to “CSR” Research Journals increasingly “rate” businesses (and NGOs) on socially responsive criteria: –Best place to work –Most admired –Best (and worst) corporate reputation

Reasons for CSR Activities CSR activities are important to and even expected by the public –And they are easily monitored worldwide CSR activities help organizations hire and retain the people they want CSR activities contribute to business performance

Businesses CSR Activities Philanthropy: –give money or time or in kind to charity –Integrative philanthropy—select beneficiaries aligned with company interests Philanthropy will not enhance corporate reputation if a company: –fails to live up to its philanthropic image or –if consumers perceive philanthropy to be manipulative

Corporate Social Responsibility (CSR) CSR is the Sum of:  Economic Responsibilities (Make a profit)  Legal Responsibilities (Obey the law)  Ethical Responsibilities (Be ethical)  Discretional Responsibilities (Good corporate citizen)

CSR- two viewpoints CSR is Inevitable Vs CSR is a Burden

Arguments for CSR  Not just profits!  Power vs. Responsibility  Stake holder relations

Arguments against CSR  From the shareholder point of view  Hindrance in maximizing profits

Choosing “moderate strategy” Businesses need to balance economic, legal, and social responsibilities in order to achieve long- run success. More generally, there is a relationship between good social and good financial performance.

The word ethics is derived from the Greek word ethos meaning character and Latin word mores meaning customs Ethics defines what is good for the individual and for society and establishes the nature of duties that people owe to oneself and others in society The principle of conduct – professional ethics A set of moral principles or values. ETHICS

Why be ethical ?  Expectation of stakeholders  To prevent harm to general public  It pays to organization  A sense of trust among partners  Personal reason

Purpose of Ethics Ethics are the guiding principles. Ethics help make relationships mutually pleasant and productive. Ethics Create a sense of community and a sense of belongingness to society.

Are Ethics Limited to Humans? Are ethics limited to humans only or do they extend to animals too? –pure vegetarianism Likewise, issues of responsibility to the environment have also been raised. In other words, philosophy is not far from the religious view of total non-violence

The Evolving Context for Ethics  Ethical absolutism - they adapt to us  Ethical relativism - we adapt to them

Emergence of a Global Business Ethic Growing business need for integrative mechanisms such as: –Ethics reduce operating uncertainties –Voluntary guidelines avoid government impositions Ethical conduct is needed in an increasingly interdependent world — everyone in the same game Companies wish to avoid problems and/or be good public citizens

Reasons for Businesses to Engage in Development of a Global Code of Business Ethics Create the same opportunity for all businesses Level the playing field They are needed in an interconnected world

Ways Companies Integrate Ethics Top management commitment in word and deed Company codes of ethics Develop, monitor, enforce ethical behavior Seek external assistance

1-22 FACILITATOR Prof. Dr. Mohammad Majid Mahmood