What does being ethical and socially responsible mean for the organisation?
When it is said that the organizations are socially responsible they mean that being a part of the society like all other parts of the society the organization is also responsible for the welfare of the society. In order to see in how many ways an organization can be held responsible for the society we can take the study of S. Prakash Sethi. In his study he has presented three approaches for social responsibility: 1. The social obligation approach 2. The social responsibility approach 3. The social responsiveness approach Now we are going to discuss these approaches in detail with the help of examples. 1. The Social Obligation Approach
Under this approach the main target of the company remains the accomplishment of its economic goals and the earning of profits. However, the social responsibility of the organization is not completely ignored. Under this approach the company is expected to follow the established rules and regulations formed by the law. For example the company which is listed on various stock exchanges should follow the listing regulations and code of corporate governance and other industry specific or special rules. If the company follows these two guidelines the company is considered to have fulfilled its social responsibility.
Other than these the welfare of its society and the environment is not considered to be the responsibility of the organization. 2. The Social Responsibility Approach According to the social responsibility approach the organization is equally liable to the society as it is to its shareholders and employees. Other than rules provided by the law enforcing agencies it has to make its own rules and regulations and have to take care of the environment as well. It should follow all those steps which should be followed by any part of the society for the welfare of the society.
3. The Social Responsiveness Approach The social responsiveness approach requires the organization to be focused at its economic goals but at the same time requires it to be socially responsible for all the current requirements of the law and all the current requirements as per the understanding of the organization. Moreover, this approach requires the organization to anticipate what social problems may occur in the future. Not only the anticipation but also the steps to prevent such problems are the responsibility of the organization.
For example, in a developing country where the resources are scarce the organization along with increasing its profits should concentrate on decreasing the usage of its scarce resources. In case of electricity the organization can foresee the shortage of power and design such plan or its own power plant so that it can benefit the society. Among all the above mentioned approaches the social responsiveness approach is the one which is most effective. If the company follows this approach it may not only easily abide by its social responsibility but may be able to gain appreciation from the regulators and goodwill in the market and the industry.
Thus, it can be said that the organizations which follow the social responsiveness are most considerate towards the society and are more socially responsive than those who follow the social obligation approach or the social responsibility approach. (Kaplan 2008) Ethics Ethics within the organization is a very vast term which covers the behavior and attitude of not only the management of the organization but also the attitude of the employees of the organization. When we say that an organization should be ethical it means that the organization should be fair and considerate towards its employees.
It should treat all of them equally and no bias should be shown when the time for the promotion or incentives come. Moreover, the organization should be an equal opportunity to all employees irrespective of their race, gender or status. Ethics include integrity as well. The organization should follow all the rules that are applicable to it and in order to fulfill its economic responsibility should not go for unethical means. Some of the unethical means commonly followed by some organizations are window dressing, figures manipulation, tax fraud etc. Ethical system within the organization targets the employees as well.
It means that the employees should not do anything which is not as per the requirements of their role in the organization. For example the investment committees of the bulls in the stock markets are well aware of the investment plans of the company. Those people should not use the information for their personal gain. Moreover, the people in the finance department of the huge listed companies are in a position to make a lot of profit by disclosing the profits or the losses earned by the company to the stock dealers before the amounts are officially announced by the company itself.
Another example of such an unethical behaviour could be the opportunities available to the production department of various pharmaceutical companies. The production department of such companies can sell the formula of the new researches of the company and make personal profits out of such acts. Many similar instances are available to the employees but they should consider the benefits and losses of all their acts on all the parties affected from any such decision.
If all the parties affected by their act are benefitted the employees may carry on with such acts but if anyone including the society or the consumers of the products is affected adversely the act should not be done. For all those organization which make mistakes while maintaining their integrity, The American Society of Quality Control has identified few mistakes so that they can be prevented in future: • The organizations prefer the company’s interest instead of taking care of the share holders’ interest. • Unintentionally either not noticing the unethical behavior or rewarding it.
• Creating a corporate code of conduct that provides conflicting acts as ethical. • Leave such loop holes in the organizations’ code of conduct which allow those charged with governance or otherwise with power to abuse their power for personal interests. • Creating managerial values that undermine integrity. (Louis J, 2007) Thus, the company should make rules to avoid the above mentioned points so that the violation of ethics can be avoided. One of the important factors in these increasing violations of ethics is due to the hiring of part time unskilled labour on daily wages.
When an employee is hired for a short time on temporary basis he has no concern for the organization or its ethical values. Moreover, even if they don’t violate the rules intentional they are hired for such short time that they are mostly unaware of their ethical responsibilities. Thus, either intentionally or unintentionally these people causes ethical violation and impure the ethical environment of the organization. Therefore, a company which wants to maintain its ethical system should try to avoid hiring and firing temporary staff on regular basis.
Another thing which a company can do to make sure that its ethical values are not violated is that it should form a proper code of conduct for the whole organization. Not only the formation but also the communication of that code of conduct should also be ensured. After informing all the employees about the code of conduct the company should make sure that the code of conduct is followed by the employees as required. Thus formation of proper code of conduct, its communication to employees and their supervision can also help the organization avoid any ethical violation.