Ethics and social responsibility play an important role in business management. Organizations, both public and private, feel the need to incorporate corporate responsibility in their organizational culture. Ethics deals with knowing what is wrong and what is right. Business ethics encompasses analyzing ethical decisions, beliefs, and actions inline with business activities. Organizations are expected to show ethical values and operate socially responsible.
The major issue is that business ethics integrates different sets of ethics. This is the reason as to why organizations should employ good individuals as workers. Social responsibility deals with business conduct in respect to the 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.
Why Businesses Should Operate in an Ethical Manner
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 have to 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 the integral part of business operations.
Customers, who are also citizens, require quality products which are affordable. Likewise, other stakeholders expect fair business engagements from organizations. Citizens need to know that right things are being done for the right reasons. This is because organizations target citizens in their plans for making profits and it is imperative that citizens observe the conduct of businesses in order to make the right choices (McNamara, 2010).
Knowing ethical and social norms help citizens to keep organizations in tandem with the society’s expectations. Businesses should work in a way that is lawful, beneficial, ethical, and inline with social commands (Johnson, n.d). Ethics in 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 to charge consumers.
An organization is therefore required to have a culture that enhances strong values. This will also attract good employees in 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).
In the health sector, patients are supposed to trust physicians because hospitals are normally governed with good ethical conducts. This trust ensures that good medical care is offered to patients. Studies have found that trust is mostly related to patient satisfaction and therefore vital in selecting and applying treatment that is essential to patients (Thom & Campbell, 1997). Moreover, such trusts are essentials because in many cases patients require long-term or ongoing management in chronic cases.
Why Businesses Should Operate in a Socially Responsible Manner
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 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 task, hence improved performance. By doing so, companies can reduce the cost of recruitment.
Moreover, social responsibility increases the customer base and attracts investors. Being a social responsible organization enable a business to gain competitive advantage. Developing products that are friendly to the environment adds value and increases sales in business. Investors prefer social 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 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 need to educate children about social responsibility in order to put a sustainable investment in the future. Children are the potential business stakeholders in 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, heath centers, and schools. This helps to heighten the idea that we are accountable for the state and quality of our societies (Griffins, 2008).
Ethical and Social Responsibility Practices and Theories
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 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.
The crime contributed in the effort of setting the U.S. Sentencing Commission in 1991 which was responsible for ensuring that companies are accountable for any unlawful behavior (Brenner, 1992). In the mid 1990, many ethical scandals were inline with sexual harassment and racial prejudice.
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 a 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 in social responsibility has increased throughout the past three decades. Consequently, attention in ethics and social responsibility appears to have been driven by business scandals. In essence, the society has constantly changed their 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 an intensive analysis from the public with regards to 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 the 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 contradicting 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. It is imperative that modern firms observe and preserve the rights of employees, customers, and the whole society.
In future, ethics and social responsibility will have a new meaning in the context of business operations. From the current happenings, it is possible that businesses will be required to be adoptive 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 the society. This is an interactive approach that reduces the difference between society’s viewpoint and business routine.
Social responsibility is part of business ethics that require managers to be open in their business engagements. Observing ethics and social responsibility improves the company’s image and result 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’s affairs.
As explained in this paper, ethics and social responsibility requires constant changes in organizational conduct and performance. Since internal and external requirements change, it is imperative that firms likely to survive in future observe the changing needs from the society and regulations imposed by the government. In essence, since businesses create some problems they should help solve them.
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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.
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