Business Management I Corporate Social Responsibility:A brief discussion on the role of CARS as an invaluable asset to companies for the creation of financial & non-financial value, including the utilization thereof to reduce the impact of corruption and bribery, and growing economic value for both companies and society. I A global mind shift has occurred recently in the business sector regarding the value of reputation and how it directly impacts, not only the company’s profit margin, but the market as a whole.
Companies have realizes how Corporate Social Responsibility CARS) goes hand-in-hand with reputation, thereby making it a valued asset; and how this is influencing the purchasers’ perceived value of a company and its products. There are four main reasons why companies need to buy into a CARS strategy and they are: * Moral obligation, * Sustainability, * License to operate, and * Reputation. The biggest challenge faced by companies today is how to provide for the needs of the present generation without compromising the needs of the next generation.
More and more governments are putting pressure on companies to have sustainable Lana in place which impact positively on the environment and society. South Africa established the King Report in 2002, to establish the foundation for good CARS. No longer is it only about the bottom-line (profits) but also that companies’ need to be good corporate citizens. For companies to be successful they need healthy societies to thrive in. This meaner good education and healthcare systems and equal opportunities to provide a productive workforce.
Pick n Pay one, of the first companies in South Africa to implement a CARS strategy has embedded it in their vision and mission. Pen supports projects that encourage self-reliance and entrepreneurship. A key success factor has been the linking of emerging farmers to the Pen stores, whereby they support them through mentors programs. The way companies treat their employees has a direct impact on society’s values and norms and the ethics of society in general. It is important to remember that business activities impact on all aspects of people’s lives.
Antenna has embarked on a Journey of making sure it’s company values and the values of its employees are aligned through staff surveys and independent surveys, like the Barrett Survey. Antenna has entrusted its employees through its ‘Heroes’ program to identify worthy causes in their communities where they would want to give back. Through its ‘Back-to-school’ campaign Antenna donated RE. 5 million into education and made sure 200 children in the Free State had uniforms, stationery, and so on. A well planned and managed CARS strategy has a direct influence on customer loyalty.
Customer loyalty is a perception that the customer has about the organization, its products and services and the willingness to the customer to repurchase products or engage Witt origination multiple times. Consumers are becoming more aware of their environment and companies are forced to act responsibly towards society and the environment. This relationship between the consumer and the company should be one of trust, to the degree that the consumer will repetitively purchase a product, and be willing to pay a premium for this product supplied by a company that has a high ethical standard.
In saying this however, they may still buy from an unethical company but will demand to pay a much lower price for the goods, resulting in mailer margins for that company. It is also very important for managers to act responsibly and ethically as they represent the company. When management make decisions, they need to think of all the stakeholders involved, these include: shareholders, investors, managers, employees, suppliers, customers and the community. There are four ethical rules which assist management to analyses their effect on stakeholders.
The diagram below illustrates these rules: Utilitarian Rule An ethical decision should produce the greatest good for the greatest number of people Utilitarian Rule people Justice Rule An ethical decision should distribute benefits and harm among people in a fair, equitable, and impartial manner. Justice Rule equitable, and impartial manner. Rules for Ethical Decision Making Rules for Ethical Decision Making Moral Rights Rule An ethical decision should maintain and protect the fundamental rights and privileges of people. Moral Rights Rule privileges of people.
Practical Rule An ethical decision should be one that a manager has no hesitation about communicating to people outside the company because the typical person in a society would think the decision is acceptable. Practical Rule society would think the decision is acceptable. Source: Jones , G. R. , George, J. M. , 2011. Contemporary Management 7th De. If one or two people are benefiting from acting unethically it creates and environment tort others to behave accordingly, which in turn erodes the company’s ethical values.
Reputation loss, skilled managers and workers leaving the company, shareholders selling off their shares and customers not buying the company’s products are all consequences that may result from a company acting unethically. In Virgin Actives CARS policy it is clear that management will support the community where their gyms are located. It is also clear in their policy those organizations and groups that they will not assist financially. To mention a few political parties, labor unions, gala dinners, clubs.
The challenge facing companies in South Africa is to secure government tenders, yet to not give in to the influence of unethical people in positions of power. Balance is created when companies protect themselves and their employees from becoming fallible to bribery and corruption, by adhering to their implicate policies and managing their corporate social responsibilities. Companies need to have internal compliance regulations in place, which are not only there to reduce risk and liability, but are key fundamentals to the company’s CARS.
Compliance is necessary to protect the interests of the company, and at the same time, protect their staff and also to identify unlawful actions in the work environment. Compliance should be supported by a company’s code of ethics. When bribery and corruption is permitted, it sends the wrong message to the market – that to survive in business you deed to act in the interest of the minority and not to the benefit and fulfillment of the society you operate in as a whole.
When the political system is eroded by corruption, it becomes a societal norm for corruption to exist, which reduces the national standard of living, the wellbeing of the majority, as well as stunting the growth of prosperity. Investment and foreign aid, from multinational companies who consider themselves very socially responsible on a corporate level, begins to dwindle because the international community does not see the benefits going towards the people of he country.
A corrupt legal and political system undermines the prosperity of the country and reduces the economic value produced. Corruption and bribery is ripe in emerging- and poor countries, and needs to be brought under control. Corporate Social Responsibility is crucial in a free market economy to drive competitive business and sustainability for society as a whole. When companies have the community’s best interest at heart, it creates a sense of harmony and people start acting in the best interest of the whole rather than for their own individual wellbeing.