SOCIAL RESPONSIBILITY OF BUSINESS, GENERAL NOTES

SOCIAL RESPONSIBILITY OF BUSINESS

Business is the part of the society. Business and society are interdependent on each other for survival and growth. Therefore, it has responsibility towards its society. There should be a balance between profit and social responsibility.

Definition of social responsibility:

“Social responsibility of a business refers to the obligation of business to pursue those policies, to make those decisions, or to follow those lines of actions, which are desirable in terms of objectives and values of our society.”

-          H.R. Bowen

Business organisation has social responsibilities towards different interest groups, such as follows:

-          Employees

-          Customers

-          Society

-          Government

-          Shareholders

Social responsibility towards employees:

The employees are motivated only when the firm fulfils its social responsibility towards them.

1.      Job security: the business should provide job security to its employees. They must be given permanent jobs.

2.      Fair wages or salaries: workers should be paid adequate wages and other incentives like bonus, medical allowance, travelling allowance, etc. and payment should be paid on time.

3.      Working condition: the workers should be provided with good working conditions. There should be proper working hours with rest pauses.

4.      Health and safety measures: the company should take adequate measures to protect health of the employees. They should be provided with canteen and medical facilities.

5.      Workers participation in management: the workers must been couraged to rake part in management. It leads employees’ respects.

6.      Motivation: the company should provide proper incentives and promotion to the employees. It facilitates motivation to employees.

Social responsibilities towards customers:

1.      Quality of goods and services: business firms should focus on the quality of goods. The company should always strive to improve its quality. Firms must adopt strict quality control.

2.      Fair price: business firms should provides goods on fair price.  Proper pricing generates customer loyalty.

3.      Honest advertisement: The customers expect true facts of the product, its uses, merits, side effects and so on. The company should not do vulgar and unethical advertisements.

4.      After-sale-services: the customer except efficient and effective after sale service, in the case of consumer durables. The company should provide prompt after sale service to the customer.

5.      Redressal of complaints:  the company should provide proper Redressal of complaints. Company should take suggestions from the customers.

6.      Consumer safety: The Company should produce goods which are customer-health oriented and environment friendly products. Customer should be warned about any safe good.

Social responsibility towards society:

1.      Protection of environment: the organisation should take all possible measures to prevent air, and water pollution. Business firms should not misuse or over exploit natural resources.

2.      Optimum use of resources: the business firms make use of all resources properly.

3.      Help to weaker sections of the society: the business organisations should also uplift the weaker sections of the society. Certain jobs may reserve for this section.

4.      Support during Natural disasters: business firms need to support the society during natural disasters like earthquakes, floods, etc.

5.      Employment generation: business firms should make all possible efforts to generate employment.

6.      Promote culture: Business firms may promote culture of the society. Culture is an integral part of the society.

Social responsibility towards government:

1.      Development of backward Areas: Firms may assist Government in the development of backward Areas. They should set up business unit in backward areas to develop these areas.

2.      Payment of Taxes: firms must pay taxes and duties regularly to the Government so that government would undertake development activities.

3.      Observation of Government Rules and Regulations: corporate sector must follow the rules and regulations strictly.

4.       Refrain from corrupt practices: Business firms should refrain from corrupt practices. They should not seek unfair favours from government officials by bringing them.

5.      Earning foreign exchange: large company should enter in export trade to earn valuable foreign exchange for the country. This foreign exchange is necessary to pay for vital imports.

6.      Financial assistance during Natural disasters: business firms should contribute and support the society during natural disasters like earthquakes, floods, etc.

Social responsibility towards shareholders:

Shareholders are the owner of the company. They expect certain responsibility on the part of the management.

1.      Fair return on investment: the shareholders expect a fair return on their investment. The company must make adequate and timely payment of dividend.

2.      Expansion and diversification: the shareholders expect the management should undertake expansion and diversification programmes. This will result in more returns to the shareholders.

3.      Proper use of shareholders fund: the shareholders expect optimum use of their funds. They will not tolerate the management, if it spends their funds in unproductive manner.

4.      Proper conduct of shareholders meeting: the shareholders want fair conduct of meetings. Every member should be given a chance to make a valid point of view at the meetings.

5.      Proper discloser: the management should make a proper discloser regarding the affairs of the business. The accounts must be properly maintained and audited from time to time. They should allow to getting copies of statements of accounts.

6.      Prompt services: business firms must provide prompt services to the shareholders. For e.g. request for renewal of dividend cheques (due to expiry of validity) or issue of new cheque (if cheque got misplaced). The prompt services create trust and confidence in the shareholders.