SOCIAL RESPONSIBILITY AND GOVERNANCE

Transcription

1 MODULE 5 SOCIAL RESPONSIBILITY AND GOVERNANCE Organizations have ethics, too What should we know about organizational environments and social responsibility? What are current issues in corporate governance? SOCIAL RESPONSIBILITY AND GOVERNANCE Organizational Environments And Social MODULE GUIDE 5.1 Organizations operate within conditions set by the general environment. The specific environment includes an organization s stakeholders. Social responsibility is an organization s obligation to best serve society. Social performance by organizations can be evaluated in different ways. Scholars argue cases for and against corporate social responsibility. Organizations follow different social responsibility strategies. Failures of ethics and social responsibility prompt calls for stronger governance. 1 2 ORGANIZATIONAL ENVIORNMENTS AND SOCIAL RESPONSIBILITY Organizational Environments General Environment Consists of cultural, economic, legal, political and educational conditions Specific Environment Consists of the people and groups with which an organization interacts Stakeholders People and Institutions most directly affected by an organization s performance General Environment Economic Health of the economy in terms of inflation, income levels, gross domestic product, unemployment, and job outlook Sociocultural Norms, customs, and social values on such matters as human rights, trends in education and related social institutions, as well as demographic patterns in society Legal-political Prevailing philosophy and objectives of the political party or parties running the government, as well as laws and government regulations Technological Development and availability of technology, including scientific advancements Natural Nature and conditions of the natural environment, including levels of public concern expressed through environmentalism 3 4 1

2 Specific Environment Specific Environment : The people and groups with whom an organization interacts. Corporate The obligation of an organization to serve its own interest and those of its stakeholders Audit Assesses an organization s performance in the area of social responsibility 5 6 The Case In Favor Of Corporate Social Increases long-run profits Improves public image Helps avoid government regulation Businesses have resources and ethical obligations to act responsibly The Case Against Corporate Social Reduces business profits Creates higher business costs Dilutes business purpose Gives too much social power to business 7 8 2

3 Strategies SOCIAL RESPONSIBILITY AND GOVERNANCE MODULE GUIDE 5.2 Failures of ethics and social responsibility prompt calls for stronger governance. Weak corporate governance can result in more government regulation. Moral management builds capacities for self-governance in organizations The oversight of top management by a board of directors Weak corporate governance leads to government regulation Boeing WorldCom Enron

4 Government Regulations Government Regulations Sarbanes-Oxley Act 2002 Goal is to see that top CEO s oversee the financial conduct of their organizations Occupational and Safety Act (OSHA) 1970 Goal is to protect employees from workplace injuries Equal Opportunity Act (EEO) 1972 Goal is to protect minorities against discrimination Consumer Product Safety Act 1972 Goal is to protect consumers from harmful products Moral management Moral Management Moral Manager Considers ethical behavior as a personal goal Amoral Manager Is unethical but unintentionally Immoral Manager Chooses to behave unethically Moral Management Ethics Mindfulness Ethics Mindfulness Enriched awareness that leads to consistent ethical behavior

5 MANAGEMENT TIPS A social responsibility audit assesses an organization s accomplishments in areas of social responsibility. Discretionary : Contribute to Community Ethical : Do What Is Right Legal : Obey the Law Economic : Be Profitable 17 5