Whilst the primary objective of most business organizations is the making and maximization of profits, it is always good for companies and other business organizations to uphold ethics in their operations and generally be socially responsible. Despite this fact, some companies have faced insurmountable problems due to their failure to incorporate the ideas of Corporate Social Responsibility in their policies (Samuelson, 2004, p.33). These instances have served the purpose of confirming to other companies and business organizations that Corporate Social Responsibility is essential for the success of any business organization.
Corporate Social Responsibility touches numerous aspects of life, all of which are meant to conserve resources and ensure the good of the public. As the needs of the consumers and the entire public are catered for, the socially responsible company also benefits in numerous ways. This paper looks into the importance of ethical behaviour and Corporate Social Responsibility to business organizations especially when it comes to decision making. This will be achieved through close comparison of the utilitarian and the moral rights approaches to identify the best approach to apply in decision making of an organization.
In the recent past, companies were not keen on social responsibility and thus they operated in ways that were only profit oriented. With time, the effects of irresponsible and unethical corporate behaviour were continually experienced until it became clear that companies needed to be socially responsible. For instance, companies in the manufacturing sector were releasing a lot of greenhouse gases to the atmosphere which aggravated the problem of global warming. The adverse effects of global warming, like earthquakes, floods, hunger, hurricanes etc, made administrative authorities to be very vigilant on operations of business organizations.
The press also continually became attentive to companies that did not observe social responsibility and the result of this was that companies strived to protect their image by being socially responsible. Companies in the manufacturing sector have therefore been trying to be environmentally friendly and thus their effluents are closely monitored to ensure that they do not cause harm to the environment. Since the introduction of the ideas of social responsibility, the scope of social responsibility has broadened to cover areas that were never covered before. These include the responsibility of companies to, not only ensure environmental conservation but also to, raise living standards of their consumers, engage in charity work and the like.
A comparison between the Utilitarian approach and the Moral Rights approach in decision making
Ethics usually has a great influence in any organisation especially when it comes to making decisions for the organisation. It is for this reason that the morally right ethical behaviour is appreciated compared to unethical behaviour (Gregory, 2007, p.45). In accordance with the Utilitarian approach ethics is accomplished when a decision is meant to favour the greater portion of the population. In this approach, the people believe that the best option is the one that suits the majority in the population. Utilitarianism does not consider facts, intentions or consequences of the choice to be made. The belief is that, as long as the option has been accepted by most people, it is doomed to be the best.
In contrast to the utilitarian approach is the moral rights approach which is based on satisfying the rights of the citizens. According to this approach, the business makes decisions that are to the interests of the citizens who in the business world are the most important people. The moral rights approach in a nutshell essentially means doing the things that will be regarded as right and ethical by the society.
It begins with the fact that human beings have some self worth and ought to be treated well and at the same time allowed to freely choose what they want. Some of the moral rights include; the right to know the truth, the right to have a degree of privacy, the right to safety among others. It is therefore against the moral rights approach to violate any of the freedoms and rights accorded to human beings and use them against their wishes. Through the adoption of moral rights approach an organisation is able to deliver services or goods to the citizens while simultaneously fulfilling their rights and freedom.
The moral rights approach in decision making is the preferred approach to be applied in most enterprises. Any enterprise that practices corporate social responsibility usually works under the moral rights approach (McNamara, 2005, p.62). This is because morality enables people to develop that sense of relatedness by being able to share with others and also being compassionate to them. Such an enterprise has that concern and care for the community.
Corporate social responsibility is both a direct and indirect way of giving citizens their deserving freedom and rights. Since the society is made up of organisations and individuals who are profit and performance oriented, it is important that they be informed on the need of social responsibility. This is because regarding the necessity of corporate social responsibility it is fundamental that each enterprise adopts it. Some of ethical examples of corporate social responsibility include;
Fair marketing- An enterprise that deals with offering goods or services to the public should consider offering fair prices to them. Despite the fact that there are laws that have been put in place to protect consumers from unfair prices and misleading advertisements, the duty to provide the consumers with good and fair priced products lies on the entrepreneur. If at all the entrepreneur is social conscious and an ethical thinker they will not indulge in such unethical acts.
Good employment practices- Organizations should not earn huge profits by treating their employees unfairly through giving them low wages. The employees are part of the society and deserve the right to fair treatment and employment terms.
The aforementioned examples are just but a few of the ethical acts that an organization may involve in taking part in corporate social responsibility. The failure to use moral approach in decision making has more demerits than merits. The list of negative effects associated with lack of moral decision making is endless with most of them revolving around the respond it gets from the community, other institutions and the nation as a whole (Bartol, et al, 2008, p.178).
The first and foremost disadvantage will be the bad reputation of the organisation from the community. This will have adverse effects as the sales will tremendously go down since people will prefer transacting with those organisations that give back to the community. Failure of application of the moral approach in decision making has another negative impact of lack of community growth in which the organisation is based. Since the company is not giving back to the community in terms of developmental projects or in any other way, the community will remain stagnant in its growth.
Disadvantages of the utilitarian approach in decision making
From the above discussion, it is clear that the utilitarian approach is not one of the best to use when making organisational decisions. The main disadvantage is the fact that some of the settled decisions may be favouring the organisation while on the other hand having negative impacts on the society (Samuelson, 2004, p.36). This is because the decisions that are usually arrived at using this approach do not consider the legality, rights or benefits to the society.
This approach is also suitable in a corporate society as the company may make wrong decisions in the name of improving and in the long run affect the society. For example, in the case where a company closes down a section or department with the aim of making the company function more effectively or stabilise its financial status, there will be a portion of the workers who will be rendered jobless just because of such a decision. This effect lands back on the society where the percentage of unemployed people will have gone up hence increasing immoral acts like crime and robbery within the society. In other words, if an organisation is to care about the society and environment it is established, it has to work using the moral rights view of thinking.
Most of the ideas of social responsibility discussed above are essentially voluntary except the ideas of environmental conservation. The ideas do not have profit-oriented motif but companies that engage in them build their profit-making foundations in one way or another. This is the main benefit associated with Corporate Social Responsibility although it is in most cases difficult to quantify it. This is so because the benefits that are directly associated with ethical behaviour and Corporate Social Responsibility are not directly associated with profits.
Through the practice of corporate social responsibility, sustainable development is achieved. Sustainable development looks at more of environment while putting more emphasis on the future generation (Kotler, 2005, p.105). In this case, the organisation makes ethical decisions that favour the present as well as the future generations. The major function of sustainable development is to protect the environment so that the future generations may have a glimpse of the current situation. Sustainable development looks at the long-term effects rather than the short term benefits the organisation might achieve. It is because of this reason that sustainable development has in mind the future generation.
There are a number of suggested approaches of Corporate Social Responsibility that ensure sustainable development in the society. Most of the ideas mentioned above have also been expounded to show their benefits and the repercussions that could result from failure to implement them. One such approach is the conservation of the environment in the course of running the business organization. Although the main focus of the environmental conservation ideas discussed above is on the operations of the organization, the same can be approached from a different perspective.
That is, the company can do more than just ensuring that its operations do not negatively affect the environment. This can be achieved by employing a variety of approaches which may include advocacy for environmental conservation and giving support to environmental conservation efforts by others (Kotler, 2005, p.105). This support may be in form of special recognition by awards or financial support. The company can also participate in the same by partnering with regulatory bodies to ensure companies and individuals who do not comply with the rules of environmental conservations are appropriately dealt with.
Since the issue of environmental conservation has become a global concern it pays off to be environmentally and socially responsible. To begin with, organisations that advocate for environmental friendly products such as packaging materials will be protecting the environment from thus saving it for the future generations. In the short run the organisation will have the benefit of gaining a good reputation in the society hence increasing their financial gains. This is because consumers will be getting hazard free products hence no fears of disposal.
The consumers will also have that compassion for such an organisation since they will have that feeling that the company is caring for them and their future generation by protecting the environment. As the company benefits financially, this benefit is channelled down to the employees as well who will now have fair employment rates. In addition to this, the employees will have safe working environment since the company itself is dealing with only environmental friendly substances. This way their health will not be at risk and this will in turn make the company save much of their finances instead of being channelled to healthcare institutions (Kotler, 2005, p.105).
Therefore an organisation that adopts sustainable development will definitely be the employer of choice. This is because in addition to protecting the environment the welfare of the employees will be taken care of too. Last but not least, sustainable development has the impact of making the organisation increase their level of investors. Before investors make the decision of investing in an organisation they have to look at ways in which the organisation gives back to the society. For example, individual investors will be more willing to buy and hold shares of a company that participates in sustainable development and social responsibility unlike in a company that does not. Other investors on the other hand will be willing to make joint investment decisions with such corporations since they will have portrayed a good picture in the society.
Another discussed issue is the application of Corporate Social Responsibility from a health perspective (Gregory, 2007, p.45). Companies need to not only ensure that their products to consumers are healthy but they should also ensure that they participate actively to health provision efforts. This may be achieved by making direct contributions to health campaigns, supporting behaviour change campaigns advocating for healthy living, sponsoring awareness campaigns for unpopular ideas of health and allowing their employees to donate their time in such campaigns. This way, the society is made up of healthy strong individuals and so is the resulting generation.
There are also a number of other ways in which companies can be socially responsible. These include the allocation of a certain percentage of product sales to charity and helping the needy as a way of giving back to the community. Companies may also incorporate within their policies social-based reward events for their employees as a way of showing their appreciation for the involvement of the employees in generation of revenue (Bartol, et al, 2008, p.178). Such events may include leisure trips, day offs, dinners, etc. These are bound to impact the motivation of the employees in a major way.
Benefits of Corporate Social Responsibility
The benefits of upholding ethical behaviour and operating in a socially responsible manner are multifaceted. For instance, a company that operates ethically is likely to have a better management than a counterpart that does not value ethical behaviour. Thus in a company where organizational policies favour mutual respect among employees the company will have minimal employee collisions and will most likely have greater productivity and thus the company will maximize its profits.
Similarly, a company that upholds Corporate Social Responsibility will enjoy many advantages due to better relationships with its consumers and administrative agencies. An example of such advantages is the fact that a socially responsible company is bound to have a lot of goodwill which will indubitably translate to greater revenue. This is because a company that is respected and appreciated by its customers will have an increased number of customers which will lead to more sales. Secondly, a company that upholds Corporate Social Responsibility will be mindful of the kind of products that it sells to its customers.
This means that products will be environmentally friendly and they will also be designed with the health of the consumer in mind. This implies that the company will not have problems with administrative bodies related to environmental pollution and degradation. The company will therefore save a lot of money which could be otherwise spent on court cases and it will also get limited customer complaints meaning that its net sales will be higher. Additionally, a company that values Corporate Social Responsibility will be respected by the government in which it operates and thus the company is likely to get policy-related favours from the government. It may even get subsidies to aid it in its operations since the government will be guaranteed that the welfare of the company translates to better living standards of its citizens.
Although the incorporation of the ideas of Corporate Social Responsibility in organizational policies is somehow voluntary, companies have a moral obligation in implementing the same. Those that fail to adhere to the provisions of Corporate Social Responsibility experience a lot of problems that make them lose a lot of revenue and status. The worst kind of social responsibility to ignore is that of environmental conservation. Companies that fail to adhere to the provisions of ethical behaviour and Corporate Social Responsibility related to the preservation of the environment are bound to experience a great deal of problems (Kotler, 2005, p.105).
First of all, such companies get a very negative publicity which makes consumers of their products to start consuming products from other companies. This results in substantial reduction of the consumer-base of the company which in turn affects the profitability of the company. Such companies may also fall victims of public protests which lead to disruption of the normal operations of the company. This results in less productivity hence less profitability.
In the same way, companies that concentrate in profit maximization and forget their responsibility towards their employees and consumers alike are bound to suffer major drawbacks related to lack of Corporate Social Responsibility. For instance, if a company does not give its employees fair wages for their involvement in its operations, it may experience a high employee turnover which may have serious repercussions to its production and profitability.
It can therefore be recommended that any organisations that want to be appraised by the public at the same time meeting their demands, they have to adopt the moral rights approach of decision making. This way, the organisation will be achieving its objectives and simultaneously giving the citizens their rights. In addition to this, the moral rights view other than giving the citizens their rights and freedom; it indirectly helps in sustainable development thus benefiting the entire globe.
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Kotler, P. (2005). Corporate Social Responsibility. Journal of Management, pp. 103-150.
McNamara, B. (2005). Corporate Social Responsibility. University of California, pp. 13-67.
Samuelson, G. (2004). Integration of Ethical values in company policies. Journal of Management, pp. 32-39.