Corporate social responsibility is a business practice that focuses on contributing towards improvement of social welfare of communities in which an organization operates, as well as maintenance of environmental integrity. It involves incorporation of activities that are not targeted at making profits, although they increase competitiveness in organizations through developing close links between the organization and the consumers. In the last few decades, the practice has been adopted by many organizations to the extent that it is viewed as mandatory in the contemporary business environment for organizations to be socially responsible. However, it is not mandatory, but it is important for the accomplishment of business goals, and for the organization’s presence to be felt within the society (Savitz and Weber 2006 p 71). This essay is a critique of the different approaches to corporate social responsibility and their possible impacts on corporate reporting.
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Approaches to Corporate Social Responsibility
Welfare of Staff and their Relations Approach
This practice is common to organizations in the contemporary work place. Recent developments in human resources management are mainly focusing on maintaining enthusiasm amongst employees. Companies have come to the realization that happy employees are productive employees (David 2008 p 45). High productivity in employees is attributed to job satisfaction. Productivity in employees results when managers ensure that all actions they take are well thought out and their impact on the employees carefully analyzed. They are supposed to know which actions should be undertaken and which ones should be avoided. Happiness in employees is achieved by ensuring that the organizational goals are reflected by the actions of managers. An organization with management whose decision making is not consistent with its objectives results in unsatisfied employees thereby lowering their productivity. Happy employees are able to maintain a work-life balance. This helps in reducing fatigue in the work place as well as other stress that may be caused by exhaustion and family issues.
Through this approach both the employer and the employees benefit. It can be accomplished through two different views; according to Crane et al (2007 p 83), the paternalistic approach to corporate social responsibility focuses on benefiting the employer. Once the workers are contented and are able to accomplish a work-life balance that is facilitated by the organization, they become more productive and therefore organizational goals can be accomplished. On the other hand, the innovative approach towards corporate social responsibility is mainly focused on benefiting the employees. An organization promotes career development amongst its employees through vocational and workplace training. This helps in making them more productive and competitive in the job market (Epstein 2008 p 112). Even though the main idea is to benefit the employees, the organization enjoys prestige since other competing organizations tend to be inclined towards accomplishing its status in matters regarding the competence of employees.
On top of training, a socially responsible organization tends to improve the economic welfare of its employees through facilitating the acquirement of loans for personal development, and medical insurance which are important in the enhancement of their living standards. In terms of work place performance, social responsibility enables companies to minimize the risks associated with unpleasant incidents such as workplace accidents. They ensure that professional ethics are observed, with minimum risks in regard to the daily routine. The relationship between the management and the workers is usually a collaboration to achieve a particular goal, rather than the management playing a supervisory role. Social interactions in the workplace ensure effective communication between the employees and the management, enhancing employee satisfaction and provision of safe working conditions (Carroll and Buchholtz 2006 p 56). Social responsibility can be achieved through organizing ethical training seminars which develop the ability of the employees in decision making and career development. This leads to organizational learning which has positive impacts on the employees’ productivity.
Community Based Approach
In the contemporary business environment, organizations have come to realize that the communities in which they operate are significant in their success. In many cases, they act as the suppliers of raw materials, and to a certain extent as the consumers of the finished products. The need to be engaged in activities that are beneficial to the local communities can therefore not be ignored. It contributes to the reputation of the organization, as well as generating a sense of ownership of the organization by the community. In many cases, companies engage in these activities occasionally. This means that the activities are usually carried out on a short term basis. The organization may mobilize the local community in garbage collection, organizing charitable events to assists the disadvantaged in the community such as the disabled and the orphans, supporting institutions with materials and such one time activities. This corporate strategy creates awareness in the community regarding the organization. It is an important advertisement strategy through which an organization can promote its products (Vogel 2006 p 55). Corporations are obligated to be socially responsible, in order to reduce the risk of unfavorable reception within the community.
This approach to social responsibility provides an avenue for organizations to distance themselves from generalization of businesses in particular issues by the public as well as the government. Such situations include cases whereby people view a particular group of industries to be polluting the environment or causing a particular health hazard. Participating in social contributions in terms of sponsorship of particular activities may help the organization to create the impression of a difference between it and similar organizations that have created a negative perception amongst the public and the government (Kotler and Lee 2004 p. 96). They build consumer confidence under such situations, thereby enhancing their competitiveness, hence profitability.
More over, the contemporary society is enlightened in regard to what it should expect from companies operating within it, especially with the common understanding that has been generated in the recent past by environmentalists regarding global warming. It is generally understood that industries are the major causes of environmental pollution that contributes to global warming. Participation of industries in cleaning the environment occasionally is therefore a significant step towards changing the attitude of the public regarding the role of industries in environmental pollution (Vogel 2006 p 55).
Long-term Social Impact Approach
This is an expensive approach that focuses on the improvement the standards of living of communities through long-term course of action. It is usually undertaken by large organizations that sacrifice huge amounts of money to finance long-lived projects that have a permanent impact on the community. It involves activities such as building institutions to cater for educational, health and other social needs of the community. The community collaborates with the organization to develop social amenities through in-kind support. Examples of companies that are engaged in long-term projects as an approach to social responsibility include the Royal Dutch Shell which is a global oil company, which launched a global initiative towards contributing to sustainable development within communities (Cummins and Beasant 2005). It promotes the establishment of learning institutions that have a permanent impact on the society through acquirement of skills that are significant in the improvement of the community’s quality of life. Mark and Spencer is also another organization that is committed to a great extent in the long-term improvement of the standards of living of communities globally (The Climate Group 2005).
Impacts on Corporate Reporting
In corporate reporting, organizations have to indicate how successful they are in understanding the society in which they operate. They also show how they are effective in controlling their impact on consumers, suppliers, and the community in general. Participation in corporate social responsibility brings in the completeness required in corporate reporting. Stakeholders are convinced that the organization is able to accomplish the corporate objectives when it reflects achievements in corporate social responsibility, and the ability to accomplish the corporate strategy. Reflecting social responsibility in the corporate report is important for stakeholders to understand the involvement of the organization in other activities apart from its focus on profitability (Werther and Chandler 2008 p 61).
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- Crane A., Matten D. and Spence L. 2007. Corporate Social Responsibility: Readings and Cases in a Global Context, Routledge.
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- The Climate Group 2005. CSR Best Practice: Mark and Spencer, viewed on 14th 2009 at
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