Ethical and Social Responsible Business Practices - Essay Example

Ethical and Socially Responsible Business Practices Socially responsible business practices simply concerns doingwhat is right. It is a relatively new field in the corporate management under the name corporate social responsibility. The field concerns iterations of investment management practices that are socially conscious. An ideal socially responsible business is one that considers profits, satisfaction of customers on the services and products that it offers, as well as considering the societal well-being of its customers and operations (Pride, Hughes & Kapoor 2011: 65). In order for an organization to be socially responsible, its management and operation practices must observe business ethics. Business ethics are the concerns for good business practices. We may define business ethics as the willingness and ability of an organization to consider values in the decisions concerning the organization, determining how decisions and values affect the company’s stakeholders, and designing a way in which managers of the organization can implement these values in the daily operation of the organization. Corporate social responsibility concerns with the achievement of justice and fairness within the management of an organization. Corporate social responsibility may not have a direct influence on the profitability of an organization, but no solid evidence exists to highlight any conflict between profitability and ethical practices. The natural system of competitive edge focuses on values fairness and truth in our operations. Application of ethical business practices adds strength to the organization is three important ways. The first impact concerns the productivity of the organization. The impacts of management practices affect the employees. If an organization observes business ethics while dealing with issues of employees, the result is a positive effect on the side of the employee, which includes increase in productivity. Business ethics practices that concern employees include equal employment opportunity for qualified applicants, a safe and healthy working environment, respect for employees’ diversity, and in-depth disclosure information on the quality of the products and services of the organization. Secondly, corporate social responsibility illustrates an organization positively to the public image. The impact on the image of the organization attracts customers from the public, and this may increase business transactions resulting to increase in profits. A good example is manufacturers of baby diapers who protects their public image as an organization that places the well being and health of customers before its profit making objectives through its codes of ethics. Lastly, a show of social responsibility from organizations may minimize regulations by government agencies. Companies with a bad image of corporate social responsibility may face are likely result in the public pressurizing the government on imposing strict regulations or observing those that exists. Besides losing customers, a company considered unethical is prone to legal battles with its employees and customers. In the quest for transparency of a company as part of its corporate social responsibility strategy, companies are required to report their social responsibilities and impact on regular basis. The biggest challenge to the company is what to report. Decisions to prepare reports that include strikes and poor industrial relationships are hard to reach. The boundaries of social responsibility of a company extends are also a common debate in the business world. Another major challenge that faces organization in their definition of socially responsible practices is the decision to constitute what ethical behavior concerns. Most business actions do not have a clear-cut association with expected business ethics. Different people in different parts of the world view ethics in different perspectives. While in America it might be right to offer women employment in important position in a business, some countries condone such acts. In such a situation, hiring a woman in important position would result to isolation and possible lose of the business, while the decision of not hiring her might be termed as discrimination. In simple terms, there are no standard rules that guide business ethics. Organizations vary in their application of business ethics. In most businesses, a code of ethics is set to guide people, both subordinates and managers, on ethical decision-making and actions. A code of ethics addresses issues of an organization that concern behaviors towards competitors, conflict of interest, privacy of information, political contribution, and rewards giving. Nevertheless, leaders in an organization need not to assume that the code of ethics provides all the guidelines for the observation of business ethics. They need to monitor the usage and comprehensiveness of the code of ethics consistently to determine if they are fully applicable in the business environment. This is a challenge to many businesses. The limitations of corporate social responsibility include costs incurred by the company. Despite their insignificance, these extra cost incurred are a fraction of the company’s resources (Pride, Hughes & Kapoor 2011: 47). Another limitation may be manipulation of these practices by organizations to self-regulate themselves. Majority of the big organizations follow their in-built corporate social responsibility guidelines in tackling situations. The initiative is good, but no evidence proves that they align completely to the rules set by government agencies. Most of the companies will opt for profitability when faced with a decision between principles and profitability. In addition to the limitations above, studies have not created any concise relationship between profitability and corporate social responsibility of organizations. This has resulted in criticism of the business ethics application. An instance is economist Milton Friedman. According to him, assigning business managers with the responsibilities of making profits for the organization and that of enhancing social responsibility of the same organization creates a conflict of interest, which may result in lose of the business. Friedman suggests that if a company is constantly forced to apply ethical business practices that are in conflict with the company’s private objectives, the likelihood of business closure is almost certain. He adds that the stipulation of business managers to observe ethical business practices and social responsibility is unethical itself, as it requires them to use money that in real sense belongs to others. In conclusion, businesses should perform all legally required social responsibilities regardless of their take on business ethics and social responsibility. They should also volunteer to perform socially responsible practices beyond those stipulated by government agencies, and strive to inform all the relevant individuals the involvement of the business in the activities (Mallin 2009: 9). The management of a company must determine to what extent beyond the minimum requirement they can be able to go with social responsibility and ethical business practices, a decision that entails analyzing the negative and positive consequences of the actions. Their focus should be on the activities that add value to the business success while at the same time contributing to the well being of the society. Works Cited Mallin , C. A. (2009). Corporate Social Responsibility: A Case Study Approach. Cheltenham, UK: Edward Elgar Publishing Limited. Pride, W. M, Highes, R. J, & Kapoor, J. R. Business. Mason: South Western Cengage Learning. Read More