Telstra Corporate Social Responsibility - Case Study Example

Executive Summary Many organizations in the 21st century are faced with the question of whether to be or not to be ethical. This particular paper was grounded on evaluating one of the biggest Telecommunication Companies in Australia; Telstra Corporation. The scope of the analysis was based on evaluating the organizations procedures, policies, and corporate programs in order to speculate whether the organization indeed qualifies as a reflection of an ethical organization. From the analysis, it can be stated that Telstra has in deed put emphasis in terms of enhancing ethical business practices and social reasonability. The various initiatives undertaken by organization depict a clear indication of the organizations determination to ensure that it does not only get involved in management by objective but rather its policies and programs also cater for the needs of the society its serves. Contention however arises when the organization gets involved in various initiatives that promote ethical business and social responsibility however without integration of the true human aspect within its culture of social responsibility and ethical business. The big question that emerges is that; does the organization practice social responsibility and ethics as an emerging issue in contemporary business environment, or due to the true concern of the welfare of people in society? The main recommendation of the analysis was that businesses such as Telstra should not only strive to build public image through external initiatives but rather focus should also be put on developing and motivating people within the organization. Introduction There are numerous calls for organizations in contemporary Australian society to be more socially responsible and conduct their operations in a manner that is more ethical. Businesses do not operate within a vacuum but rather within the social context. As result, being societal conscious is one of the emerging issues in contemporary organizational management. A business may be renowned as a multi- billion seller however it may be a failure in terms of business ethics and the care for people in the society it operates. Yet again, there are numerous shifts in the business environment due to changes from both the micro and macro environment. These factors have greatly influenced the manner in which organizations undertake their operations. The big question that many organizations face is whether to be or not be ethical? Telstra Corporation provides a good case analysis for the evaluating the notion. Brief Background of Telstra Telstra Corporation was formulated after the overseas telecommunication commission was amalgamated with the Australian Telecommunication Company in 1992. The company initiated its trading activities under the name of’ Telstra” with a trademark known internationally as ‘Telecom Australia’. After trading domestically, a uniform branding was introduced through the whole organization in 1995. The company has continued to expand its services and operations over the years which has influenced its current standing in both the Australian and international markets. Telstra offers a wide range of telecommunication services all over Australia including basic access services to many households and businesses, local as well as long-distance telephone call services, internet and mobile services. Telstra Corporation also provides telecommunication networks, distribution channels as well as integrated portfolio of assets such as Bigpond, Foxtel and Sensis (Telstra Corporation report, 2000). Basing on the fact that Telstra is one of the leading telecommunication services companies in Australia adhering to social responsibility and ethics can be termed as essential engagements that the company has to get involved with. Haynes (2000) defines social responsibility as an ethical ideology that compels an individual or an organization to act in a manner that can be of benefit to the entire society. The integration of social responsibility in contemporary business environment has resulted to the emergence Corporate Social Responsibility whereby businesses ensure that their operations support ethical standards, laws, and international norms. The scope of corporate social responsibility is actually diverse. Haynes (2000) identifies six basic areas of corporate social responsibility which include environment, fair business practices, energy, human resource, products and community involvement. Business ethics on the other hand involves businesses undertaking actions and decisions that that are morally responsible. Ethical business fundamentally results to a situation whereby a business engages in activities that promote the social and economic wellbeing of the society. From the above descriptions, what is evident is that social responsibility and ethical issues act towards attaining the objective of enhancing and sustaining social wellbeing. Telstra Social Responsibility and Ethics Initiatives Telstra has over the years developed initiatives to indicate how dedicated the company is towards social responsibility activities. The companies CEO acknowledges the fact that being a company that is successful does not just entail financial performance but rather developing good corporate citizenship (Telstra report 2003).The CEO further brings to light the fact that Telstra utilizes an integrated approach in its social responsibility endeavors . Furthermore, the company does not perceive the initiatives as projects but rather as activities that are part of the culture of the company. One of Telstra policy producers and area of social responsibility is that of the practice of fair business. The reputation of the company for quality products and services is an aspect that indicates the dedication of the company towards fair business practices. This can be denoted by the manner in which the company does the marketing of products, sales and pricing. Telstra’s marketing strategies must be effective, timely and clear, in order to improve the image of the company and at the same time support its strategic objectives (Grace 2005) .Telstra Strategic marketing general manager argues that in many cases Telstra strives to ensure that its sales activities, marketing and advertising portray services and products honestly, accurately and fairly. This is through ascertaining that misleading or a false impression is not created. All the information given to customers must be correct, factual, and complying with the company’s policies and legal requirements. For instance, Telstra provides internet services such as IP networking, servers, email, and network hosting within a wide range of subsidiaries .The Australian customers can attest to the fact that Telstra internet services are consistent with what the company advertises. This is essentially because Telstra Internet has been a backbone for Australia internet requirements. Telstra’s pricing can also be termed as complacent with fair business practices. The company’s product manager highlights that prices offered to customers have to be developed in a manner that meets the needs of the market place. In addition, they should reveal the value proportion of the service or product sold. In general the pricing guidelines for the company are usually based on regulatory, legal requirements and pricing guidelines. For instance, Telstra adopted compliance to price control regulations from January 1998 to June 1999 this was an indication of the company’s dedication to fair pricing. In recent years the company has also embarked in numerous product promotions, which are undertaken through price cutoffs in order to meet the needs of its clients (Telstra CSR report 2003). The company’s policy also seeks to ensure that the products given to all customers are those of high quality. For instance in 1999 the company devised the consumer service charter, the charter is usually revised annually after intensive consultations have made with the companies staff, customers and external stakeholders. The charter is committed to enhancing quality services and products for the customers after evaluation of their feedback. Furthermore, the company also frequently engages in innovative programs that facilitate the development of quality products and services. Telstra recently invented seamless integration through the development of an integration Lab. The lab was established purposefully for acting as a compliment to the deployment of network solutions. The aim of the laboratory is to ensure readiness of operational services while making a reduction on the technical and commercial risks that are linked to the solutions for network transformation (Grace 2005). Telstra is also actively involved in programs involving environmental support. The company has an environmental management policy that supports programs such as environmental awareness, reduction of greenhouse and waste management. For instance, the company sponsored activities such as the Clean Up Australia Day in 2002. Telstra also launched a policy on green purchasing. Telstra spends annually approximately $7 billion in buying environmental friendly products from suppliers. If supplier’s products are not environmental friendly the company works in collaboration with them to ensure that they devise their environmental plans and improve on their products. Activities such as environmental screening are also part of a meaningful practice and policy in the organization (Bansal, 2000). Telstra also promotes organizational social responsibility through community involvement. (Bansal, 2000).The company has been able to revolutionize the lives of many Australians through the many initiatives developed in order to change the lives of Australian citizens. In 2002 Telstra established the Telstra foundation which has acted as a cornerstone for community involvement. The foundation has since acted as cornerstone for of Telstra’s involvement in community support. For instance, Telstra supports a good number of life changing projects in the Australian society through programs such as the Telstra kids fund and the Community development fund. Each type of fund supports a variety of community programs. For example, the community development fund has been useful in programmed areas such as development of Indigenous communities, people with disability and grants for social innovation. The 2004 Telstra social responsibility report (2000), highlights that Telstra was the first organization in 1996 to launch an action plan for people with disability. The organization has since devised facilities such as the Teletypewriter (TTY) to assist people with disability to effectively communicate through texting. Telstra has also been able to enhance social responsibility through Human resource oriented social responsibility initiatives (Telstra CSR report 200). Telstra being one of the largest Australian employers has made initiatives in terms of people development within the organization. Telstra ensures that its workforce is better skilled by developing training and development initiatives for its employees. This has facilitated robust management succession whereby employees get promoted. The organizations management also ensures that the working environment is safe enough for the employee. In addition, employees are also given a chance to regularly express their views through regular engagement with the top management. Also, the organization has programs put in place to recognize the efforts and performance of employees. In general, Telstra’s management philosophy can be described employee development oriented. Discussion and Analysis The 21st Century market place can be termed as increasingly conscious about the practice of business ethics as a result many organizations such as Telstra Corporation have been on the frontline in the adoption of social responsibility as a strategy of enhancing ethical business practices Nazir (2004) brings to light the fact that business ethics and social responsibility are two interrelated aspects. Nazir argues that the purpose of a business is fundamentally to generate maximum returns for its shareholders and owners, in addition to serving the community and further assisting employee to live better lives. These aspects can be termed as an ideal form of success for the organization. The above purpose should however be pursued ethically. Carla (2004) further backs the aspect of interrelatedness between business ethics and social responsibility by stating that the first apparent aspect about the comparison between principles of social responsibility and business ethics is that ‘’business ethics ‘’ is embedded in the principles of social responsibility. This is because the main principles of social responsibility state that an organization should abide by a code of ethics. When analyzing the notion of to be or not to be ethical the basic question that arises is whether Telstra social responsibility initiatives are actually a true reflection of business ethics. In some way it can be argued that the organizations social responsibility initiative prove the fact that Telstra is an organization that is striving to undertake its social responsibility operations under the influence ethical business practices. Telstra has demonstrated its ability to influence demand for social responsibility and ethical behavior. When it comes to the aspect of being ethical in business the organization has proven that ethical behavior is not just attained by the manner in which the business conducts its daily operations but rather its sensitivity towards its society and the employees within the organization. Telstra has managed to qualify as a true reflection of ethical business due to the fact that its social responsibility programs have promoted a strong public image of the organization. Carpenter,( 2009) highlights that managing organizational ethics should not primarily be adopted with the objective of enhancing public relations. However, the fact that a business frequently directs its attention to initiatives that are ethically oriented , provides a strong public image. The alignment of values with behavior is actually an effective strategy of enhancing the public relations of a business. Bob Dunn, a San Francisco based CEO admits that social responsibility can best be enforced through developing a social responsible and a commercially successful business (David, 2010).Telstra has indeed proven this particular fact, essentially because the company’s strong public image is to a large percent derived from its social responsibility initiatives, which are a reflection of business ethics. Ethical business practices and programs should also support meaning and growth of the employees. The focus in the welfare of the employee is also an indication of an organizations commitment towards the well-being of the employees. As highlighted by the human resource initiatives undertaken by Telstra, what is evident is that through the various employee-centered programs such as training and development, motivation and development of a less rigid working environment and a participative leadership system. Telstra can be termed as a reflection of an ethical organization. Ethics in business is also governed by principles such as honesty and transparency in the daily operation activities of an organization (Carla , 2004) Telstra’s services and products are developed from the approach of integration of ethical business. For instance Telstra’s adoption and compliance to price control regulations or arrangements is an indication of the organizations commitment towards enhancing customer sensitive business practices, which is an indication of good business ethics. On the other hand, we can contend that Telstra has to some extents failed in terms of enhancing ethical business as intended through its social responsibility initiatives. This is essential because various failures in the part of the organizations management have indicated the incapability of the organizations in-terms of meeting its social responsibility and ethical objectives. Julian (2009) brings to light the fact that Telstra’s efforts to portray itself as a good image of corporate citizenship have failed. This is essentially because the telecommunication company has been graded lower due to its corporate behavior of lack of fair wages for employee and the salaries awarded to top executives. The company has faced numerous scandals concerning the welfare of employees. For instance in 2009, thousands of Telstra employees stood up to reject the repeated practice by the management of pressuring them into job contracts that are substandard. Furthermore, the Telstra protesters also opposed the blatant strategy of division of employees into different classes of worker. The application of the Marxism theory, whereby class is used to differentiate the workers is a subject of great concern in Telstra. Legge, (2004) argues that that human resource management should enhance good employee relations. In a context whereby there is one particular class that greatly benefits due to the massive efforts of the other class as highlighted by Karl Max, depicts a clear indication of failure of ethics and social responsibility. Another argument that can be raised is that despite of the fact that the organization has over the years worked very hard to build its image in terms of social responsibility, Telstra has not really generated a connectivity level with the human level within their undertakings. Many organizations try to serve the society through supporting local charities, enhancing environmental conservation, supporting education and training the workforce, as activities that businesses have to comply with in order to improve their image in society thus increase their profits and competitive advantage. Grace (2005) argues that the logic is that companies cannot just engage in activities that are not profitable; there is always an underlying reason for practicing social responsibility. This explains the basic reason as to why there is lack of connectivity between the social responsibility activates undertaken by many companies and the human level. In the case of Telstra it can be stated that if the organization does afford to financially support societal initiatives such as charities, then if difficult arises when it comes to supporting the individuals who generate the funds directed to charity, then there is in deed a big question concerning the organizations ethical standing. Is Telstra a Role model For Global Companies? Ethics is an aspect that involves values that are mainly associated to behavior. As a result, it can be argued that Telstra to large extent can be emulated by other organizations globally essentially because its values are basically accompanied by actions. The various initiatives undertaken by Telstra to demonstrate ethical business and social responsibility provide backing to the fact that Telstra can be used as a global image of indicating the practice of implementing organizations values through actual behavior. Also by constantly training and developing employees for promotion purposes is an indication that the organization still regards the well-being of the employees as important. Basing on this fact Telstra can be used as role model for global companies. On the other hand lack of integration of social responsibility and ethics with areas were consumers perceive as essential indicate a failure in the part the organization. This as a result reduces its role model capability. It is true that consumers perceive getting involved in environmental conservation and charity as essential. However, consumers also regard the imposition of limits to the pay given to executives and the increase in salaries for employees as important. As a result, to be a good role model Telstra should facilitate or implement all levels of business ethics and social responsibility in order to be termed as effective role model. Conclusion and Recommendations As indicated by the above analysis Telstra Corporation just like many organization in contemporary society is faced with the challenge of whether to be or not to be ethical in business. Telstra has indeed devised programs and policies that indicate its commitment to business ethics and social responsibility. This is through programs community based social care, environmental concern, fair business practices and human resource based initiatives. Based on this particular aspect Telstra can be termed as an organization that has strived to enhance ethics in business. However certain aspects of failure depict that the organizations initiative may to some extent be viewed as superficial. The failure to fully motivate its workforce and the development of class differences within the organization reflects failure in terms of ethical business. It is therefore recommended that Telstra should not only strive to build public image through external initiatives but rather focus should also be laid on developing and motivating people within the organization. This will act as a reflection of true business ethics. References Bansal, P &Roth ,2000, "Why Companies Go Green: A model of Ecological Responsiveness". The Academy of Management Journal, Vol.43, No.4, pp. 717–73 Carpenter, M., Bauer, T. & Erdogan, 2009, Principles of Management, New York: Flat World Knowledge Carla S, 2004, Business Ethics = Social Responsibility, Annual International Supply Management Conference, Lallatin & Associates. Carter, M, 2010 , 8 Guidelines of managing Ethics in the Workplace, Sage. David, G, 2010,Responding to “The Case Against Social Responsibility” Business Ethics . Grace, D., S. Cohen ,2005, Business Ethics: Australian Problems and Cases, Oxford University Press. Haynes, T, 2010, Social Responsibility and Organizational Ethics. Julian Lee , 2009, ‘’Telstra fails the public respect test’’ , Business day. March 26, 2009 http://www.smh.com.au/business/telstra-fails-the-public-respect-test-20090325-9aka.html Telstra corporate social responsibility report 2004 http://www.telstra.com.au/abouttelstra/download/document/csr.pdf Telstra Corporation report, 2000, Constitution of Telstra Corporation Limited: a company limited, Telstra Corporation Ltd. Read More