The Social Performance of the Company General Electric - Case Study Example

Introduction The recent economic crisis and debacles have highlighted the importance of corporate governance. Corporations in the twenty first century are looking for the well being of the “customers, employees, and community and share holders”. (Silva, 2004) The framework followed by corporations look into the issues of “accountability, effective communication and diversity of perspective”. (Mills, 1999) Many theories and rules have been framed to ensure that corporations adhere to the social norms. The theories and models will help to ensure that “there is effective monitoring, overseeing and evaluating the performance of the upper levels so that the management don’t use it to their advantage but rather look into the well being of everyone”. (Silva, 2004) General Electric has ensured that they work towards the well being of the society. The social performances have ensured that they are able to able to deliver services which helps to adhere to the requirements of governance. The company has a standard for measurement of the performance which has been transformed into designs to deliver services of high quality. (Richman, 2009) General Electric has also ensured that they focus on society and shareholders (Woods, 2010) which has ensured that they are able to generate maximum leverage and use their focus to deliver on the promises made to the society. Working on delivering the governance to the society has ensured that General Electric has a continuous flow of labour (Greening & Turban, 2010) which is helping them to deliver products and ensure that the society is sought after. The company has followed a mechanism which has allowed them to deliver on the services and ensure that they contribute to the society. Stakeholders General electric has responsibility to deliver services for every section of the society that is associated with the company. The company on the whole is looking towards the wellbeing of the general masses and has a corporate governance norm to be followed to ensure that they are able to deliver on the promises made. The stakeholders for General Electric look as follows The “business organisation needs to see that the organisation works for the well being of people associated with the organisation and ensure that their well being is looked after”. (Hill & Jones, 1992) It shows that corporation should take decision which will improve the performance for the customer, community, employee, trade association and everyone associated with the corporation. Thus it looks into various aspects and people associated with the company. This thereby ensures that decision taken affects all. The shareholders being the owner needs to ensure that the management i.e. the agent acting on behalf of the principal takes decision which helps to see the well being of all and ensure that the policy of corporate governance is adhered to. Case against General Electric General Electric has delivered various products to the society which has done harm despite the benefit accrued from the product. The invention of “light bulb, X-ray, the first U.S. jet engine” (Sheffer, 2010) have all added to the pollution levels thereby contaminating the earth and the environment. This has caused widespread harm and many a cases have been filed as it has harmed the society to a certain extent. General Electric also has a case against is as it “released radioactive material to see how far the cloud drifted” (Multinational Monitor, 2001) harmed the society and environment causing damage. The company also used “human to conduct an experiment for nuclear calibration” (Multinational Monitor, 2001) thereby causing harm to human life. This was a manner in which General Electric acted against the society. Also, a test done by General Electric “on prisoners to see the effect of radio active material on human reproductive organ” (Multinational Monitor, 2001) shows the cruelty being displayed by General Electric on prisoners. This incident demonstrates that General electric wasn’t able to look for the society. Inaccurate “disclosure of military products and using human to test those” (Immelt, 2007) stands against General Electric. It shows the cruelty exercised by the company just to earn profits. This is a strong violation of the social norms and has brought ill name to the company. The aggressive “commercialization of activity like turbines, aircrafts engines and so on” (Hart & Milsten, 2007) ensured that General electric divert from its path of a greener society to one which pollutes the environment. This policy to earn greater revenues forced General Electric to deviate from its path of greenery and as a result has case filed against it name for harming the environment. The different manner which General electric has used humans and the environment to generate profits for the company by delivering those have made the company loose some vital findings. General Electric due to this has not bee able to develop a mechanism but the recent changes in the citizenship report where General Electric have inculcated some changes have ensured that the company looks towards a path where it contributes to the society. Case for General Electric General electric is taking all possible step to ensure that they are able do deliver governance for their stakeholders. Looking at the larger perspective General Electric has ensured that they “reduce pollution and go green and this has been disclosed in the citizenship report”. (Concoran, 2010) The companies’ policy to publish citizenship report itself highlights the areas and ways the company is working upon for the society and ensuring that they are able to uplift the condition in the society. One area where General Electric has been successful is the implementation of Agency Theory. This theory puts a new perspective and deviates from the old philosophy of profit maximization. This theory says that “corporations need to have agents who will work on behalf of the principal owner i.e. the shareholders and will be given certain incentive for it.” (Nicholson, 1998) For this to happen and ensure that corporate governance follows it is essential to differentiate the role of board of directors and the executive management. This will define the path each has to follow and will strengthen the core values of the unit. General Electric while ensuring that they deliver the promises to the society has been able to craft a reputation which has been due to the social responsibility adhered by them. (Esther, Juan & Garcia, 2007) This has made them implement the programs and ensured that they deliver to the society. The company has also addressed the over mounting problems in healthcare industry by working with partners (GE, 2010) General Electric against the cases filed against them had “shed $200 million to reduce environmental pollution on rivers and other releases”. (Multinational Monitor, 2001) This was a measure that shows General Electric looking after the environment and society at large. The clean up of rivers and other damages ensures that General Electric is able to devote time and look towards improving the social condition. General Electric look out towards the environment to ensure “reduction in global warming, scarcity in water level and energy” (Immelt, 2007) have ensured that they take steps to reduce those. Especially, in developing countries where this problem tantamount to General Electric has a mechanism which ensures that the environment and the society are cared after. Having regular meetings with the shareholders and other concerned stakeholders also have ensured that general Electric devise their citizenship report in a manner which gives them advantage. General Electric objective to reduce environmental pollution and also look into the manner water is becoming a scarce resource and working in that direction is a core value acquired by the company. Also the change in the mission to ensure that they are able to contribute for the society shows that the company has started to take a path which will help them to raise the bar and enable them to deliver better social services and improve their social obligations. Performance of social duties The overall performance of General Electric to deliver governance and social responsibilities can be seen below. The following chart sows the trade offs and the delivery of corporate services to the community and the stakeholders of the General Electric. “The green part represents a synergy whereas red indicates trade off highlighting the fact that at certain areas the benefits are offset by the financial cost and regulation involved in it”. (Gonzales, 2010) It highlights the General Electric was able to develop synergy with customers and staff to a larger extent. On other angles the company was having a trade off thereby showing the importance to improve corporate governance in those areas to be able to get more governance. Social Contracts General Electric has also been part of the social contract and has ensured they have a mechanism in place which helps them to adhere to the social norms. A social contract theory is one where “government is entitled to rule the people and powers have been given to them”. (Vreeland, 2010) General Electric has ensured that they adhere to it and disclosing information ensures that the government knows about it. This sometimes lead towards a prisoners dilemma as giving some authority at times goes against the social obligation of the organisation towards the society and it puts them in a fix. (Ken, 1996) Deciding upon the future course of action then becomes difficult as working on one aspect will render the other useless. This thereby contradicts with the social responsibility and social contracts thereby creating an environment where it becomes difficult for General electric to act on one. Concluding Remarks Thus, corporate governance has become a vital tool for business. All agencies and society is looking at the different aspect the business works upon to ensure that they look for the well being of most. The various theories and models developed thereby help to ensure that corporations are able to ensure that the management working on their behalf is able to consider corporate governance. With carious scandal and downturn it has become essential that business units focus on corporate governance and ensure effective mechanism in their organisation to ensure that the company doesn’t look for profit but instead maximizing value for all. General Electric has shed their old tradition and image and has worked to ensure that the image of the organisation improves. General Electric has developed a citizenship memorandum and by taking all necessary steps to ensure that they are able to deliver proper social responsibility will go a long way in shaping the way business is conducted and will help them to grow. 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