Corporate Social Responsibility in South Africa - Case Study Example

Corporate Social Responsibility in South Africa Table of Contents Table of Contents 2 Part 3 Introduction 3 Potential Ethical Issues 3 Conclusion 6 Part 2 6 Introduction 6 Cultural Differences 7 Bridging the Cultural Differences 9 Conclusion 9 References 11 Part 1 Introduction Corporate Social Responsibility (CSR) implies a commitment to policies development. Policies that incorporate responsible and ethical practices into everyday business operations and report on the progress made with an aim of applying these practices (Lee & Kotler, 2013, p.6). In the Automotive Supplier Company certain serious ethical issues arise despite stipulations that South African Companies should have a code of ethics. Therefore, the Company needs to properly incorporate CSR in its daily activities. Potential Ethical Issues A key serious ethical problem is depicted in the Company’s mode of employment. The administrative office, for instance, mainly comprises personnel of German descent. In addition, workers employed at the production facility are predominantly Zulus. Furthermore, in the case of the Indian Company, the management and its employees are all from Indian descent. Actually, South Africa’s population comprises four major groups: Africans (includes different ethnic groups) (79%), Colored (9%), White (Afrikaners and the English) (9%), and Asians/Indians (3%) (Irwin, 2010, p.5). Certainly the Company does not adhere to the code of ethics: it has failed to practice diversity in its mode of employment. I recommend that the Company should ensure its personnel comprise citizens from all the four groups of South African population. To ensure this, the human resource department of both the Automotive Supplier Company and the Indian Company should be provided with information and training concerning the ethical policies and the code of ethics. The Company has also failed to ensure Broad-Based Black Economic Empowerment (B-BBEE); they have instead averted it. The post-apartheid South African government introduced the idea of black economic empowerment so as to encourage the participation and involvement of Black people in the economy of South Africa (Mullerat & Brennan, 2011, p.36). Therefore, the core target of this empowerment encompassed economic as well as social growth meant for Blacks. In 2003, South African government implemented the B-BBEE Act and in 2007 published the B-BBEE Codes of Good Practice. In the Act, private companies are expected to implement the codes in case they desire to carry out business activities with government entities (Irwin, 2010, p.6). The customers of the Automotive Supplier Company are all from private sectors, therefore the Company is not party to this code. However, it is still unethical that the Company is failing to assist the government in achieving one of its goals (ensure black empowerment) when it actually can. I therefore recommend that the Automotive Supplier Company should consider including some Blacks in the administrative office. In addition, the Automotive Supplier Company seems not to put efforts into ensuring care for employees having HIV/AIDS despite many highly skilled and long-term employed employees suffering from this disease pandemic. South African government is signatory to UN Declaration of Commitment on HIV/AIDS (Grande, 2014, p.186) it is therefore offers employers the responsibility duty of care for workers suffering from HIV/AIDS. This is a key aspect of most CSR programs. Companies are therefore expected to ensure employees receive HIV counseling and testing, training on health and safety, HIV awareness campaigns on safe sex, and anti retroviral treatment (Grande, 2014, p.186). Certainly, the Automotive Supplier Company seems to breach the set rule and is also acting unethically in this situation. As a recommendation, the Company should consider assessing the effectiveness and adequacy of its ethical management processes and structures, so that it can make its management efficient. Further, the Company does not treat its employees responsibly and the Company’s boss seems okay with this. The Company’s management has failed to ensure employee wellbeing since it is not concerned about duty of care to employees living with HIV/AIDS. These employees lack medical care and the plant is also highly labor intensive. This is a breach of a sustainable policy yet the head of the Company considers it as an issue of no objective to the Company. Moreover, BMW South Africa Rosslyn, the Company’s main customer, believes on responsible and proper treatment of employees, and their corporation largely depends on whether the Company sticks to this. Nevertheless, the Automotive Supplier Company’s boss does not feel that it is the Company’s duty to ensure this. This is also unethical since the Company is assuming some of the key desires of its customer. It important that the Company ensures organizational satisfaction (all employees should be satisfied with the Company’s and its leadership ethical conduct) (Groenewald & Geerts, 2013, p.20). It is recommendable that the Company must ensure that all its customers are made comfortable and that their desires are not ignored. Further, as a leader, the boss should set the pace by audibly and visibly committing himself to the ethical standards set aside for companies (Dobbos, Barry & Pogge, 2011, p.77). In the Company, another ethical issue arises whereby the arranged deliveries frequently get lost. In this case, when the contact persons confirm the missing deliveries the management seems to take no action (it is considered not to be a problem). In addition, the supplier manager seems reserved about this issue and gives impractical justifications. Actually, failure by the supplier to provide deliveries as arranged and later on provide unjustifiable reasons is unethical. Also, the fact that the Automotive Supplier Company does not take seriously the fact that deliveries are not made as arranged despite constant confirmation by the contact person is unethical; an organization ignoring an employee’s efforts to make reports is not only demoralizing but is also unethical (Mitchell, 2009, p.186). To help solve this, I would recommend that the Company must ensure that it demonstrates to all its employees that reports about unethical practices are appreciated and considered serious. Conclusion Generally, the Automotive Supplier Company seems to breach a number of codes of ethics. Some of their practices are unethical despite not being considered to breach the law, they should therefore be discussed. They must also stick to other ethical conducts as entailed in the South African laws. The Company should consider strengthening its ethical culture. It must make sure ethical conduct become part of its identity. Part 2 Introduction Cultural differences is an aspect evident in all corporations and is often enriching and interesting. However, it sometimes brings about problems for reasons not understandable. It is therefore of importance for every employee and employer to understand and acknowledge the differences amid cultures. This helps people and businesses to work with their colleagues, customers or competitors more effectively and avert any form of misunderstandings. For companies, cultural difference may arise in various forms. It may be as a result from different ethnic backgrounds of employees and different ways of doing daily activities in a company among others. Often, in order to perfectly understand cultural differences in corporations, it is important to consider the dimensions of Hofstede and Trompenaars models (Heidtmann, 2011, p.52). Cultural Differences In the Automotive Supplier Company, there exist several cultural differences. A key cultural difference is the fact that the Company comprises mainly Germans (Whites) and Zulus (Blacks). It is no doubt that these two ethnic groups have variations in their cultural practices and behaviors. In consideration to this, the Hofstede model implies a cultural difference. Hofstede considered culture a joint programming of the mind that controls or determines a behavior regarded acceptable or attractive (Browaeys & Price, 2008, p.20). Hofstede model identifies five cultural dimensions, for instance, the power distance which is applicable in the situation of the Automotive Supplier Company. Power distance, simply is a reflection of the extent to which a particular culture supposes how organizational and institutional power must be distributed (unequally or equally) and the manner in which the decisions made by those in power should be perceived (accepted or challenged) (Heidtmann, 2011, p.53). Germans seem to be in a higher power distance than the Zulus. Therefore, they are more comfortable with a higher status differential. This is the reason why the administrative office is packed with Germans; they believe work at production facility is for low lives like the Zulus. In actual sense, a key predictor of power distance is wealth distribution (Piepenburg, 2012, p.41). It is a fact that in South Africa Whites holds a higher social status than Blacks simply because most of them are very wealthy while most Blacks are poor. Hofstede states that the level of power distance between cultures becomes greater with an increase in unequal wealth distribution between the cultures (Bono, Jones & Van Der Heijden, 2008, p.243). This gives a reason why, in the Company, Zulus do not work in the administrative office. It also gives the reason why the Germans are averting the application of the Black Economic Empowerment; they have the power. Another form of cultural difference is depicted between the Automotive Supplier Company and its main customer the BMW South Africa Rosslyn. This customer puts special importance on responsible and proper treatment of workers. In other words, for this company, it is their culture to ensure the application of sustainability policies like all employees being treated well so that they are comfortable. The Automotive Supplier Company’s case is however different. From the comments made by the head of the Company about application of sustainability policies, it is evident that this implementation is not part of the Company’s culture (it receives no special emphasis). In consideration to this, the Trompenaars model implies a cultural difference. Trompenaars model identifies seven cultural dimensions, for instance, the Universalism vs. Particularism or rather Rules vs. Relationships (Beugré, 2007, p.26), which is applicable in the situation of the Automotive Supplier Company. BMW South Africa Rosslyn seems to apply universalism. For universalism, people tend to put high emphasis on values, rules, obligations and most importantly laws. They make an effort to ensure they fairly deal with people in consideration to these laws/rules; relationships come after the laws/rules (Börzel & Hamann, 2013, p.159). BMW South Africa Rosslyn follows the law by ensuring employees are treated well. They are also ready to break their ties with any supplier (for example, the Automotive Supplier Company) that does not comply with this rule. In other words, for them, the relationship they have with their supplier comes after the law. In contrast, the Automotive Supplier Company seems to apply particularism. For particularism, people have the notion that each relationship and every circumstance dictates the laws/rules that they follow. Their reaction to a situation can change depending on whatever is happening and whoever is involved (Beugré, 2007, p.26). The Germans easily breach the Black Economic Empowerment because only the Zulus (the powerless) are affected. They however ensure that all Germans are comfortable by employing them in the administrative offices. For them, relationship comes first. This is also the main reason why the boss is against sustainability policies’ implementation. Hofstede’s cultural dimension of collectivism vs. individualism also brings about a cultural difference in the Indian Company (suppliers of the Automotive Supplier Company). Collectivism-individualism illustrates the extent to which an ethnic group (culture) depends on and has loyalty to the group or the self (Cullen & Parboteeah, 2013, p.51). In the Indian Company, the management and the employees are of Indian descent. The Company owners believe in collectivism, that why they only employ people of their ethnic group and not outsiders. They believe in being loyal to their group and they practice no self expression like individualists. Bridging the Cultural Differences Some of the key ways to bridge these cultural differences is to adhere to the set codes of ethics. All companies should note the importance of strengthening ethical culture by identifying themselves with this culture. Companies must also ensure the improvement of the training and communication on ethics policies and codes of ethics (Kline, 2013, p.96). It is also important to implement sustainability policies. Conclusion Generally, cultural differences pose a key challenge to CSR. Therefore, corporations should put much emphasis on activities that can help bridge these cultural differences. They should particularly focus on ethical practice since it is the origin of proper conduct in corporations (Carroll & Buchholtz, 2014, p.67). Companies must aim at having one universal culture; the ethical culture. References Beugré., C. 2007. A Cultural Perspective of Organizational Justice. New York: Routledge Bono., S, Jones., S, & Van Der Heijden., B. 2008. Managing Cultural Diversity. UK: Meyer & Meyer Ltd. Börzel., T, & Hamann., R. 2013. Business and Governance in South Africa: Racing to the Top? Palgrave Macmillan. Browaeys., M & Price., R. 2008. Understanding Cross-cultural Management. Hoboken, N.J: Wiley. Carroll, A., & Buchholtz., A. 2014. Business and Society: Ethics, Sustainability, and Stakeholder Management. London. Cengage Learning. Cullen., J & Parboteeah., P. 2013. Multinational Management. South-Western Cengage Learning. Dobbos., N, Barry., C, & Pogge., T. 2011. Global Financial Crisis: The Ethical Issues. Basingstoke ; New York : Palgrave Macmillan. Grande., J. P. 2014. Corporate Social Engagement in South Africa. London: Oxford University Press. Groenewald., L & Geerts. 2013. The South African Business Ethics Survey. [Pdf]. Available at: [Accessed on 28th May, 2015] Heidtmann., D. 2011. International Strategic Alliances and Cultural Diversity - German Companies Getting Involved In Iran India and China. Humburg; Diplomica Verlag GmbH. Irwin., J. 2010. Doing Business in South Africa: An Overview of Ethical Aspects. [Pdf]. Available at: < http://www.ibe.org.uk/userfiles/op4%20final.pdf> [Accessed on 28th May, 2015] Kline., J. 2013. Ethics for International Business: Decision-Making in a Global Political Economy. New York: Routledge. Lee., N & Kotler., P. 2013. Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. Hoboken, N.J: Wiley. Mitchell, C. 2009. A short course in international business ethics combining ethics and profits in global business. Petaluma, CA, World Trade Press. Mullerat., R & Brennan., D. 2011. Corporate Social Responsibility: The Corporate Governance of the 21st Century. Alphen aan den Rijn: Kluwer Law International. Piepenburg., K. 2012. Critical analysis of Hofstede’s model of cultural dimensions. Basingstoke; New York: Palgrave Macmillan.   Read More