Ethics and CSR Versus Corporate Objective of Profit Making - Essay Example

Client’s Name Professor’s Name Course Name 09 October 2013 Ethics and CSR versus corporate objective of profit making Why do companies and businesses get formed? Why do people work so hard every day to ensure that their businesses are successful? Koss believes that businesses are designed for the sole purpose of profit making (57). According to him, the capacity of businesses to make profits and sustain their operations is what gives these businesses their lifeline (Koss 57). Several other authors share this opinion (Chieg 77; Boyatzis and Soler 24) but extend to state that sometimes the purpose of setting up a company goes beyond the realm of making profit (Kozlinskis and Guseva 112). Mostly, the concept of corporate social responsibility (CSR) is emphasized and widely practiced among many different companies in the world. However, sometimes companies find that they have to maintain a very tender balance between their CSR obligations and the major objective of making profits. While others do this in a very well defined and practical approach, other companies find themselves having a state of conflict between the two. This essay paper will examine how company has managed to successfully effect a balance between its profit making activities and its corporate social responsibility. The company under discussion here is ‘Interface’, a carpet manufacturing company based in Atlanta, Georgia in the USA. The various components of the CSR that this company engages in will be illuminated in this essay. To be able to contrast this company’s performance with others in the market, the paper will look into the corporate as well as management practices of Interface limited and identify what practices ought to be incorporated in the daily operations of many companies today. Definitions of CSR and its general applicability will also be offered and then a link connecting the profit making segment of Interface and CSR established. It will be found out from this discourse that Interface is among the companies that know how to have a well blended combination of CSR and profit making as they use CSR to ensure that their sales volumes are boosted. Defining CSR Basically, corporate social responsibility involves the act of giving back to the community. The manner through which this is conducted is usually left to the management of the company itself to decide. Freeman and Hasnaoui state that there is no clear-cut definition of CSR (419). This is because the concept is understood differently in different geographical settings across the globe. Each nation in the world has its own specific definition of CSR. However, there exists some form of commonness amongst these definitions of CSR irrespective of the geographical differences. Even different scholars have penned down very diverse and different definitions of this concept. Dahlsrud states that despite this confusion, the key factor in the definition is the ‘social responsibility’ concept (1). According to Dahlsrud, CSR involves companies acting in a socially responsible manner (1). Bowen (Smith 3) defined CSR as the “obligations of a business to pursue policies” and these policies and lines of action be set along the desirable factors and elements as “well as values of the society” (Smith 3). In other words, CSR should ensure that in the process of pursuing their objectives of making profits among others, they should ensure that they conduct their actions in a manner which will respect and share in the values of the society in which they operate. It is important to note that CSR oftenly involves an expense to the company. The company has to pay for some activities that will engage the society and encourage them in some way. In a bid to break down this definition in a more simpler sense for the application in this paper, CSR can be defined as the process of engaging the society through activities that will generate a sense of social responsibility. The following section explores the company set out as a case study for this essay. Interface Company profiling Started in the year 1973 by Ray Anderson, Interface ltd has grown to become the world’s largest manufacturer of carpets for both institutions as well as private homesteads (Interface company website). Founded as a small company, it went on to acquire other competitors in the market and through a process of continuous innovation, it was able to become the market leader in carpet making in the world. Today, the company boasts of an employee base in excess of 3000, a far call from the humble beginnings with only 15 employees including Ray Anderson himself. The company has grown and expanded exceedingly to acquire 33 manufacturing locations and a revamp of revenue to over 900 million dollars by the year 2012. The latest innovation of the company was InterFOL, carpet tiles that could easily be removed and rolled out. The chairman of the company, Ray Anderson states that the soaring success of the company mainly crops from the fact that the company has been able to provide a perfect mixture of CSR that is sustainable, principled and profitable. This being a hard thing for most companies to do, the following segment of this essay will focus mainly upon the balance between the two and how profitable CSR can be, taking interface as our lead case study. CSR and profit making objectives It has been established at an earlier section in this paper that CSR engagements are an expense to the business. They take money away from the business. yet, the concept has become so popular since the 1950s to an extent that some companies have even embedded it into their company manifesto. This means that there must be some gain attached to the practice of this concept and most likely, the gain involves finances. Exploring this section and using Interface ltd as our classical example, the benefits discussed in the following paragraphs have been established. Image revamping Perhaps this is the single most important reason as to why many companies engage themselves in CSR activities. Many companies in the world which could be termed as having been successful have ridden this wave of success as a result of image and corporate branding. People identify themselves with such companies whose brand is so strong that its presence is felt everywhere. But how do companies get to achieve a sense of huge branding? By looking around, one could easily name three companies, both local as well as international one which have succeeded in creating a lot of value in their name. Facebook, Apple, WalMart, Cocacola, General Motors to name but a few are some of the world’s largest and most readily recognized brands. To create a brand like this involves a lot of work and patience. This is what is being referred in here as image revamping. Image revamping involves conducting a series of activities that are in resonance with the community and the society at large. For companies which have got it right, CSR is the way to go. Interface is a perfect example in this field. Over the years, the company has involved itself in numerous charitable activities across the sates where they have factories. Employees of the company engage themselves in numerous voluntary activities in the society most times at the expense of the company. This goes quite a long way in ensuring that the society positively identifies with the company and they become responsive to the products that the company sells to them. The image of Interface company has been given a huge facelift due to the various charitable activities it does in the society. Improving respect for the company’s products Scheig believes that CSR does indeed improve the levels of profits that a company makes, or rather it does create an avenue for which sales will increase and consequently profits soar too (79). There is a huge correlation between CSR and the act of profit making. The key issue here lies in the delicate balancing of the two parameters. Too much of one will affect the other’s performance. The vice versa is also very true. People have a lot of respect for the products of the company that is seen to give back to the community in one way or another. Corporate and management practices of Interface versus the CSR policy Inarguably, the Interface company has succeeded as it has mainly because it has made sound corporate as well as management decisions along the way. The management of a company is wholly responsible for making decisions and striking a balance between CSR and profit making initiatives. Interface company limited has managed to enact management decisions and policies that have ensured that the company’s objectives are fulfilled. Some of these decisions and corporate practices have been described in the ensuing paragraphs. Interface limited allows its employees the freedom to engage in social activities as volunteers. Matter of fact, the company encourages its employees to participate in activities in the society on a voluntary capacity. This is done mainly through a system of enrolling employees into voluntary clubs and societies in the vicinity of their working environments. Employees of the company go out to interact with other members of the community on the company’s time and through these activities, they are able to market the company brand in a passive manner. The lesson from this aspect that other companies should learn is that CSR is best conducted when the employees of the company are willing to participate in an active form in the process. This is often possible when the employee does not have to worry about missing out on payment for the duration they are engaged in CSR activities. Another way through which the management of Interface limited has scored a first in this area is through setting aside a kitty that is designed specifically for such activities. It’s easier to have a small budget that caters for CSR activities designed out at the beginning of the fiscal year. Through setting aside some money for CSR activities, the company is capable of concentrating on other more important segments of their business. Through this, they are allowed chances of advertising themselves and even offering company branded products like t-shirts and caps. Interface company does this at the beginning of every fiscal year. This ensures that no unexpected pitfalls could result and affect the budget of the company in the year. This is a lesson most companies should learn. Through a proper budgeting technique that sets money aside for factors such as CSR among others, it prevents the companies from either overspending or using cash that was meant for other uses. Being environmental minded is also a factor that appeals to the society very well and falls within the dockets of CSR appropriately. With the increased amount of environmental pollution in the world today, companies are in pursuit of ways of refining their production to be in line with the environmental conservation policies. With this knowledge in mind, Interface company managers came up with a decision of finding innovative ways of making carpets that were eco-friendly. This resonated very well with the people and sales volumes of the company’s products skyrocketed. In view of this, the company has also started a campaign to rally other companies to engage in the manufacturing of products that are in line with this eco-friendly tag. Putting all factors into consideration and noting that some companies are rigid in the sense that they are not in a capacity to produce eco-friendly products, it’s the initiative of every manager to ensure that the environment in which the company operates in is protected from the pollutant elements. Some companies have effluents which could be very hazardous to the environment. It is the responsibility of the managers of such companies to ensure that they clean up those effluents before they are released to the environment. Recycling is also another huge plus area for the interface company. the management of the company has identified that it is important to have the materials used earlier recycled into the creation of new products instead of allowing such materials to go to waste. Many companies do not recycle their products. As such, they find that these used products just go back into the environment and this leads to environmental pollution once they pile up. Most dump sites in the world today exist mainly because people do not want to recycle these products. The managers of other companies should borrow a leaf from the management of Interface company limited and start programs that will allow for recycling of already used products. Through this style, they will ensure that the environment is decongested and at the same time lower their production costs and increase the profit ratios. Conclusion The discussion offered in this essay has brought out a number of issues. That CSR does indeed lead to profitability. However, it has been observed that this is only possible if the balance between the two is struck. This concept has been discussed in depth through an illumination of Interface company limited. It has been observed that the management of this company make decisions that are very much in cohesion with the CSR concept and for this reason, the company’s success keeps on soaring. Other management practices of the company have also been identified and discussed at length. The paper concludes by stating the CSR is a responsibility that goes a long way in propelling the image of companies which exercise them to great heights and for this reason, every company should endeavor to act in a socially responsible manner to boost its CSR itinerary and consequently, its profit margins. Works cited Boyatzis,Richard and Soler, Ceferi. "Vision, leadership and emotional intelligence transforming family business". Journal of Family Business Management. 2.1 (2012):23-30. Dahlsrud, Alexander “How Corporate Social Responsibility is Defined: an Analysis of 37 Definitions”. Corporate Social Responsibility and Environmental management.15.1(2008): 1-13. Freeman, Ina and Hasnaoui, Amir, “The Meaning of Corporate Social Responsibility: The Vision of Four Nations”. Journal of Business Ethics. 100.3 (2011): 419-443. Interface company website. “ about us- the interface story”. Retrieved October 9, 2013 from http://www.interfaceglobal.com Kozlinskis, Vulfs and Guseva, Kristine. “Evaluation of some business macro environment forecasting Methods”. Journal of Business Economics and Management, 7.3(2006): 111- 117. DOI: http://dx.doi.org/10.1080/16111699.2006.9636131 Schieg, Martin. “Risk management in construction project management”. Journal of Business Economics and Management. 7.2 (2006): 77-83. DOI: http://dx.doi.org/10.1080/16111699.2006.9636126 Smith, Richard. “Defining Corporate Social Responsibility: A Systems Approach For Socially Responsible Capitalism”. Master’s thesis. Retrieved October 9, 2013 from http://repository.upenn.edu/cgi/viewcontent.cgi?article=1009&context=od_theses_mp Read More