Theories of Corporate Social Responsibility - of is Unilever Company - Case Study Example

CORPORATE SOCIAL RESPONSIBILITY Student’s Name Course Tutor Institution Date Contents 1.0 Introduction 3 2.0 Theories of CSR 5 2.1 The Corporate Social Responsibility Theory 5 2.2 Triple Bottom Theory 5 2.3 Stakeholder Theory 6 3.0 Case Study 6 3.1 Advantages of Using CSR 8 3.2 Disadvantages of Using CSR 9 4.0 Recommendations 10 5.0 Conclusion 11 Bibliography 13 Corporate Social Responsibility 1.0 Introduction Currently, the world is at the helm of the industrial and technological revolution that are majorly the main contributors to the growth of many corporations around the world that carry out business to satisfy the growing demand for their goods with the consistent growth of world population by double digits. This scenario has brought significant changes to the welfare of the people, but, on the other hand, it has led to other hazardous activities from the corporations, resulting in deadly repercussions that have prompted global attention that eventually led to the birth of corporate social responsibility. These retrospect paper seeks to discuss CSR broadly, while addressing divergent attributes of CSR. CSR is the relationship between the company and the society in which it operates. Additionally, another relation that defines CSR is between the company and its stakeholders [Gon12]. This two relations between the company, society, and stakeholders can be expounded as a management concept that requires every company as it endures to achieve its business goals it has to take into consideration the social and environmental effects of its operational activities within the society it operates, in essence, all the activities carried out should not be detrimental to the welfare of the society it exists in and the environment at large. The other relation explained about stakeholders is meant to keep the management of the company to make prudent decisions that always merge with those of the stakeholders ‘expectations[Gon12]. Various cooperatives have established their understanding of Corporate Social Responsibility. The United Nations Global Compact states that it is the act of making a decision in business using ethical values, linking to respecting individuals and communities and abiding with laws[ARa13]. In general, corporate social responsibility is voluntary in nature, incorporates social, environmental and economic policies in its administrative work, and it is dynamic and basic. First, the benefit of the aspects of CSR is the creation of admirable reputation. Firms which tend to have a good CSR practices tend to be attractive to both the potential investors and the customers at large as compared to those whose CSR practices are undermined by the management. Secondly it has enhanced ability to recruit, train and retain staff due to its overall friendly working policy framework that exists within a firm that endorses CSR[JMa13]. Thirdly it leads to innovations, competitiveness and market positioning due to the fact that when a company is trying to avoid exposing risk to the society, it has to look for better ways to cover the risks, and this enables the company to seek certification from legal authorities that enables it to operate a wide market hence curbing competition and market share[JMa13]. Lastly, there is the ability to adapt change. This is because the company is in touch with all the stakeholders and this enable the firm to react very fast to information that is on the ground to maintain market share [KHa13].Lastly, it leads to the creation of a robust social license to operate in the community. This means that due to the closeness to the stakeholders it creates a massive “social capital” that helps the company to thrive in a competitive market[KHa13]. Social responsibility has become one of the most important developmental principles that many are opting for currently. Global initiatives promote not only social dimension but also environmental dimensions of firms [DBa13]. For instance, the United Nation Global Compact which aims at reinforcing corporate citizenship has outlined ten principles under three major issues including: i. Human Rights-, businesses aim to uphold international recognized human rights and ensure they aren’t abused. ii. Labor standards- entails upholding freedom of association avoiding discrimination and all forms of forced labor and abolishing child labor iii. Environment-Under the environmental policy, business looks for ways in which the environment is conserved and promotes ways to do so[ARa13] There are three theories that explain corporate social responsibility. 2.0 Theories of CSR 2.1 The Corporate Social Responsibility Theory As a theory, it outlines four obligations: The economic responsibility in which the main objective is to make money. A company has to make profits in order to be competitive. In the legal obligation, rules and regulations have to be adhered to. Organizations have to obey the rules not because there is a penalty but because it is good to do so. Ethical responsibility focuses on doing right. For instance taking bribe in an organization is unethical even if everyone is doing it and thus firms shouldn’t engage in bribery [RCo13]. Finally the philanthropic obligation where an individual contributes to the society even if it’s private. For example a company could offer a land they aren’t using to make it a park 2.2 Triple Bottom Theory It states that corporate leaders should tabulate a bottom line results in the economic terms of the company and social realms in relation to the environment. There should be long-term maintenance of balance which can be achieved economically, socially and environmentally [Beb14]. 2.3 Stakeholder Theory The stakeholder theory aims at protecting the individuals, and that’s within the surrounding environment of the company[JBr]. It appeals for the balance of everyone’s interest and welfare [Bro13]. Currently, the world is faced with a lot of challenges, and thus every individual social responsibility should be to ensure a safe environment that accommodates all. Socio-economic and environmental factors should be key to all organizations. 3.0 Case Study Corporate social responsibility is no longer a term for not for profit organizations. Many companies have made corporate social responsibility a core practice in their daily operations. One of such case in our study is Unilever Company. One may wonder how this has managed to grow worldwide and have managed also to satisfy people[DBa13]. The purpose of CSR at Unilever Company is actual to ensure that their customers are served to their satisfaction and that other stakeholders involving the employees and the society across the world are treated it respect and good behavior[DBa13]. The company realizes that for it to grow and improve on productivity, then each and every individual involved must accept to work together in unity. This company uses three level techniques in its attempts to interact with the society. This includes voluntary contribution that the company makes to various societies across the world, impact through value chain where it states its relationship with its business partners, and impact of the companies own operations. In terms of employees, the company has its code of principle where they consider every employee who is qualified and can work in the company as equal. They believe in hiring on merits and training all the employees with respect to their job description without discrimination. The company ensures that there are safety and health in working conditions worldwide for all employees regardless of the job status. In its business conduct, the company believes in stiff competition with other companies yet fair to allow other companies to exist[DBa13]. The company does not believe in manipulation of other companies through behaviors like the excessive lowering of prices to it difficult for others to survive in the business. Unilever Company is also putting more effort to ensure that the environment is friendly. This can be revealed through their productive that they ensure that is environmentally friendly with all people in the society. The company gets involved in activities of environmental conservation across the world specifically through the planting of trees that is to say that the company believes in a green environment. The company’s corporate with governments in their countries of operation in matters concerning the general public. They fund projects like education and health, and they do not get involved in politics of their respective countries. In terms of financial matters, the company is open to scrutiny by the various authorities in their countries of operations. They ensure that their books of financial statements are in line with accounting standards required and that no asset or funds are undisclosed in their respective financial reports. The company has an independent internal audit body. This body in conjunction with the entire brand of Unilever Company ensures that the responsibilities and expectations of the company are communicated to every stakeholder affected. They have to know how to monitor the activities of the company to ensure they are in line with the standards set achieve equality in service provision across the world. The board also ensures that no criticism is laid on any management in line with the loss of the company that may be traced to following the regulations and the responsibilities of the company. 3.1 Advantages of Using CSR The success of any organization lies not only in the management but largely on the corporation of the whole organization and the people surrounding. This is true in the case of the success story of Unilever Company. At times, it is difficult for people to understand the impact of putting corporate social responsibility at the heart of the company, but even the small organizations benefit more from this technique. As most organization are geared towards profit making, many organizations that responsible have also benefited a lot from the use of CSR through reduction of risks, losses, and have also managed to attractive more quality investors. It should be understood that no investor will want to invest in an organization that does not respect the people who are directly or indirectly involved in its operations. Such organizations are believed to have high chances of making losses and, therefore, scare away potential investors. Corporate social responsibilities, therefore, offers organizations various advantages and this improves the ability of the organization to reduce cost and also to operate differently from their competitors [DBa13]. Organizations that practice CSR has a high chance of winning on investors. The benefits arising from the incorporation of CSR can be classified in terms external and internal benefits. Some of the external benefits accruing to the incorporation of CSR is increasing in the reputation of the company and reduction in the possible arising risks in the running of the business. This can be seen in the case of Unilever, which has earned a good reputation worldwide. Additionally, some other external benefits may include increase in sales revenue which boosts the general productivity of the company, and finally the high customer relations leads to customer goodwill that by itself is the company’s current asset[Gon12]. Organizations with a strong CSR are said to have high chances of retaining their best workers for a long time [Gon12].This by itself is important as it reduces the cost that can be involved in hiring and training of new employees in the organization. Companies with poor corporate social responsibilities are seen to have problems with employees who are not committed to work for the best of the company. These companies often lose the best employees to companies with strong CSR practices. Another advantage of using CSR as a company can be seen in terms of employee relations, productivity, and innovativeness. A high CSR in an organization has proven to increase a good relation among employees; this makes them to work together in a corporative manner. Corporation of employees reflects itself in high productivity of the company. Good relationship among employees also encourages creativity and innovation as there is ample environment for such [EGa13].These conditions also discourage absenteeism in employees and can help the company to get more employees who are dedicated to their work [KHa13]. 3.2 Disadvantages of Using CSR As much as the CSR is a key component to realize a profit in an organization, it has its shortcomings. Implementation of CSR in a company is seen to pass on costs to the customers. This is so because as the company strives to create income to support community activities, it has to get the income from the same members of the community through and increase in price commodities being produced to customers. Another disadvantage is that in some companies directors are given the responsibilities to take care of the shareholders and not of any other stakeholders like the society members. This makes it difficult for such directors to implement the CSR practices in their companies as it will be difficult to satisfy the shareholders. Through the implementation of CSR, there are additional costs that are imposed. This reduces competitiveness with companies that do not practice these responsibilities. 4.0 Recommendations At Unilever, corporate responsibility is an important aspect. The company has made efforts to work with suppliers and customers or the growth of the company, its employees and the general community [Jon12]. To develop social responsibility further, the following recommendations are useful for the company: Governance, ethics and transparency should be included in all leadership and business transactions. The company should develop official policies for these three aspects [KLo13]. To maintain openness, quarterly reports concerning social responsibility should be published concerning the developments that have been made in corporate responsibility. The company has employed a limited number of women globally. Though women shall not be favored over men during recruitments, the company needs do develop a policy for gender equality at workplaces. This will ensure that the responsibilities available are distributed equitably at the workplace [Jon12]. With regard to employees, their training, recruitment and development as well as retention are vital. The company needs to come up with better initiatives to ensure that it has employees with adequate experiences with the company and who are appropriately trained and developed. To strengthen its corporate responsibility, the company needs to translate the objectives of its human resource department into the general operation of the business [FMo]. Strategic management is an important tool to ensure that business objectives are positively aligned to human resource. The company also needs to keep improving its reputation among the customers by offering high quality engineering services, which are eco-friendly. In the contemporary business world, customers are looking for products that are environmentally [SCh13]. In addition to this, globalization and sustainability are important aspects. The company should ensure that all its operations do not affect the environment in any negative manner such as carbon emissions [Cra13]. Even if it does, it should ensure it comes up with offsetting projects for such environmental hazards. Partnering with other companies in the engineering domain is also an important aspect in corporate social responsibility. It offers the opportunity for unitary growth while providing platforms for dealing with challenges that face the industry, country and globe. 5.0 Conclusion Conclusively, it is evidenced that CSR is an imperative aspects for any company. Corporate social responsibility plays an imperative role in addressing the company’s needs with respect to social aspects. It is important to consider CSR aspects in divergent practices. Business organizations in the community are seen to have a powerful image. This has to be accompanied with responsibilities; it is therefore important for organizations to have a good self-image to portray to the members of the community in order to earn their goodwill. Evidently, The theories of CSR, notably, stakeholder theory and triple bottom theory have expressed the importance of such approaches in any organization. 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