Social Responsibility and Executive Leadership - Essay Example

Social responsibility and executive leadership BY YOU YOUR ACADEMIC ORGANISATION HERE HERE HERE Social responsibility and executive leadership Introduction Social responsibility has gone through three distinct historical phases, ranging from the 1800s to present day. The historical phases of social responsibility include profit maximizing management during a time when the industrial revolution was reaching its pinnacle and was the broad, acceptable practice at the time from the governmental and corporate level. In the early 1900s, as commerce, industry, investors and suppliers related to business activities grew, a new focus was developed known as trusteeship management which viewed the interest of multiple stakeholders. In the 1930s, after the Great Depression, quality of life management became the most modern phase of CSR where issues of improving societal gain in areas of lifestyle enhancement became the objective of business, government and corporate leadership. As time progresses, economies and specific international regions are recognising new trends in social attitude and consumer behaviour which are driving new and innovative practices for ensuring positive corporate reputation and also satisfying social beliefs on moral and ethical business practices. The historical phases of CSR maintain both strengths and weaknesses, which will be identified in this paper along with discussion of how these historical phases have developed into new CSR objectives in modern society. Additionally, recommendations on implementing effective corporate social responsibility activities in Hong Kong will be identified and discussed. The historical phases of social responsibility The concepts of social responsibility were largely generated from the American perspective, since this region was essentially a launching pad for industrialism and growth in the late 1800s. “America in the 19th century was a society of economic scarcity where economic growth and the accumulation of aggregate wealth were primary national goals” (Hay and Gray, 1974, p.136). It was during this period where the business system was considered to be a quality tool for reducing this scarcity, thus the focus of leadership in the corporate environment was to ensure maximisation of profits in order to enhance total economic growth within a region. One weakness of this historical phase is that it did not involve governmental influence when dictating what were acceptable social responsibility policies at the business level, therefore there was no regulatory body to oversee business activities at the internal level. Because of this lack of regulation and legislation, companies were allowed to exploit child labour and provide unsafe working conditions for corporate employees, especially in the manufacturing sector (Hay and Gray). The basic social belief during this time period was one where success in business and industry helped business leaders create a sense of self-identity, thus profit-gaining at the corporate level was heralded for both its genius and savvy business leadership. Having no regulatory body to oversee operations gave leaders incentives to formulate unethical advertising, create unsafe products, and also to turn a proverbial blind eye to broader urban problems at the social level (Hay and Gray). Capitalism at this time was under a series of business abuses which provided often-deplorable business conditions simply for the pursuit of cost reduction in order to maximize business profit. When businesses are able to provide products which might not be suitable for buyer needs , due to limited regulation of internal activities at the business level, it builds an incentive to further develop deceptive marketing practices simply to ensure rapid and high profit. This type of business model could be seen with many small-scale vendors attempting to establish their miracle cures and elixirs without having any concrete research evidence to justify their products’ effectiveness. Buyers at this time period were not accustomed to marketing in its concentrated form which makes up most of marketing promotion today, therefore they were forced to take the moral and ethical word of the seller that their products would perform their desired function and have relevance to the buyers’ needs. Though profit is definitely maximised through these efforts, the impact on consumers can be significantly negative in a non-regulated environment. However, a strength of this historical phase is that this focus did, in reality, create an entire system of business both domestically and internationally which diversified product offerings and enhanced the supply chain to better open lines of trade with regional or foreign businesspersons. By focusing on profit maximisation as a key goal toward the better social good, businesses in the manufacturing sector found considerable success and were able to expand, thus offering buyers more options to improve lifestyle. These developments led to supplier agreements with other companies and built the foundation of the supply chain used today. Highly profitable businesses were able to expand their production capabilities, thus faster turnaround on product development and launch into the buyer markets was accomplished. By not devoting funds or time investment into broader social problems and building business profit, the long-term strength was a more efficient business and supply system that ultimately did improve economic stability in multiple regions across the globe. The second historical phase of social responsibility is trusteeship management, popular during the first part of the 1900s. This view tended to move away from the first phase of CSR where profit maximisation was not the fundamental focus, rather establishing a balance between multiple stakeholder interests were considered. These stakeholders include suppliers, customers, employees, loan holders and other creditors, stockholders and even the general community. The outcome of this focus is “increasing public awareness and concern about the role of the business” (Brown, 2005, p.27). This new phase of social responsibility transferred activities to the management level or leadership level where managers were expected to maximise the return on investment for shareholders and also use business influence to improve other internal and external relationships at the social level. Trusteeship management tended to put the business manager into a more diverse job role where much more than profit was considered at the strategic level. A strength of this historical phase is that it changed the management and leadership focus within the business and began to recognise that other stakeholders were just as crucial in economic stability and business success. The role of management moved from profit-hungry leaders looking to exploit opportunities for financial gain to that of a better-rounded leader with multiple knowledge in areas of employee relations and stakeholder relationships. Where the division of labour during the first phase of social responsibility was significant with rich business leaders managing the activities of poorly paid, poorly-provided-for worker populations, this new focus removed some of these barriers by including employee needs in the business model. In many ways, this seems to have built the foundations of much of today’s human resources policies and processes which have added much benefit to the success of internal business operations and improved competitiveness. Reorganising the role of the manager to consider multiple dimensions of business and society created today’s template for the diversified manager with key competencies in multiple business areas. It seems that the largest strength of this historical focus was how it redeveloped business models to use management talent and foresight to create a more socially-relevant set of business practices. Thoughts about deceptive products or unsafe product launch were likely considered during this period which also laid some of the foundation of using marketing to connect with lifestyle and consumer values. This reflects a movement from strict focus on profit to a more empathetic business viewpoint on values, lifestyles, and needs of society at the professional and product level. A considerable weakness of this particular historical phase is that it put the burden of balancing interests between all stakeholders at the leadership level, demanding more policy creation from managers who had just emerged from a profit-focused business model. Investors, especially, demanded that managers ensure that internal processes were aligned to generate better return on stock investment. At the same time, the manager was engaged in meeting needs of employees and customers. This multi-focused management expectation, by internal and external stakeholders, demanded too much of leadership at a period where knowledge and business strategy was not widely available in research literature. Therefore, managers were left to their own, unique efforts at ensuring all stakeholders were recognised and, if the manager ineffective, long-term opportunities for business success could be diminished. The third phase of social responsibility was launched in the 1930s after the Great Depression. After emerging from this period where finances were minimal in many consumer and worker groups and society has just experienced approximately a decade of economic hardship, a renewed interest in material comfort and lifestyle enhancement through product development began. This phase was known as quality of life management where industries were developed with new capacities to create spacious homes, large and flashy automobiles, and huge varieties of appliances and other products geared to improving life of the middle- to upper-class citizen. It was also during this period where technological breakthroughs in production process began to take shape, therefore businesses were able to create higher volumes of products in faster time, thus opening new consumerism channels domestically and abroad. Quality of life management focuses on how business relates to areas of politics, culture, education and the overall stability of the citizen lifestyle. This focus also “builds corporate reputation by ensuring quality products and assuring social accountability by operating in a transparent fashion” (Cafolla, 2007, p.21). A strength of quality of life management is that it further streamlined how internal processes and policies are developed within the business. New partnerships with technology companies built more efficient process systems and also laid the foundation for relationship marketing used today to build better supplier agreements and overall competitive advantage. This began the start of a collaborative business environment between once-unrelated industries to develop more efficient internal systems. It was during this period where the general social belief was that heavy and excess consumerism could fulfil the needs of society, therefore these partnerships built new and more efficient internal systems which created better and more relevant products based on consumer needs. It is during this period where consumer research was beginning to be explored, which in today’s society brings many businesses competitive advantage by being able to link consumer needs with relevant product offerings. The provision of better management education was also a strength of quality of life management, as with new processes and technologies, the educational tools necessary to support these efforts became required. Managers and employees likely became better-rounded about business at the process, policy and technology level, inviting more active participation from all stakeholders who were skilled with multiple competencies in business development. Better training, in any industry-related field or topic, is an effort toward better human capital at the internal level for competitive strength and advantage. The weakness of this historical trend is that the rapid growth in business and technology created larger social and environmental issues domestically and abroad. With the growth of industry came problems with air quality and impact on environment, as various legislations regarding safe manufacturing had not been fully explored or developed yet. As a result, heavy concentrations of manufacturing industries actually detracted from the physical health of local workers and citizens and represented a risk to the populations. Yet another weakness of this approach is that the division of wealth in society began to become more extended, with rich getting richer and poor getting poorer. Those in society who could not afford the quality merchandise being generated by this time were forced to live in poorer conditions than those fortunate enough to have access to finance, business and education. This division of classes and wealth is still present in today’s society and much of this can be attributed to the negative outcomes, however unintended during this phase of social responsibility, and is still a problem at the regional and international levels. All of the historical phases of social responsibility created positive outcomes as well as negative outcomes on broader society. The development of today’s business infrastructure can be attributed to all historical phases and should be recognised as these developments have given today’s society much better product options, regulatory environments, and the assurance that deception in business practices will be minimised at virtually every level. Despite any weaknesses, the long-term gains seem to outweigh any disadvantages created by these social responsibility systems. Implementing CSR in Hong Kong Hong Kong, a developing international economy, now has multiple representatives taking more careful consideration of issues of environment, employee satisfaction and welfare and business governance related to corporate social responsibility (Gunawan, 2009). The notion of a business providing value to both internal profit and the external stakeholder is a common theme in today’s Hong Kong at the business level, therefore this region would be highly accepting of new CSR initiatives if they bring better brand image and also satisfied, loyal customers. A recent survey of over 500 Hong Kong consumers identified that over 71 percent of them had made a personal product purchase simply because it had promoted an affiliation with environmental focus and objectives for eco-minded sustainable business practices (csrinhongkong.com, 2006). At the profit level, Hong Kong consumers have developed a social trend regarding the environment and the role of businesses in providing a more sustainable environmental model. Such demands include less harmful packaging, reduction of the business’ carbon footprint in areas of emissions and energy usage, and also, in some instances, the devotion of corporate funds to charitable foundations devoted to all things green. Environmental corporate social responsibility involves company reputation at the consumer level, therefore implementing new CSR initiatives related to environment should be a key objective in the Hong Kong business environment. Depending on the specific industry in Hong Kong, environmental policy can include the creation of less harmful packaging, reducing suppliers who do not comply with environmental objectives, or changing areas of process to include energy-use reduction. Even though these improvements represent short-term costs to the business, at the financial level, the long-term benefits of this new CSR focus is the creation of better consumer sentiment. Businesses in Hong Kong strongly rely on consumer sales volumes of products in order to remain competitive and profitable, therefore it would be important to absorb these short-term costs to gain long-term positive consumer sentiment about the company and its eco-friendly objectives. Consumer attitudes and their view of corporate image strongly impact their willingness to make a purchase from a company. When consumers develop this sense of business identity, the social beliefs which they use to make this determination involve morality as well as personal likes and dislikes (Holbeche, 2005). Consumers, in today’s Hong Kong, have begun to view environmental initiatives at the corporate level as a moral need for improving society, thus issues of ethics are important when launching a CSR campaign in this region. The development of a solid code of ethics, which include impact on environment and internal environmental policy, is a quality step in improving business transparency and also establishing a positive ethical reputation on the consumer marketplaces in multiple business divisions and product categories. “There are still too many brands (today) that are not listening to consumers in Hong Kong” (Marketing Week, 2009, p.20). Hong Kong is rapidly becoming a consumption-based society as international and domestic businesses begin developing local companies and brands, thus giving Hong Kong citizens more variety on the consumer marketplace. Part of developing a relevant CSR programme in this region involves using consumer research gathering as a tool for building a better brand image by focusing on consumer needs. For example, consumers in Hong Kong may be more responsive to products which fulfil a relevant need, such as a household cleaner, therefore they want this product to be safe on the environment, sold at the right price, and actually performs as it is promoted to perform through business marketing. Failure to provide products which satisfy can lead to negative brand image and lost consumer sales volumes. “Studies increasingly show that consumers will spend their money on brands that reflect their values and concerns” (Choueke, 2009, p.3). If Hong Kong businesses are not devoting the financial and labour resources into conducting consumer-oriented research surrounding viewpoints on CSR and its link to product reputation, this is a failing in terms of social responsibility which needs adjustment. In order to understand what the modern Hong Kong consumer demands in terms of social responsibility at the corporate level, implementing new research in the form of surveys, interviews and questionnaires can provide the data needed to create more CSR-focused promotional materials to build a stronger brand reputation. Hong Kong business environments could also benefit from the development of a total ethics programme which invites internal employee volunteerism and participation to give the business a competitive edge and positive brand identity in consumer groups. “Employer-sponsored volunteerism is strongly associated with a positive organizational identity” (Houghton, Gabel and Williams, 2009, p.478). Assessment of the local community discovered that many businesses are not taking advantage of a volunteerism model related to corporate social responsibility and are missing out on the positive organisational outcomes it can provide. The historical trend of CSR related to quality of life represents diverse needs of many key internal and external stakeholders as business focus in meeting their demands. Employees are a considerable source of competitive and strategic advantage to businesses, therefore utilising them in a much more publicised CSR campaign related to volunteerism can give press releases and positive publicity to Hong Kong citizens, of multiple demographics, showing how these firms value the community environment and are willing to devote human resources to ensuring a more collaborative social environment or urban development environment. The development of an ethics programme can also give the business more transparency in how it conducts its internal operations and processes related to social responsibility. One of the key success factors in achieving business profitability is giving stakeholders and shareholders an accurate, transparent window of how the business is performing by reporting in a way that is meaningful to the investor or other stakeholder. Investors are not only concerned about whether the business is turning a positive profit, they are concerned about long-term, strategic issues such as brand reputation and consumer sentiment. Therefore, increased corporate social responsibility focus on volunteerism, supported by the organisation, will only provide new opportunities to satisfy complex stakeholder and shareholder demands and build a better business image to Hong Kong consumers who would be concerned about charity, ethics and volunteerism. The end result can be higher sales volumes from consumers who successfully link personal views on ethics with a complying organisation or brand. As businesses become more modern-focused and attempt to meet the needs of internal employees through various human resources policies, this strengthens the interpersonal dimensions and closes the gap between management and subordinate. Better benefits offerings in Hong Kong and more flexible job structures are part of the contemporary business and social landscape in this region. These are efforts which largely are designed to improve human capital, thus improving business competitiveness and profitability. However, these human resources changes are geared toward corporate social responsibility and Hong Kong businesses should take advantage of this opportunity for further business promotion. Each time an organisation changes its internal processes in order to provide workers with a better quality of life, the families of these employees are affected as well. In a cyclical chain, higher disposable income contributes to better regional economic stability, therefore impact on families should be capitalised upon as part of a new CSR promotion. It is recommended for Hong Kong businesses to implement a new reporting system which publicly addresses internal change processes related to employee benefits. Using press releases or extranet memos to show these improvements will build a stronger reputation with consumers, reduce the costs of recruitment and retention at the HR level, and also improve relationships with external stakeholders as the business strongly reinforces its ethical commitment to sustaining better employee lifestyle. To the benefit of businesses, which must look toward low-cost methods of improving relationships with key stakeholders, promoting these internal human resources-focused changes is a low-cost method of promoting brand image and corporate function. It has always been, since the first historical phase of social responsibility, to maximise profitability in industry. In a period where cost reduction is commonplace roles for managers, due to diminishing economic stability in many regions across the globe, routine press releases which highlight employee-oriented improvements can satisfy budgets whilst also creating long-term reputational value for the organisation. It is further recommended that businesses adopt a relationship marketing focus as part of corporate social responsibility efforts in Hong Kong. As this business region develops, the area becomes exposed to new talents, new ideas, better innovations, and a multi-cultural set of values which reflect diverse social belief and lifestyles. In this inter-connected infrastructure of production, supply and marketing, business leaders must conduct business with many different cultural representatives from many different global regions. Relationship marketing is a relatively contemporary concept which is designed to strengthen supplier relationships at the managerial and business levels and also help organisations pool their knowledge and resources to build better business models for all partners involved in the relationship effort. There is a clear trend in Hong Kong society, today, where the social dimensions of business are considered just as important as process and policy. The development of a new relationship marketing model would identify any deficiencies in how organisational leadership connects at the interpersonal level and then adjusting behaviours and policies in a way that creates win-win outcomes for all partners involved. In marketing, the development of various strategic alliances to improve sales or brand loyalty are becoming more commonplace for internal process enhancements or better sales philosophy. This relationship marketing recommendation would include strengthening the frequency of face-to-face contact with external business leaders involved in areas of the company’s value chain. These meetings, and the outcomes of leadership discussion or project goals discussed, can be reinforced and publicised in press releases, annual reports, quarterly commentaries or any other structure which would represent low-cost options to the business and could offer more exposure for the company in multiple market environments. Additionally, the relationship marketing model and the strengthening of the interpersonal dimension of partnered business relationships could be internalised, using the firm’s intranet or other internal communications systems to reinforce that the business is strengthening relationships to provide workers with better long-term job security. Identifying with the needs of employees is part of a quality CSR campaign in today’s society, as it was in the 20th Century during the last two phases of social responsibility, and this is a tremendous opportunity for improving business image and also increasing efficiency in all areas of the value chain. Conclusion This paper discussed aspects of CSR and its historical development over the last 100-150 years. Social changes and changes to management concept and its role in assisting business and stakeholders has developed significantly to include a more modern focus on issues of ethics, morality, and the role of business in improving local infrastructures and ensuring eco-friendly delivery of products and services. This is true at the international level. At the local level, in Hong Kong, this evolution of corporate social responsibility has created a wholly-new business environment which derives much of its success and profit on consumer attitudes related to the company and the branded products. Marketing is a very important force as a medium for promoting efforts at improving CSR in the Hong Kong business and should be considered to give these ongoing activities more promotional exposure. New philosophy regarding CSR tends to illustrate that profit objectives must always be met, without sacrificing the well-being of all key stakeholders in this process. This is a fundamental shift from historical beliefs, however it is an important success factor for meeting with modern social beliefs and values related to the role of business in improving communities across the world and in Hong Kong. The modern viewpoint on corporate social responsibility takes into consideration such a diverse set of factors, there are virtually unlimited opportunities in Hong Kong (and abroad) for improving business standing in communities through innovative CSR focus. References Hay, R. and Gray, E. 1974. Social responsibilities for business managers. Academy of Management Journal, 17(1), pp.136-137. Gunawan, Richard. 2009. CSR trend in Hong Kong. Viewed 18 Oct 2009 at http://businessassurance.com/csr-trend-in-hong-kong/ Csrinhongkong.com. 2006. The CSR Challenge – Where does Hong Kong stand? Viewed 19 Oct 2009 at http://www.csrinhongkong.com/resources/CSR-Event-Survey-Results.pdf. Cafolla, Liana. 2007. CSR can build and defend good reputations. China Staff, Hong Kong. 13(1), pp.20-23. Holbeche, Linda. 2005. The High Performance Organization: Creating Dynamic Stability and Sustainable Success, Oxford: Elsevier Publications. Brown, Christopher S. 2005. 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