Shameless Exploitation in Pursuit of the Common Good(Text Page 423)
VII.social responsibility
Learning objective 6
Explain social responsibility. (Text pages 419-423)
A.Social responsibility is the obligation that individuals or businesses have to help solve social problems.
B.Profit Maximization
1.In the 19th and early 20th century business owners believed that their role was simply to maximize the profits of their companies.
2.Dealing with social problems was not considered a legitimate business activity.
C.Trusteeship Management
1.During the 1920s and 1930s trustee management became popular.
2.Business owners had obligations to their employees, customers, and creditors.
D.Social Involvement
1.The 1960s brought a more activist approach.
2.Corporations have a responsibility help solve problems such as poverty, crime, and environmental destruction.
3.Businesses have obligations to all stakeholders, the people – employees, customer, suppliers, and the community – who are affected by the actions of a business.
4.Corporations are now expected to show their commitment to social change.
5.Most corporations actively try to diversity their workforces by actively hiring and promoting more women and minorities.
E.Measuring Social Responsibility
1.Philanthropy and volunteerism
a.Businesses contribute time and money to charitable organizations.
b.Some companies grant employees paid time off to participate in charitable activities.
c.Others offer matching charitable donations.
2.Environmental awareness
a.By creating eco-friendly production processes, companies can limit the damage their operations cause to the environment.
b.They can also adopt policies that limit pollution, such as buying recycled products.
3.Sensitivity to diversity and quality of work life
a.Socially responsible businesses recruit and hire workforces that reflect the societies in which they operate.
b.Other actions can include adopting flexible work hours and creating on-site day care centers. / Bonus Case 14-2
Merck and Ethics
What happened to Merck? The well-respected company earned its reputation for being socially responsible by donating an important drug. That reputation was tarnished by its handling of the Vioxx controversy. This case explores both parts of Merck’s history. See complete case, discussion questions, and suggested answers on page 14.43 of this manual.
PowerPoint 14-12
Social Responsibility
(Refers to text page 419)
TEXT REFERENCE:
Study Skills Box: Keep a Journal!
Keeping a journal is a productive way to improve study habits. (Box in text on page 419.) An additional exercise and discussion is available in this chapter on page 14.29.
bonus internet
exercise14-3
Exploring Community
Service
This exercise encourages students to use the Internet to explore opportunities for community service. See complete exercise on page 14.36 of this manual.
lecture link 14-5
Wal-Mart to the Rescue
After Hurricane Katrina devastated Waveland, Mississippi, Wal-Mart store manager Ron Cox contacted the retailer and arranged for a temporary replacement. See complete lecture link on page 14.32 of this manual.
PowerPoint 14-13
Measuring Social
Responsibility (Refers to text pages 420-422)
Bonus Case 14-3
Off-Label Drug
Prescriptions
When a new drug is approved for the U.S. market, doctors are legally free to prescribe it “off-label” for any other condition. See complete case, discussion questions, and suggested answers on page 14.46. of this manual.
Bonus Case 14-4
Cell Phone Privacy?
Data brokers can legally sell customers’ cell phone information. See complete case, discussion questions, and suggested answers on page 14.48. of this manual.
ETHICAL MANAGEMENT(Text page 421)
You are the line manager for a team of people in your company in the finance sector. One of your key staff members is excellent at her job and is known for her ability to generate a high amount of income for the company. None of your other staff members comes close to her in terms of this.
You are aware that your company’s competitors have made attempts to head hunt this staff member, which she has so far rejected, much to your relief, as your department is heavily reliant upon her abilities and you are paid bonuses based on your department’s profitability.
However, you are certain that this staff member is submitting fraudulent expense claims, sometimes several hundred or even thousands of dollars more than she has actually spent – a tiny fraction of the profits she is generating, but fraudulent nonetheless.
1.Should the high amount of income this staff member generates for the company justify looking the other way over these fraudulent expense claims? Why or why not?
If there is reason to raise her compensation, based on her excellent sales performance, then the company should increase her pay through other means, not by condoning inflated expense reports. This is allowing inaccurate reporting to take place and can become a bigger problem if other employees realize that fraudulent expense reports are acceptable. Besides, falsifying expense reports is a form of theft. Knowingly abetting her in her criminal behavior is unethical, and may even be illegal. Companies are regulated by laws to ensure ethical behavior and there can be serious consequences for not employing these standards of behavior.
2.What would your action be if she weren’t such a star performer? Why?
The actions should be the same no matter who the employee is. It is a reflection on the company and should be corrected before it becomes an accepted practice with other employees of the company.
3.How would you go about bringing this to the attention of your boss?
Gathering facts is the first place to start, such as how long the person has been employed, when the misreporting began, any supervisors who might also been involved in the approval process, and what amounts are involved. Once the facts are in place then a meeting with your supervisor should be scheduled to discuss what remedies can be taken.
4.Do you think the company would terminate this employee? Why or why not?
The decision whether or not to termination this employee should be made only after the facts have been collected and a meeting with the supervisors is held. Once the entire picture is seen, you and your supervisor are in a position to make a better decision. The decision should also be a reflection of the company’s code of ethics that established how they govern ethical behavior within the company.
F.Actions Necessary to Implement Social Responsibility
1.Organizations face pressure from financial analysts and stockholders to achieve steady increases in earnings on a quarterly basis.
2.This short-term focus makes it difficult to invest in areas that do not contribute immediately to the bottom line.
3.Stockholders may be unsympathetic.
4.Organizational values should be in tune with the values held by society.
5.Long-range planning should consider environmental impact.
6.Businesses can support volunteer organizations by donating technology, organizational skills, and management.
7.Corporate philanthropy involves donations of money, property, or work to socially useful purposes.
G.Conducting a Social Audit
1.A social audit is a method used by management to evaluate the success or lack of success of programs designed to improve the social performance of the organization.
2.The social audit can encourage environmental and social strategies that really work.
3.Most large corporations publish their successes in their annual reports.
4.Socially responsible firms will eventually be rewarded by their markets and stakeholders.
Progress Check Questions(Text page 423)
- What is social responsibility?
- What are the three schools of thought from which social responsibility was developed?
- Explain the terms philanthropy and volunteerism.
- List the five steps of a social audit.
Conducting a Social Audit
(Refers to text pages 422-423)
CASE INCIDENT 14.2
Shameless Exploitation in Pursuit of the Common Good(Text page 423)
The success of Paul Newman’s salad dressings in the retail market has resulted in millions of dollars in donations to medical research, education and the environment. In over 20 years, over $175 million has been donated to these numerous charities.
1.What makes Newman’s Own such a positive example of corporate social responsibility?
The success of these products have generated huge profits that have turned into charitable donations over the past twenty years, including funding for medical research, education, and the environment. Their signature program is the creation of the eight Hole in the Wall Gang camps for children with serious illnesses.
2.What other products are now included in the Newman’s Own line?
Following the Newman salad dressings, the offerings grew to spaghetti sauce, popcorn, and lemonade.
3.If the organization used only all-natural ingredients and did not donate their after-tax profits to charity, would they still be held in such high regard? Why or why not?
By assuming social responsibility, the donations to charities perhaps are what have made the sales grow at the rates they have. If the company had kept these profits for their own gain, consumers would not have been as likely to do their part. The clear donation aspect is what consumers are proud of and therefore are willing to seek out these products on a regular basis.
4.Provide an example of something that your organization (or an organization you have worked for in the past) could do to be more socially responsible. Explain your answer.
Students should easily identify causes that their companies could invest in, from using employees’ time, their own products, or their own dollars to help change unfortunate situations into positive outcomes. The collaboration of business and non-for-profit charitable organizations is a powerful force.
THE WORLD OF WORK
It Costs Money to Be Socially Responsible(Text page 424)
The social audit for Taco barn was more positive than many would have thought. In place are active recycling programs and donations of food to community food banks. However, the next steps still involve unit managers looking into purchasing food items from local farmers to help create a more active, social conscience approach to doing business.
1.Are the unit managers’ concerns about increased costs valid? Why or why not?
Probably, considering the entire operation is asked to be profitable. If operating costs rise at a higher rate than sales, it is possible that other variable expenses, such as hourly wages, could be reduced. Profitability is the objective of any business and all variables to how this is achieved must be analyzed at any point to ensure profits occur. On the other hand, positive publicity about Taco Barn’s support of local growers could bring more consumers into the restaurant, increasing revenues to more than offset the increased raw material costs.
2.How do you think Tony’s crew members would react if the company did go back on this new commitment to social responsibility?
Because of their favorable response to this new initiative, it would be a real negative to initiate this program only later to let it go. If employees are truly in favor, they may be willing to see how the stores budget could be cut in other areas to support this new buying program.
3.What options does Taco Barn have in managing the increase in costs from this new initiative?
The company’s advertising should highlight this new commitment to social responsibility. Many consumers are willing to spend a little more to support a good cause. But in reality, there will probably be increased costs without a corresponding increase in revenues unless Taco Barn increases prices. In the bigger picture, most experts agree that socially responsible firms will eventually be rewarded by their markets and shareholders.
4.Based on the information shared in this case, do you think Taco Barn will follow through on all these commitments? Why or why not?
In the new direction this company wants to take, these new programs are identifying points for how the company does business. The company initiative appears to have a real commitment from upper level management. As these programs are communicated and more relationships are built, the identity of company becomes more pronounced and this new culture evolves to new levels for the company.