Social Responsibility In A Business Context

(This article is to do with the broader concept of Social Responsibility. Readers are not to confuse this with Corporate Social responsibility or CSR in the Indian context.

CSR is a narrow, compliance part of the overall concept of Social responsibility)

Social responsibility simply means that any action with each and every individual stakeholder is conducted in a very responsible manner. Does this make the process of being responsible subjective? It may not be so, since every- one knows the difference between the right and wrong. Being socially responsible, adds an extra dimension. Can one up the bar, can one do more good?


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Why Social Responsibility:

Businesses, as observed in the course of providing consulting services and in my opinion, from generally do well in the initial 5-7 years phase. Post that starts the saturation phase and, in most other cases the declining phase. Amongst the key reason for the decline is that one of the stakeholders has revolted against the business. This adversely impacts the growth and sustainability of the business.

Traditionally the business takes care of only one stakeholder – the shareholder. All benefits, monetary or otherwise accrue only to the shareholder. The other stakeholders – Employees, Vendors, Customers, Lenders, Community, Environment, or Government, concerns are not addressed fully. It is but natural that this discontent builds up, gradually at first and eventually explodes causing the business to decline.

What does Social Responsibility entail:

It goes without emphasisingfro that being socially responsible casts an onerous responsibility. A socially responsible business cannot sell inferior products to its customers. A socially responsible business cannot evade taxes. It also cannot be poorly governed, not have accountability or display lack of transparency. It must ensure safety and hygienic work conditions for its people.

Hence it leads to an oxymoron type of a situation that on one hand a business claims to be socially responsible or has undertaken sustainability projects or has implemented projects under the program of its Corporate Social Responsibility but continues to antagonise its stakeholders. Eventually Social Responsibility will result in good businesses.

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What is the confusion associated with Social Responsibility:

Very often Social Responsibility action is confused with Charity, Donation or Philanthropy. It is neither.

Charity is different m donation and donation is different from Philanthropy. The lines may blur on certain occasions but they are different. And, Social Responsibility actions are vastly different.

Unlike other actions, Social Responsibility requires a collaborative approach. There needs to be a process, policy, engagement, monitoring and an assessment methodology. It is not a unilateral act.

How does one do Social Responsible actions:

Social Responsiblity - actions

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Typically the business needs to identify its various stakeholders. An unbiased discussion generally would reveal existing fissures or potential fissures. A mapping of all these would point out the extent and its implication. At this point business needs to start the process of engagement to ensure that the points of conflict are ironed out. All potential flash-points are to be addressed in the activities. Good-will, transparency and communication needs to be created.

Who implements the activities of Social Responsibility:

Broadly there are two ways of implementing social responsibility actions. It can be done internally within the business or implementing with an external agency.

Internally one may run an activity from within the organisation or through its own foundation or a trust. Externally one may select an implementing partner who could be a not-for-profit organisation, a for-profit social enterprise, a foundation or a charitable organisation.

What are the problems with Social Responsibility:

Businesses are comfortable dealing with facts and figures. Precise information in financial numbers is the essence of every decision. However the actions of social responsibility results and deals with abstract quantifications, intangible returns and is based on human emotions.

Managers and top management are not trained in these qualities.

What would convince business to undertake Social Responsibility:

Return on Investment (ROI) is the guiding mantra for all business decisions. All business actions are justified if and only if there is a ROI. If the results of social responsibility actions do not result in a ROI, there is no absolutely no justification for it to be there in the first place.

Hence it needs to be demonstrated that for every business action there is a ROI.

In my opinion, this, and only this, is the holy grail of Social Responsibility.