Impact of Corporate Social Responsibility Policy
Corporate Social Responsibility (CSR) is an organizational strategy promoting a business’s accountability to its stakeholders and the community. Contemporary businesses are expected to be concerned not only with their profits but also with the quality of their impact on the people affected by their activities. CSR can be expressed through a business’s sustainability efforts, its actions to help the communities, and, most importantly, the ethical standards implemented by the organization. A CSR policy can positively impact such by creating a positive reputation, enhancing access to funding, reducing employee turnover, and enhancing customer retention. Evaluating an organization’s CSR policy’s effects on its ability to meet its stakeholders’ goals and expectations is significant.
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Explain in general terms how a company’s social responsibility policy can complement its obligation to maximize profits for shareholders. Where might these goals conflict?
Having a good CSR policy can be beneficial to a business’s profitability. Many researchers have investigated the relationship between CSR activities and the financial performance of an organization. The results of these studies are inconclusive, especially because of the difficulty in quantifying social responsibility to determine its direct impact on profitability (McWilliams & Siegel, 2000). However, CSR policy has impacted some performance factors, increasing profitability.
One way CSR policy can help a company complement its profits obligations to its stakeholders is by increasing its funding potential. Sufficient capital is needed for a business to meet its financial objectives. CSR has been found to affect a business’s access to funding because investors are usually interested in an organization’s social and ethical policy before they can commit their resources to the organization (McWilliams, Siegel, & Wright, 2006). A business with an effective CSR policy is more likely to be attractive to investors. Therefore, such a business has higher access to resources that can be invested and turned into profits for the stakeholders.
A CSR policy can also increase a business’s ability to make profits by stabilizing its cash flow. Poor social responsibility exposes a business to financial risks (McWilliams, Siegel, & Wright, 2006). For instance, poor compliance with laws puts a business at risk of litigation, which can cost them considerable money in legal fees. Poor ethical practices within the business, such as unfair employee treatment, can also make the business lose a lot of money on the constant recruitment of employees because of the high employee turnover (McWilliams, Siegel, & Wright, 2006). Therefore, CSR policy can be a financial saving strategy that increases a business’s profit potential.
CSR practices also give a business a positive reputation among the target consumers and the communities. A positive reputation means more potential customers want to be associated with the company. This reputation leads to a positive relationship with customers and increases the potential for sales. More sales reflect the higher revenue and profit potential for the business. Therefore, a socially responsible business can meet its profit expectations to fulfill the needs of the stakeholders.
However, profitability goals might conflict with CSR goals when social and ethical responsibility implementation is too costly. Some CSR projects can be too expensive, and embarking on them will mean that a business spends a lot of its resources on projects not part of the business investments. A business must maintain low operating costs and high revenue to be profitable. Spending too many costs on CSR projects can make this hard to achieve. Hence, businesses must ensure that their CSR policies do not negate their ability to meet their objectives.
Explain how the ethical issue might affect employees, considering the specific company dilemma you discussed in the Unit 2 assignment. How about shareholders? Clients? Outside parties?
Part of social responsibility is to ensure that the workplace is safe for all employees. Failure to do so puts the business at risk of negative influences on the affected employees and other stakeholders. Workplace bullying is an unethical practice that reflects the CSR strategy in an organization. Bullying in the workplace involves humiliation, intimidation, and threats (Hauge, Skogstad & Einarsen, 2010). These actions hurt employees’ morale at work. An employee’s motivation is influenced by the kind of experiences they have in the workplace environment. An organization that does not have policies to stop bullying will likely have employees who are not motivated to work (Hauge, Skogstad, & Einarsen, 2010). This leads to high employee turnover and low productivity. In turn, shareholders get lower returns because of poor organizational performance. The clients can also be affected by poor employee morale because the employees will not be at their best when serving them. The quality of services is likely to be poor when employees are poorly motivated (Nielsen & Einarsen, 2012). Therefore, it is important to have policies to ensure workplace bullying does not happen since the effects are reflected in different stakeholders.
State the approaches to ethical decision-making (as discussed in Chapter 2 of your text) you would recommend for creating a policy to solve the issue. Explain.
The deontological or duty-based ethical approach is the best ethical model to be used when making a workplace policy for bullying. This ethical model was developed by Immanuel Kant, who emphasized the importance of doing the right thing regardless of the consequence of the action. This ethical approach argues that the end does not justify the means. Regardless of the kind of impact that will be experienced from an action, the right thing must always be done (Weiss, 2014). Even when the unethical decision might benefit the most people, the moral decision must always be made.
This ethical model applies to the bullying situation because the management of any work must ensure that employees have a positive work environment. Regardless of the effects that intimidating actions might help the organization achieve, rules must be implemented to ensure that employees are not bullied. This decision-making model is particularly important because there are situations where managers may think that intimidation is the right way to motivate employees to do what they want. For instance, some employers may threaten employees to lose their jobs if they do not do something the management likes. This is a form of bullying, and even though it might make employees work harder to protect their jobs, it is not a morally responsible approach. Therefore, employers should always take approaches that fulfill their moral duty to the employees and other stakeholders. When developing the policy, the organization must only include rules and principles that protect the employees from bullying and not excuse any form of bullying, even when they seem to have positive effects on the business.
Write an overview of a company policy that could be created, based on this decision-making approach, to address the ethical dilemma.
This company has a zero-tolerance policy on workplace bullying. No form of bullying will be accepted for any reason whatsoever. This anti-bullying policy applies to all employees regardless of their employment status or position. Any employee engaging in bullying will face the consequences, including immediate termination from their employment position.
What constitutes bullying?
Bullying is any persistent malicious, unwelcome, and pervasive mistreatment that harms, intimidates, degrades, humiliates, or offends another employee, whether physical or verbal, within the workplace.
The company encourages all employees who experience anything they suspect of bullying to the company’s HR managers. This company promotes a positive work environment where everyone can be comfortable working without fear of bullying. Any reports made will be investigated impartially and promptly to achieve the duty of protecting all employees. Employees will be protected from any form of reprisal or retaliation due to their reports of bullying. There will be no fixed reporting period, but employees are encouraged to report any bullying issues promptly because early reports have been proven most effective in solving the bullying issue.
Explain the effects your policy might have on employees if the company used the policy you just described. What would be the effects on shareholders? On clients? On other outside parties? Please consider both the potential positive and negative outcomes.
The possible effect of the policy above is a positive working environment for all employees. The policy clearly describes bullying; hence, employees will understand the actions they must avoid to prevent it. Additionally, the company clearly expresses its commitment to protecting all employees regardless of their authority. This creates a culture of justice where all employees feel protected by the organization. This policy will likely increase productivity within the organization to produce more returns for the shareholders and better quality services and products for the customers. However, there is a possibility that the policy might lead to unnecessary cases between employees. Sometimes an employee may feel intimidated even when that was not the intention of the employee they are interacting with. Such issues might make some employees feel targeted when they have done nothing wrong.
Hauge, L. J., Skogstad, A., & Einarsen, S. (2010). The relative impact of workplace bullying as a social stressor at work. Scandinavian Journal of Psychology, 51(5), 426-433.
McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: correlation or misspecification? Strategic management journal, 21(5), 603-609.
McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate social responsibility: Strategic implications. Journal of management studies, 43(1), 1-18.
Nielsen, M. B., & Einarsen, S. (2012). Outcomes of exposure to workplace bullying: A meta-analytic review. Work & Stress, 26(4), 309-332.
Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers.
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Assignment u7a1 Impact of Corporate Social Responsibility Policy
This is the second component of your course project. In this assignment, you will return to the company-wide dilemma you wrote about in the Unit 2 assignment. Please note that you will incorporate this paper into your final project due in Unit 10.
For this assignment, consider how a company’s social responsibility can affect the workplace, stakeholders, clients, and other outside parties.
In your paper, complete the following:
- Explain in general terms how a company’s social responsibility policy can complement its obligation to maximize profits for shareholders. Where might these goals conflict?
- Explain how the ethical issue might affect employees, considering the specific company dilemma you discussed in the Unit 2 assignment. How about shareholders? Clients? Outside parties?
- State the approaches to ethical decision-making (as discussed in Chapter 2 of your text) you would recommend for creating a policy to solve the issue. Explain.
- Write an overview of a company policy that could be created, based on this decision-making approach, to address the ethical dilemma.
- Explain the effects your policy might have on employees if the company used the policy you just described. What would be the effects on shareholders? On clients? On other outside parties? Please consider both the potential positive and negative outcomes.
Review the Impact of Corporate Social Responsibility Policy Scoring Guide to understand the grading criteria for this assignment.
Your paper should meet the following requirements:
- Written communication: Written communication is free of errors that detract from the overall message.
- APA formatting: References and citations are formatted according to the current APA style and guidelines.
- Paper length: 750–1,500 words, or 3–6 typed, double-spaced pages.
- Font and Font Size: Arial, 10 points.