Jaime E.

Robrigado
Discussant

Social Responsibility of
Management and
Responsibilities of Managers
Social Responsibility

can be defined as
the obligation of
management
towards the
society and
others
concerned.
 Reason for Social Responsibilities:

Business enterprises are creatures of

society and should respond to the
demands of society.

If the management does not react to

changes in social demands, the society will
either force them to do so through laws or
will not permit the enterprise to survive
 Therefore the long-term interests of
business are best served when
management assume social responsibilities.
The image of business organization liked
with the quality of its products and
customer service and the extent to which
it fulfills the expectations of owners,
employees, consumers, government and
the community at large.
For long-term success it matters a great
deal if the firm has a favorable image in
the public mind
 Every business enterprise is a organ of
society and its activities have impact on
the social scene.
Therefore, it is important for management
to consider whether their policies and
actions are likely to promote the public
good, advances the basic values of society,
and constitute to its stability, strength and
harmony.
 The 4-Way Test

The test was developed by Rotarian and

entrepreneur Herbert J. Taylor during the
Great Depression as a set of guidelines for
restoring faltering businesses and was
adopted as the standard of ethics by Rotary
in 1942.
 The 4-Way Test

It is still seen as a standard for ethics in business

management:

Of things we think, say or do:

1. Is it the truth?
2. Is it fair to all concerned?
3. Will it build goodwill and
better friendships?
4. Will it be beneficial to all concerned?
 Increasing concern for the social
responsibility of management, it is now
recognized that besides taking care of the
financial interest of owners, managers of
business firms must also take into account
the interest of various other groups such
as employees, consumers, the
government and the community as a
whole.
 These interested groups are directly or
indirectly affected by the pursuit of
business activities and they are the stake-
holders of the business
enterprise.
 Responsibility towards owners:

The primary responsibilities of

management is to assure a fair and
reasonable rate of return on capital and fair
return on investment can be determined on
the basis of difference in the risks of
business in different fields of activity.
Responsibility towards owners:

With the growth of

business the
shareholders can
also expect
appreciation in the
value of their capital.
 Responsibility towards employees:

Management responsibility towards

employees relate to the fair wages and
salaries, satisfactory work environment,
labor management relations and employee
welfare.
Fair wages should be fixed in the light of
labor productivity, the prevailing wage
rates in the same or neighboring areas and
relative importance of jobs.
 Responsibility towards employees:

Manager’s salaries and allowances are

expected to be linked with their
responsibility, initiative and skill.

But the spread between minimum wages

and highest salaries should be reasonable.
Responsibility towards employees:

Employees are
expected to
build up and
maintain
harmonious
relationships
between
superior and
subordinates.
 Responsibility towards employees:

Another aspect of responsibility towards

employees is the provision of welfare
amenities like safety and security of
working conditions, medical
facilities, housing, canteen, leave and
retirement benefits.
 Responsibility towards consumers:

In a competitive market, serving consumers

is supposed to be a prime concern of
management.

But in reality perfect competition does not

prevail in all product markets. In the event
of shortage of supply there is no automatic
correction.
 Responsibility towards consumers:

Consumer interests are thus protected to

some extent with laws and pressure of
organized consumer groups.

Management should anticipate these

developments, satisfy consumer needs and
protect consumer interests.
 Responsibility towards consumers:

Goods must be of appropriate standard

and quality and be available in adequate
quantities at reasonable prices.

Management should avoid resorting to

hoarding or creating artificial scarcity as
well as false and misleading
advertisements.
 Responsibility towards consumers:

“If your order is late, then its on us.”

“Your safety is our primary concern.”

“If after 10 days you don’t like it, money

back guaranteed.”
 Responsibility towards the Government:

As a part of their social responsibility,

management must conduct business affair
in lawful manner, honestly pay all the
taxes and dues, and should not corrupt
public officials for selfish ends.

Business activities must also confirm to the

economic and social policies of the
government.
 Responsibility towards the community
and society:
The socially responsible role of
management in relation to the community
are expected to be revealed by its policies
with respect to the employment of
handicapped persons, and weaker sections
of the community, environmental
protection, pollution control, setting up
industries in backward areas, and
providing relief to the victims of natural
calamities etc.
Are you one of us?

Then, be a socially
responsible manager.