MANAGEMENT

•SOCIAL RESPONSIBILITY

What Is Social Responsibility?

• The Classical View

Management’s only social responsibility is to maximize profits (create a financial return) by operating the business in the best interests of the stockholders (owners of the corporation).

Expending the firm’s resources on doing “social good” unjustifiably increases costs that lower profits to the owners and raises prices to consumers.

What Is Social Responsibility? (cont’d)

• The Socioeconomic View

Management’s social responsibility goes beyond making profits to include protecting and improving society’s welfare.

Corporations are not independent entities responsible only to stockholders.

Firms have a moral responsibility to larger society to become involved in social, legal, and political issues.

“To do the right thing”

Social Responsibility and Organizations

• Social ResponsibilityThe set of obligations (to behave responsibly) that an

organization has to protect and enhance the social context in which it functions.

• Areas of Social ResponsibilityStakeholders: customers, employees, and investors.The natural environment: environmentally sensitive

products, recycling, and public safety.The general social welfare: charitable contributions,

and support for social issues such as child labor and human rights.

Arguments For and AgainstSocial Responsibility

1. Business creates problems andshould therefore help solve them.

2. Corporations are citizens in oursociety.

3. Business often has the resourcesnecessary to solve problems.

4. Business is a partner in oursociety, along with the govern-ment and the general population.

Social

Responsibility

4. The purpose of business insociety is to generate profitfor owners.

2. Involvement in social programsgives business too much power.

3. There is potential for conflictsof interest.

1. Business lacks the expertise tomanage social programs.

Arguments For Social Responsibility Arguments Against Social Responsibility

Figure 2.2

Approaches to Social Responsibility

Source: Barney, Jay B. and Ricky W. Griffin, The Management of Organizations. Copyright © 1992 by Houghton Mifflin Company. Used with permissions.

Managing Social Responsibility:Formal Organizational Dimensions

• Legal Compliance Extent to which the organization conforms to local,

state, federal, and international laws.

• Ethical ComplianceExtent to which members of the organization follow

basic ethical/legal standards of behavior.

• Philanthropic GivingAwarding of funds or gifts to charities and other social

programs.

Managing Social Responsibility:Informal Organizational Dimensions

• Organizational Leadership and CultureLeadership practices and the culture of the

organization can help define the social responsibility stance an organization and its members will adopt.

• Whistle BlowingThe organizational response to the disclosure by an

employee of illegal or unethical conduct on the part of others within the organization is indicative of the organization’s stance on social responsibility.

To Whom is Management Responsible?

Exhibit 5.2Exhibit 5.2

Arguments For and Against Social Responsibility-Summary• For

Public expectations Long-run profits Ethical obligation Public image Better environment Discouragement of further

governmental regulation Balance of responsibility and

power Stockholder interests Possession of resources Superiority of prevention

over cure

• Against Violation of profit

maximization Dilution of purpose Costs Too much power Lack of skills Lack of accountability

From Obligation to Responsiveness to Responsibility

• Social Obligation The obligation of a business to meet its economic and legal

responsibilities and nothing more.

• Social Responsiveness The capacity of a firm to adapt to changing societal

conditions through the practical decisions of its managers in responding to important social needs.

• Social Responsibility A firm’s obligations as a moral agent extends beyond its

legal and economic obligations, to the pursuit of long-term goals that are good for society.

Social Responsibility versus Social Responsiveness

Source: Adapted from S.L. Wartick and P.L. Cochran, “The Evolution of the Corporate Social Performance Model,” Academy of Management Review, October 1985, p. 766.

Social Responsibility Social Responsiveness

Major consideration Ethical Pragmatic

Focus Ends Means

Emphasis Obligation Responses

Decision framework Long term Medium and short term

Does Social Responsibility Pay?

• Studies appear to show a positive relationship between social involvement and the economic performance of firms.Difficulties in defining and measuring “social

responsibility” and “economic performance raise issues of validity and causation in the studies.

Mutual funds using social screening in investment decisions slightly outperformed other mutual funds.

• A general conclusion is that a firm’s social actions do not harm its long-term performance.

CORPORATE SOCIAL RESPONSIBILITY – CASE STUDY OF

TATA GROUP

Corporate Social Responsibility Policy

“Tata Steel believes that the primary purpose of a business is to improve the quality of life of people.

Tata Steel will volunteer its resources, to the extent that it can reasonably afford, to sustain and improve a healthy and prosperous environment and to improve the quality of life of the people of the areas in which it operates.”

8

From Tradition To Process

Areas of Impact

Environment

Employee Relations

Stimulating Economic Growth

Civic Amenities & Community Service

Population Management

Sports and Adventure

Health for All

Relief During Natural Calamities

Education / Arts and Culture

9

Environment

Conserving Nature for Future Generations

All production units certified to ISO 14001Town Services certified to ISO 14001

Planted -”thousand trees for thousand days” - as a millennium gift for future generations. The eventual count was 1.6 million

20% reduction in consumption of raw materials in the past five years

100% treatment of waste water, discharged upstream from point of collection

Greening of Supply Chain

10

Employee Relations

Many landmarks in Labour Welfare

1915 Free Medical Aid to all employees and dependent family members1917 Welfare Department set up1956 Joint Consultation instituted with Union Management Agreement1990 Incentive for Higher Technical Education2001 Family Benefit Scheme2003 R D Tata Technical Education Centre2003 Initiated process for SA 8000 certification2004 Completed 75 years of Industrial Harmony2004 Inserted clause against Sexual Harassment in the Works Standing Order

11

Stimulating Economic Growth

Continuously augmenting Town infrastructure to promote business growth

Tata Steel and its subsidiaries provide business opportunities to ancillary units

Institutions such as National Institute of Technology, R.D.Tata Technical Education Center, and Savak Nanavati Technical Institute provides technical and job oriented training

Promoting rural economy through natural resource management, micro financing and credit, and training for gainful employment

Tate Steel caters to over 600 villages and several company towns, in the provinces of Orissa and Jharkhand

Creating a ripple effect across towns and villages

12

Civic Amenities and Community Service

“Be sure to lay wide streets planted with shady trees, every other of a quick growing variety. Be sure that there is plenty of space for lawns and gardens. Reserve large areas for football hockey and parks. Earmarks areas for Hindu temples, Mohammaden mosques and Christian churches.” J N Tata,1902

Created Town Services, Community Development & Social Welfare Department, and Energy and Environment Cell

Today, also responsible for environment management, family initiatives, medical services, emergency fire services, airport, mobile medical services, sports facilities, libraries, education centers...

Services have grown to cover 700,000 beneficiaries

13

Population Management

Jamshedpur leads in demographic indices and maternal and child health in the country

Shares planned family norms with employees and non-employees through Family Initiatives Foundation

Extension programs have empowered the community to sustain initiatives

Provides free Reproductive Health Services to over 2,000,00 women from urban & rural areas each year

Ensures 98% immunisation coverage in the city of Jamshedpur

14

Sports & Adventure

Promotes Sports as a way of Life

Sports DepartmentTata Steel Adventure FoundationTata Football Academy Tata Archery Academy

30-acre J R D Tata Sports ComplexOrganizes sporting events for employees and community year roundPromotes sports in schoolsEmployees include 20 Olympians, over 100 international sports personsIndia’s first woman to scale Mount Everest

15

Health for All

Health care facilities open to employees and non-employees

850-bed hospital, two super dispensaries and nine dispensaries in Jamshedpur

Mobile medical units reach out to rural and semi urban areas

Health Centers based in villages and communities. Supports alternative remedies such as ayurveda, naturopathy, homeopathy, etc

Supports Blood Bank, specialty hospitals for tuberculosis, eye care services, cancer, etc

Taken “Lifeline Express” seven times to remote parts of rural India

Partner for Child Survival, Smile Train, Polio and Water and Sanitation projects

16

Relief during natural calamities

Immediate relief with materials and help during natural calamities

Relief followed by long-term rehabilitation programmes

Employees have contributed their wages towards relief and participated in relief work

Constructed schools and shelters after recent super cyclone in Orissa and earthquake in Gujarat

17

Education

Jamshedpur is a centre for excellence in education

Three primary schools, six high schools and one college run by the company

312 private schools and 171 “balwadi” schools assisted by Tata Steel

Jamshedpur has among the highest literacy rates in the country

Instituted Dr J J Irani Education Excellence Award

18

Arts and Culture

Patron of Art and Culture

Contributed to setting up of National Centre for Performing Arts, Mumbai

Tribal Culture Centre set up for preservation and promotion of indigenous art and culture

Supports cultural institutions inJamshedpur and outlocations

Promotes rural arts and crafts

“Art in Industry” campsOne of the oldest and finest collection of India’s masters and contemporary Indian art

19

Vision 2007

Global Goals and Social Commitments

Tata Steel plans to augment capacity from 4 million to 10 million tones per annum

Grow from a domestic player to a global enterprises

All in line with ethos of creating value for the nation, without compromising on the ability of future generations to meet their needs.

Sets aside 12-14% of PAT for welfare

20

“We generate wealth for the people. What comes from the people must, to the extent possible, therefore get back to the people.” - Bharat Ratna, J R D Tata

21

Corporate ResponsibilityCorporate Responsibility

An Approach to Business that Embodies An Approach to Business that Embodies

Transparency and Ethical Behaviour, Respect Transparency and Ethical Behaviour, Respect

for Stakeholder groups and a Commitment for Stakeholder groups and a Commitment

to add Economic, Social and Environmental to add Economic, Social and Environmental

valuevalue

ONGC’s ONGC’s CORPORATE CITIZENSHIP POLICY CORPORATE CITIZENSHIP POLICY

StatementONGC Group of companies, as responsible Corporate

Citizens, shall promote Education, Healthcare and Entrepreneurship in the community and support Water Management and Disaster Relief in the country.

• To operationalise the Corporate Citizenship statement, ONGC Group companies shall .

Promote community projects selected on the following parameters in the focus areas:

Shared contribution by the Corporation and the community; Sustainable impact of the project on the well-being of the

community; and Process credibility to enhance the corporate image.

• Support National causes in the focus areas, and

• Create enduring Values, Satisfactions and Recognitions

Corporate Citizenship PracticeCorporate Citizenship Practice

Financial CommitmentFinancial Commitment

ONGC allocates fund equivalent to 0.75% of net profits of the previous year towards SEDP every year. Out of the total, the following allocation are made:

60% towards Corporate programmes, all in the focus areas.

40% towards programmes in and around the Work Centres and operational areas

The Focus AreasThe Focus Areas

Corporate Level:Disaster relief management Water Management Projects.

Work Centre Level:

Education especially InfoTechHealthcare including drinking waterEntrepreneurship schemesOthers

ONGC’s Cyclone Relief Activities in Nimpada, situated in Puri district of Orissa in 1999:

• Rs.8.0 crores contributed towards the Prime Minister’s Relief Fund.

• ONGC’s employees donated one day’s salary• Immediate Relief:

Temporary shelters i.e. polythene sheets, tarpaulins, food, medicines, clothing, 10,500 blankets, drinking water.

Round the clock medical treatment by ONGC doctors.

Disaster Relief ManagementDisaster Relief Management

Disaster Relief ManagementDisaster Relief Management Contd…

• Reconstruction, rehabilitation, restoration work:

Restoration work under taken Reconstruction of public utilities viz.primary

health centers, dispensaries.500 BPL (below poverty line) houses constructed

and handed over to beneficiaries30 schools constructed74 tube wells drilled

Disaster Relief ManagementDisaster Relief Management Contd…

• Relief and Rehabilitation of Gujarat earthquake victims:

Immediate Relief:Rs. 7.5 crores donated to Prime Minister’s Relief Fund.Employees donated one day’s salaryRelief provided in terms of food, medicines, medical

helpProvided heavy machinery like cranes, trailors and fire

tenders

Restoration/Reconstruction:Associated with Oil PSUs for construction of 800

temporary sheltersReconstruction of Meghani Nagar, Kanoria schoolConstruction/Extension of Physiotherapy building at

Vadilal Sarabhai Hospital, Ahmedabad

• Kargil War Relief:

Rs. 15 crores contributed towards Prime Minister’s Relief Fund

ONGC Employees donated one day’s salary

50 posts sanctioned for Kargil War victims

Water ManagementWater Management

Project SaraswatiProject Saraswati

• To provide sustainable solution to Ground Water Resource Management in North West Rajasthan.

Collaborators:

• Central Ground Water Board• Rajasthan State Ground Water Deptt.• Space Application Centre• Deptt of Space & Regional Remote Sensing

Service Centre• Indira Gandhi Nahar Pariyojna

Scope:

Supplying water from Indira Gandhi Nahar Pariyojna for hinterland through lift canals

Recharging available ground water aquifers through rainwater harvesting and canals

Conjunctive use of ground / surface water Mixing of Saline ground water with canal water to

augment supply Desalination and deflouridation of contaminated ground

water

HealthcareHealthcare

Support to Centres of excellence in medical research in the country example: Sankara Nethralaya, Chennai

Contribution for setting up of a 600 bed hospital in Behala, West Bengal.

Contribution towards Latika Roy Memorial Foundation for running a school for mentally handicapped.

Contributed to Conclave on Accelerating the Business Response to AIDS – Partnership and Action organised by CII.

• HealthcareHealthcare:

Medical camps organised by ONGC serve about 10,000 patients residing around operational area annually and around 300-400 patients obtain IOL implants done free of cost.

AIDS Awareness activities are conducted through lectures, display boards, exhibition, plays, rallies, dances etc.

Active participation in pulse polio immunisation programme of the Government. More than one lakh children immunized for polio virus through various clinics in the country.

• Promotion of Sports: Supported National Football League and Durand

Football Tournament. Supported National Games held in Punjab Supported construction of an International

Tennis Centre by Bengal Tennis Association, Kolkata