Page 301 - Encyclopedia of Business and Finance

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Ethics in Management

that contribute to the business’s success while contribut- Organizations characterized by attitudes and behav-
ing to the welfare of society should be undertaken. iors consistent with the social responsiveness approach
generally are more socially responsive than organizations
Social Responsiveness. Social responsiveness is the degree characterized by attitudes and behaviors consistent with
of effectiveness and efficiency an organization displays in either the social responsibility approach or the social obli-
pursuing its social responsibilities. The greater the degree gation approach. Also, organizations characterized by the
of effectiveness and efficiency, the more socially responsive social responsibility approach generally achieve higher lev-
the organization is said to be. The socially responsive els of social responsiveness than organizations character-
organization that is both effective and efficient meets its ized by the social obligation approach. As one moves from
social responsibilities without wasting organizational the social obligation approach to the social responsiveness
resources in the process. Determining exactly which social approach, management becomes more proactive. Proac-
responsibilities an organization should pursue and then tive managers will do what is prudent from a business
deciding how to pursue them are perhaps the two most viewpoint to reduce liabilities whether an action is
critical decision-making aspects of maintaining a high required by law or not.
level of social responsiveness within an organization. That
is, managers must decide whether their organization
Areas of Measurement. To be consistent, measurements
should undertake the activities on its own or acquire the to gauge organizational progress in reaching socially
help of outsiders with more expertise in the area.
responsible objectives can be performed. The specific areas
In addition to decision making, various approaches to
in which individual companies actually take such meas-
meeting social obligations are another determinant of an urements vary, of course, depending on the specific objec-
organization’s level of social responsiveness. A desirable tives of the companies. All companies, however, probably
and socially responsive approach to meeting social obliga-
should take such measurements in at least the following
tions involves the following:
four major areas:
• Incorporating social goals into the annual planning
process 1. Economic function: This measurement gives some
indication of the economic contribution the organi-
• Seeking comparative industry norms for social pro-
zation is making to society.
grams
2. Quality of life: The measurement of quality of life
• Presenting reports to organization members, the
should focus on whether the organization is improv-
board of directors, and stockholders on progress in
ing or degrading the general quality of life in society.
social responsibility
3. Social investment: The measurement of social invest-
• Experimenting with different approaches for meas-
ment deals with the degree to which the organiza-
uring social performance
tion is investing both money and human resources
• Attempting to measure the cost of social programs to solve community social problems.
as well as the return on social program investments
4. Problem solving: The measurement of problem solv-
S. Prakash Sethi (1975) presents three management ing should focus on the degree to which the organi-
approaches to meeting social obligations: (1) the social zation deals with social problems.
obligation approach, (2) the social responsibility
approach, and (3) the social responsiveness approach. The Social Audit: A Progress Report. A social audit is the
Each of Sethi’s three approaches contains behavior that process of taking measurements of social responsibility to
reflects a somewhat different attitude with regard to busi- assess organizational performance in this area. The basic
nesses performing social responsible activities. The social steps in conducting a social audit are monitoring, measur-
obligation approach, for example, considers business as ing, and appraising all aspects of an organization’s socially
having primarily economic purposes and confines socially
responsible performance. Probably no two organizations
responsible activity mainly to conformance to existing conduct and present the results of a social audit in exactly
laws The social responsibility approach sees business as
the same way. The social audit is the process of measuring
having both economic and societal goals. The social
the socially responsible activities of an organization. It
responsiveness approach considers business as having both monitors, measures, and appraises socially responsible
societal and economic goals as well as the obligation to performance.
anticipate upcoming social problems and to work actively
to prevent their appearance. SEE ALSO Management

278 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION