Consumers are becoming increasingly concerned about the types of businesses they choose to support. Similarly, employees are making career decisions based on the practices of organizations. Learn the four dimensions of social responsibility so that you can positively impact the society around you and attract more like-minded consumers and employees.
The four components of social responsibility are ethical, legal, economic and philanthropic.
Understanding the Elements of Corporate Social Responsibility
Social responsibility is the concept that people should be accountable for their actions and not impact their society in a negative manner. When applied to businesses, corporate social responsibility (CSR), which is also referred to as corporate citizenship, involves being aware of the impact a company has on the community or world around them. Businesses that have a corporate social responsibility mandate frequently work to enhance their communities in different ways.
There are four key aspects of social responsibility: ethical, legal, economic and philanthropic. Businesses that have CSR policies first ensure they are accountable to themselves, their shareholders and their employees. In addition, they hold themselves accountable to their customers and the world around them.
As one of the most important elements of social responsibility, ethical actions define the core values of a business. Instead of merely abiding by the law, a business that focuses on corporate social responsibility needs to go above and beyond that and make choices based on what is right, not just what is legal.
For example, if a business pays its employees minimum wage, that action follows a legal directive. However, if an employer chooses to pay its employees more than minimum wage in the belief that the employees do important work and deserve to be compensated accordingly, that is making a socially responsible decision. In addition to the compensation, employers can offer paid vacation, education and training perks and health coverage to improve the lives of their employees.
From a legal perspective, it’s critical for businesses to follow the letter of the law. In addition to being aware of local, federal and international laws, companies also need to understand the rules of regulatory bodies for their industries. All businesses have a legal responsibility to do so.
For example, if a small business sells toys for children, it needs to ensure that the products meet all safety regulations specified by the regulatory bodies. In addition, it needs to check that any international manufacturers used appropriate materials, since businesses in other countries may have different rules and regulations.
Part of being socially responsible is remaining profitable. Businesses support a lot of people, including shareholders and investors, employees and partners. It is socially responsible for the company to thrive and meet its revenue goals. In addition to increasing revenue, businesses need to work to reduce expenses and costs so they can maximize their profits.
However, economic interests are not the only guideposts and should not be viewed in a vacuum. Businesses maintain profitability and minimize expenses by keeping the broader community in mind and not taking any actions to harm it. This means ethical sourcing of products, using sustainable business practices, treating employees and customers fairly, and taking responsibility for business actions.
One of the best-known aspects of social responsibility is philanthropy. Companies take actions that improve the society around them, such as donating money or products and volunteering time. By helping those in need, businesses make a positive difference in the lives of people in their communities.
For example, a bakery could send leftover bread at the end of the day to a nearby food bank, or a hairdresser can offer free haircuts to homeless people in the community. These philanthropic actions help the businesses to remain accountable and show employees and customers the true values of their businesses.