LO 4

W H AT I S CO R P O R ATE
SO CI A L R ESP O NSI B IL IT Y
(CSR )

• Corporate social responsibility

(CSR) is a self-regulating business
model that helps a company be
socially accountable — to itself, its
stakeholders, and the public. By
practicing corporate social
responsibility, also called corporate
citizenship, companies can be
conscious of the kind of impact
they are having on all aspects of
society including economic, social,
and environmental.
• To engage in CSR means that, in
the normal course of business, a
company is operating in ways that
enhance society and the
environment, instead of
contributing negatively to them.
4 CORPORATE RESPONSIBILITY TYPES
YOUR BUSINESS CAN PRACTICE
Recognizing how important socially responsible efforts are to their customers, employees and stakeholders, many
companies now focus on a few broad CSR categories:
• Environmental efforts: One primary focus of corporate social responsibility is the environment. Businesses,
regardless of size, have large carbon footprints. Any steps they can take to reduce those footprints are considered
good for both the company and society.
• Philanthropy: Businesses can practice social responsibility by donating money, products or services to social causes
and nonprofits. Larger companies tend to have a lot of resources that can benefit charities and local community
programs. It is best to consult with these organizations about their specific needs before donating.
• Ethical labor practices: By treating employees fairly and ethically, companies can demonstrate their social
responsibility. This is especially true of businesses that operate in international locations with labor laws that differ
from those in the United States.
• Volunteering: Attending volunteer events says a lot about a company's sincerity. By doing good deeds without
expecting anything in return, companies can express their concern for specific issues and commitment to certain
organizations
ENGRO CSR
 CORPORATE SOCIAL RESPONSIBILITY…
• The ultimate test for any operations manager is whether he or she can develop an
operation which meets the challenges and decisions that lie ahead for the
organization. Lets examine an issue that is far wider than operations management,
but with which operations management is intimately connected – corporate social
responsibility (CSR). It is important to operations management because, of all the
functions of any organization, it is operations management which can have the
most practical impact on its CSR performance.
 • Corporate social responsibility (CSR) is
a company's commitment to manage the social,
environmental and economic effects of
its operations responsibly and in line with public
expectations.
• Although operations management is seen by some as being
concerned largely with the routine aspects of business, it is in fact at
the very forefront of almost all the new challenges to business
practice.

OP & CSR… • This is because whether it is new technologies, new approaches to

organizing resources, changing market and environmental
circumstances, changing regulatory frameworks, or shifts in how
society views business practices, operations will have to understand
the consequences of these changes and respond to them
• That issue is ‘how should the relationship between business and
wider society be viewed, assessed and (if possible) managed?’ This
issue is generally referred to as corporate social responsibility or
simply CSR.
 CONFLICTING
VIEWS
• In terms of power and influence... there is no
more powerful institution in society than
business... The business of business should not be
about money, it should be about responsibility. It
should be about public good, not private greed.’
Anita Roddick
• "Stakeholders want companies to make a profit,
but not at the expense of their staff and the wider
community.“
• “Another argument is that companies are meant
to create products or provide services rather
than handle welfare activities. They do not have
the expertise or knowledge necessary for
handling social problems. Also, if managers are
concentrating on social responsibilities, they are
not performing their primary duties for the
company at full capacity.”
• ‘CSR is the business contribution to our sustainable development goals. Essentially it is about how
business takes account of its economic, social and environmental impacts in the way it operates –
maximizing the benefits and minimizing the downsides. Specifically, we see CSR as the voluntary
actions that business can take, over and above compliance with minimum legal requirements, to
address both its own competitive interests and the interests of wider society.’ (UK Government) ‘
• Corporate Social Responsibility is the continuing commitment by business to behave ethically and
contribute to economic development while improving the quality of life of the workforce and their
families as well as of the local community and society at large.’1
• ‘Corporate Social Responsibility is listening and responding to the needs of a company’s
stakeholders. This includes the requirements of sustainable development. We believe that building
good relationships with employees, suppliers and wider society is the best guarantee of long-term
success. This is the backbone of our approach to CSR.’2
OPERATIONS AND THE
ENVIRONMENTAL DIMENSION OF
CSR
• Operations managers cannot avoid responsibility for environmental
protection generally, or their organization’s environmental
performance more specifically. It is often operational failures which
are at the root of pollution disasters and operations decisions (such
as product design) which impact on longer-term environmental
issues.
• The pollution-causing disasters which make the headlines seem to
be the result of a whole variety of causes – oil tankers run aground,
nuclear waste is misclassified, chemicals leak into a river, or gas
clouds drift over industrial towns. But in fact they all have
something in common.
• They were all the result of an operational failure. Somehow
operations procedures were inadequate. Less dramatic in the short
term, but perhaps more important in the long term, is the
environmental impact of products which cannot be recycled and
processes which consume large amounts of energy – again, both
issues which are part of the operations management’s broader
responsibilities.
• KIA example
OPERATIONS AND THE
SOCIAL DIMENSION OF CSR

• The way in which an operation is managed has a

significant impact on its customers, the individuals who
work for it, the individuals who work for its suppliers
and the local community in which the operation is
located. The dilemma is how can operations be managed
to be profitable, responsible employers and be good
neighbors?
OPERATIONS AND THE ECONOMIC
DIMENSION OF CSR…
• Economic dimension of CSR refers to how resources for the production of goods and
services are distributed within the social system. Social responsibility, in relation to
the economy, encompasses many aspects of how firms, in terms of competition, consumers,
employees, community and environment affect the economy
• Operations managers are at the forefront of trying to balance any costs of CSR with any
benefits. In a practical sense this means attempting to understand where extra expenditure will
be necessary in order to adopt socially responsible practices against the savings and/or benefits
that will accrue from these same practices. Here it is useful to divide operations related costs
into input, transformation (or processing) and output costs.
OPERATIONS AND THE STAKEHOLDER
DIMENSION OF CSR…
• Customers’ welfare is directly affected by many operations decisions. The most obvious is that their safety
might be compromised. If a product is badly assembled or if the equipment used in a service (such as a rail
transport system) is not maintained, customers can come to harm.
• Staff are constantly exposed to the ethical framework of the organization throughout their working lives.
Organizations have a duty to their staff to prevent their exposure to hazards at work. This means more than
preventing catastrophic physical injuries; it means that organizations must take into account the longer-term
threat to staff health from, say, repetitive strain injury (RSI) due to short-cycle, repetitive work motions.
• Suppliers are always a source of ethical dilemma for the operation. Is it legitimate to put suppliers under
pressure not to trade with other organizations, either to ensure that you get focused service from them or to
deny competitors this source of supply? Also, do you have any right to impose your own ethical standards on
your suppliers, for example, because you would not wish to exploit workers in developing countries?
• Business partners and retail store exaples
OPERATIONS AND THE
STAKEHOLDER DIMENSION
OF CSR…

• The community also has a right to expect its

organizations to adopt a responsible attitude.Yet there
are often difficult trade-offs between commercial and
societal objectives. However, businesses could claim
that prospering commercially is also a very valuable
contribution to society, as is stated by Rolls-Royce in
this extract from their CSR policy. ‘The most
significant contribution Rolls-Royce makes in the field
of Corporate Social Responsibility comes from the
wealth created by maintaining the 35,000 highly-skilled
jobs which arise from our business activities, mainly in
the UK, North America, Germany and the Nordic
Countries. In 2004 our global wage bill was £1.5
billion. In addition, the company’s activities support
thousands of jobs throughout our global supply chain.’
 OPERATIONS AND THE VOLUNTARY DIMENSION OF
CSR…
• Some critics of corporate behaviour claim that CSR is meaningless if it involves nothing more than what
is required by legislation, or even simple good management. Unless it hurts, they seem to be saying, it
does not count as true CSR. So, how should operations managers view CSR?
• Figure 21.4 shows the result of one survey. The most popular response was that CSR was ‘A necessary
cost of doing business’. In other words, operations managers see it as something that has to be done
because it is required either by legislation or through company policy. There is very little element of
voluntariness in this response. Certainly there is no evidence that respondents who think this way see
any advantage in going beyond what is strictly required. However, the second most popular response
(running the first one very close) is that CSR gives the company something of a distinctive position in the
market. In other words, there are market-based advantages in adopting CSR.
 ORGANIZATIONAL CULTURE, VALUES AND BUSINESS
ETHICS
• Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic human needs. Every employee desires to be such himself and to work for an
organization that is fair and ethical in its practices.
• Creating Credibility: An organization that is believed to be driven by moral values is respected in the society even by those who may have no information
about the working and the businesses or an organization. Infosys, for example is perceived as an organization for good corporate governance and social
responsibility initiatives. This perception is held far and wide even by those who do not even know what business the organization is into.
• Uniting People and Leadership: An organization driven by values is revered by its employees also. They are the common thread that brings the
employees and the decision makers on a common platform. This goes a long way in aligning behaviors within the organization towards achievement of one
common goal or mission.
• Improving Decision Making: A man’s destiny is the sum total of all the decisions that he/she takes in course of his life. The same holds true for
organizations. Decisions are driven by values. For example an organization that does not value competition will be fierce in its operations aiming to wipe out
its competitors and establish a monopoly in the market.
• Long Term Gains: Organizations guided by ethics and values are profitable in the long run, though in the short run they may seem to lose money. Tata
group, one of the largest business conglomerates in India was seen on the verge of decline at the beginning of 1990’s, which soon turned out to be otherwise.
The same company’s Tata NANO car was predicted as a failure, and failed to do well but the same is picking up fast now.
• Securing the Society: Often ethics succeeds law in safeguarding the society. The law machinery is often found acting as a mute spectator, unable to save
the society and the environment. Technology, for example is growing at such a fast pace that the by the time law comes up with a regulation we have a newer
technology with new threats replacing the older one. Lawyers and public interest litigations may not help a great deal but ethics can.
• A strategy based on integrity holds
organizations to a more robust standard.
While compliance is rooted in avoiding
legal sanctions, organizational integrity is
based on the concept of self-governance in
accordance with a set of guiding principles.
From the perspective of integrity, the task
of ethics management is to define and give
life to an organization’s guiding values, to
create an environment that supports
ethically sound behavior, and to instill a
sense of shared accountability among
employees.The need to obey the law is
viewed as a positive aspect of
organizational life, rather than an
unwelcome constraint imposed by external
authorities.
• Ethical values shape the search for
opportunities, the design of organizational
systems, and the decision-making process
used by individuals and groups. They
provide a common frame of reference and
serve as a unifying force across different
functions, lines of business, and employee
groups. Organizational ethics helps define
what a company is and what it stands f
SUSTAINABILITY…

• The generally accepted definition of

sustainable development is
“development that meets the needs of
the present without compromising
the ability of future generations to
meet their own needs.” (United
Nations 1987).
S U S TA I N A B I L I T Y…

• In recent years, Sustainable Operations

Management (SOM) has started receiving
attention from both operations management and
management science researchers. SOM includes
topics such as green supply chain, green
procurement and reverse logistics (RL) . SOM
has a potentially vital role to play in contributing
to solutions for the complex sustainability
challenges confronted by many organisations . As
a result, a number of operations management
researchers and practitioners are dealing with
the challenges of integrating the issues of
sustainability in protecting the environment and
reducing the carbon footprint
• Both researchers and practitioners recognise the
importance of SOM as a key strategic
component in the development of cost-effective
and sustainable global supply chains to meet the
increasing needs of customers in terms of
flexibility, responsiveness and cost while
safeguarding natural resources for future
generations
I N T E G R AT I N G
S U S TA I N A B I L I T Y I N T H E
B U S I N E S S O P E R AT I O N S
It is the mission of the production
manager to operationalize the
organizational strategy! Hence, the
production manager can only achieve
sustainability if he adopts a
continuous improvement philosophy
with measurable performance
objectives.To operationalize the
economy-environment-community
triad, the operations manager should
integrate the following initiatives as
one
 Total quality of product and
process,
 Environmental protection, and
 Total process safety
 S TA K E H O L D E R S …

• Effective management of relationships with

stakeholders is crucial to resolving issues
facing organizations. By using their influence,
stakeholders hold the key to the
environment in which your organization
operates and its subsequent financial and
operating performance. Thus the effective
management of stakeholder relations should
be an essential focus of Operations.
• A stakeholder is any person, group or
organization who can place a claim on an
organization’s attention, resources or output, or
is affected by that output. They have a stake in
the organization, something at risk, and
therefore something to gain or lose as a
result of corporate activity.
• The aim of stakeholder relations
management is to influence stakeholder
attitudes, decisions, and actions for mutual
benefit. Stakeholders need to gain from the
relationship or they may not be sufficiently
motivated to cooperate.
You can use the viewpoints of the main stakeholders
to help shape your projects at an early stage. This
makes it more likely they will support you, and their
input can also improve the quality of your project.

THE BENEFITS
OF USING A
Gaining support from powerful stakeholders for your
work can help convince senior management to
allocate more resources to you. This makes it more
likely your projects will be successful.
STAKEHOLDER-
By communicating with stakeholders early and often,
you can ensure they know what you are doing and
BASED
fully understand the benefits of your project. This
means they can support you actively when necessary. APPROACH
ARE:
You can anticipate what stakeholders’ reaction to
your project is likely to be, and then you can build
into your plan the actions that will win their support.
 IDENTIFY YOUR
STAKEHOLDERS
• Stakeholders can be assessed systematically according to
criteria such as influence, impact and alignment. For
example, these questions can help assess their relevance:
• To what extent will your strategy affect each group,
positively or negatively?
• How far does the strategy align with their existing beliefs
about your organization’s values and purpose?
• How far do they share your organization’s values and
purpose in this area?
• How robust is the existing relationship with them?
• What information do they need from you?
• How do they want to receive it?
• Who influences their opinions about this issue, and who
influences their opinions of you? Are some of these
secondary sources therefore potential stakeholders as
well?
• What is their potential to influence the business directly
or indirectly (via other stakeholders), positively or
negatively?
PRIORITIZE YOUR STAKEHOLDERS

• You may now have a long list of people and organizations that are affected by your work. Some
of these may have the power either to block or advance your activities. Some may be
interested in what you are doing, others may not care. Having identified your main
stakeholders, you need to decide which of them are the most important. With limited
resources, you should only deal actively with the most important ones.
• Stakeholders can be prioritized numerically in a matrix showing a weighting of their
importance, for instance out of a score of 10, against each of the most important factors
relevant to a particular issue, also weighted out of 10, or a set of factors most important to the
organization overall.
DEVELOPING, ENCOURAGING AND SUSTAINING
ENTREPRENEURSHIP AND INTRAPRENEURSHIP

• Intrapreneurship is when employees have an entrepreneurial spirit internally," said Phil Shawe, co-founder
and co-CEO of business language services firm TransPerfect. "It's as if [each member of your] staff is running
his or her own business. They can do it on their own or within [their department]. It's all about having a
good system in place.“
 ENTREPRENEURSHIP…
• The entrepreneur is a person having abilities to solve crisis, a leader, motivated for
undertaking risks. Marshall suggests that the qualities associated with a good
entrepreneur are rare and limited, being "so great and so numerous that very few
people can exhibit them all in a very high degree" (Burnett, 2003)
MORE DEFINITIONS…

• Intrapreneurship is a set of good business practice that gives full credit to people with
entrepreneurial personality to innovate quickly in large organizations, not only for the benefit
of the latter, but also that of the consumers/clients.
• Intrapreneurship encompasses individual actions or/and team actions that behave in an
entrepreneurial manner, in order to serve the interest of very large companies and supply
chains, with or without official help (Pinchot, 2010).
 Managers play a key role in encouraging intrapreneurship. Managers
DEVELOPING, ENCOURAGING have to: Show, ask, reward and empathize.
AND SUSTAINING • Show: If you want your team to be an intrapreneur, be one.
Understand what it means, and think and act like one. If you can't
ENTREPRENEURSHIP AND show what it means, do not expect your team members to
INTRAPRENEURSHIP understand. Introspect. If you are not an intraprenuer yourself, it is
perfectly fine. Just don't set unclear expectations with your team.
• Ask: Most of the managers do not even discuss and ask their team
members to acting like an intrapreneur. Ask your team. Explain
what it means. Give examples of what you have done or seen.
• Reward: Link incentives with this expectation as clearly as
possible. Account for all possible types of rewards: ranking, bonus,
appreciation, promotion.
• Empathize: You asked.You explained (or tried to explain) what it
means.You set the right incentives. How will the team members
react? Will it result in significant changes in their behavior and
performance?