Social Responsibility of Management and Responsibilities of Managers

Social Responsibilities of Management

The term "social responsibilities" can be defined as the obligation of management towards society and others.


Reason for Social Responsibilities: Business enterprises are creatures of society and should respond to the demands of society. If 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 longterm interests of businesses are best served when management assumes social responsibility. The image of a business organization depends on 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 favourable image in the public mind. Every business enterprise is an 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, advance the basic values of society, and add to its stability, strength, and harmony.

Besides taking care of the financial interest of owners, managers of business firms must also take into account the interests 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 in the enterprise.




Responsibility towards owners: The primary responsibility of management is to assure a fair and reasonable rate of return on capital and fair return on investment. With the growth of business, shareholders can also expect appreciation in the value of their capital.


Responsibility towards employees: Responsibility towards employees relates to fair wages and salaries, satisfactory work environment, labour management relations, and employee welfare. Fair wages should be fixed in light of labor productivity, the prevailing wage rates in the same or neighbouring areas, and relative importance of jobs. Managers' 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. Employees are expected to build up and maintain harmonious relationships between superiors and subordinates. 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 markets. In the event of shortage of supply there is no automatic correction. Besides, consumers are often victims of unfair trade practices and unethical conduct of business. Consumer interests are thus protected to some extent by laws and the pressure of organized consumer groups. Management should anticipate these developments, satisfy consumer needs, and protect consumer interests. 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 the government: As a part of their social responsibility, management must conduct business lawfully, honestly pay all 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 is revealed by its policies with respect to the employment of handicapped persons, 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.