Social Responsibilities of Management

The term social responsibilities can be defined as the obligation of management towards the society
and others concerned.
Reason for Social Responsibilities:Busi n ess enterprises are creatures of society and should

respond to the demands of society. If the 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 business are best served when management assume social

responsibilities. The image of business organization liked with 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 longterm success it matters a great deal if

the firm has a favourable image in the public mind. Every business enterprise is a 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, advances the basic

values of society, and constitute to its stability, strength and harmony.

Increasing concern for the social responsibility of management, it is now recognized that besides

taking care of the financial interest of owners, managers of business firms must also take into

account the interest 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 of the business enterprise.

Responsibility towards owners: The primary responsibilities of management is to assure a fair

and reasonable rate of return on capital and fair return on investment can be determined on the

basis of difference in the risks of business in different fields of activity. With the growth of business

the shareholders can also expect appreciation in the value of their capital.

Responsibility towards employees: Management responsibility towards employees relate to the

fair wages and salaries, satisfactory work environment, labour management relations and employee

welfare. Fair wages should be fixed in the 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 superior 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 product

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 with laws and 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 Governments: As a part of their social responsibility, management

must conduct business affair in lawful manner, honestly pay all the 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 are expected to be revealed by its policies with respect to the

employment of handicapped persons, and 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.