A socially responsible business

Answer

Introduction

A socially responsible business refers to an organization which has established an obligation to streamline its management towards the interest and welfare of the society within which it operates (Ferrell et al., 2016). Socially responsible businesses mainly use triple line management model to assess the profits they are making through implementation of corporate sustainability goals. Such business see beyond the traditional business objective which is profit maximization. Socially responsible businesses focus their responsibilities to incorporate social, economic and environmental sustainability.

Under social responsibility, these businesses measure profits in terms of human capital and their positions in the local society. This bottom line is enhanced by implementing fair and beneficial practices of labor through the involvement of community in the corporate’s affairs. Nurturing positive relationships with the local community ensures that the business expands its clients’ base and increase its employee pool (Ferrell et al., 2016).

Socially responsible businesses question the traditional notion that the less you pay your employees the longer it will take to afford the wage bill. Instead, these businesses measure the long term sustainability accrued from human capital. They do this with the understanding that a business with a desirable workplace will always be in a position to operate successfully (Ferrell et al., 2016). These businesses align their interest with labor interest to find a level ground of operations.

Environmental sustainability forms the other element of triple bottom line that is exercised by socially responsible businesses. Through this model, sustainable businesses believe that the fewer natural resources they use and the less impact they have on the environment, the longer and the more successful they will be. These businesses consider controlling their environmental bottom line to mean monitoring, reporting and managing its emissions, wastes and resource consumptions (Ferrell et al., 2016). Socially responsible businesses make green policies and waste reduction as corporate values across all its management levels. They set up sustainability committees to help in communicating the businesses’ sustainability solutions to all the departments.

Under economic sustainability, a socially responsible business measures the impact of its business operations on the economic environment. Such a business usually strengthens the economy it operates in so as to ensure it succeeds in its future endeavors. A socially responsible business will expand the scope in which it understands its position in the economy. Also, the businesses have clear abilities to survive in the future despite the changing economic trends (Savitz, 2013).

Using the triple bottom line model, socially responsible businesses are able to measure their abilities that place them in the business indefinitely. This valuation is normally based on the impacts that the business has on the surrounding environment, its contribution to the economy and its relationship with the host community (Savitz, 2013). This model allows business owners to view their businesses as environmental and social entities meant to serve both the community, environment and its owners.

Examples of Socially Responsible Businesses

There are many businesses worldwide which operate as socially responsible firms. Some of these are outlined here. The first is Altered Seasons Company founded by Kelly Reddington in 2003 (Crane et al., 2013). This is an eco-friendly candle company and it focuses on a ‘one-for-one’ business model to serve the community more. The operation of the company is based on the notion that for every candle sold, it provides a meal to an American in need through the program of feeding America.

The second example is Coyuchi. It brings social sustainability to the textile industry by producing organic duvet covers, towels, and sheets (Crane et al., 2013). The company gives a subscription service called Coyuchi for life. Through this service, the company is able to reclaim and renew old textiles from its customers before they are disposed into landfills. Additionally, the company only uses organic cotton and dyes with the aim of eliminating the introduction of chemicals into water bodies after processing.

The third example is Out of Africa Cosmetic Company. Its customers not only purchase the products but also help improve quality of life for women in West Africa. A portion of the firm’s proceeds is donated to local organizations that provide medical care and education to children (Crane et al., 2013). Also, the firm regularly donates to cooperatives that are owned by women to create more jobs in West Africa.

The last is People Water Company. This firm has formulated a ‘drop for drop’ initiative which outlines that for every bottle of water sold, there is at least one global clean water project funded. The projects can either be building of new wells, repairing a broken water source or building a water purification system in areas suffering from poor water quality. Up to date, the company has helped bring approximately twenty two million liters of clean water to those in need.

Role of Stakeholders in an Organization

Stakeholders in a firm refer to the investors whose actions determine the outcome of the business decisions made. Stakeholders have three main roles in an organization. The first is that they fund the operations of the organization. They do this by dictating the financial performance of the organization by ether increasing or decreasing their stakes in the organization (Carroll & Buchholtz, 2014). Secondly, stakeholders are involved in the decision making process in an organization. They do this through becoming members of the board of directors tasked with the day to day oversight of the company’s operations. Lastly, stakeholders exercise direct management of the firm. This is a ‘hands on’ approach by assuming management positions.

Roles of Shareholders

The main function of shareholders in an organization is to shape the constitution of the board of directors. When shareholders are dissatisfied with how the directors run the firm, they may remove the directors or decline their re-election bid. Before the board of directors pass certain changes to the running of the firm, the shareholders must approve the fundamental changes. Some of these changes include effecting reorganization of the firm, selling of substantial amounts of the firm’s assets, changing the firm’s share capital, confirmation of by-laws, changing of shares’ ownerships and changing the number of directors to minimums or maximums (Carroll & Buchholtz, 2014).

Roles of Ethics in an Organization

Ethics in an organization helps determine the behavior of a firm’s leadership, employees and their adherence to organizational cultures. Ethics enable the leaders in an organization to manage employees in such a manner that improves their loyalty and morale. Ethical leadership also helps to enhance the reputation of the organization in the community and financial markets. Secondly, ethical behavior among the firm’s employees ensures that they handle their assigned task with integrity and honesty (Carroll & Buchholtz, 2014). This is because such employees will adhere to the rules and policies set by the company. Lastly, ethics in an organization ensures that all the stakeholders in the firm adhere to the set organizational culture. For instance, leaders in an ethical firm may create a culture that exhibit the behavior they expect from employees.