ethics and sr

8/14/2019 Ethics and SR

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Ethics and SocialResponsibility

Doing good also involves doing right

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FLOW OF PRESENTATION

1. What is Ethics

2. Decline and Growth of Philanthropy : the Paradox

3. Towards Social Responsibility

4. Business Response

5. Conclusion


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Ethics

Ethics is a Greek word, it means Character or manners.

Ethics is about sense of belongingness to society of

business or Organization Formed with a limited vision for

economic generation but should resolve conflict with

society by servicing the community.


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Ethics in Business

Deals with determination what is right'," fair, prior and just" in

decisions and actions made that affect stake holders. It focuses

on the business relationship with employees, customers,

stockholders, creditors, suppliers and member of the society in

which it operates. Business is a part of activity of society..

Corporate ethics , is a a matter of leadership.

Adhere to corporate credos-code of conduct.

Development of IQ,EQ and SQ culture.


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The Business Scene

Corporate Growth

Five Year Plans and Industrial growth ( 1951- 1965)

Industry top League and Economic power of the Corporates remainedconcentrated with the pre Independence Business Houses.

Continuous Growth in the number and size of Business Growth

Decline and Growth of Philanthropy :The Paradox


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Rank Growth Assets (Rsmillion)

1 Tata 4177.22 Birlas 2927.23 Martin Burn 1496.14 Bangur 779.15 ACC 773.66 Thapar 7797 Sahu Jain 676.98 Bird Heilgers 601

9 JK Singhania 59210 Soorajmull Nagarmull 573.7

TOP 10 Business Houses (1965)

Source : Report of the monopolies Inquiry Commission 1965


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Changes in Organizations and Management of Industry and in nature of

business class.

Industrial Entrepreneurship more driven by Economic and Industrial Factors

such as Capital, Possession of business experience, etc . Rather than by

social factors such as caste, community, and social approval or disapproval .

Till 1950First generation of

industrialists dominated thebusiness sceneFamily business operating

on the joint family andhighly personalized decision

making

From 1960

New generations of first timeentrepreneurs more educatedIndianisation of Non Family

owned business likeHindustan Lever, ICI, L & T

Changes in the Business Class


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The third Plan Ran into heavy weather due to a series of unforeseen difficulties such

as the border troubles with China in 1962, failure of monsoon and war with

Pakistan.

Population Growth

Unemployment

Recessionary Conditions in Heavby Industry

Growing Budgetry Difficulties

The unfavourable Economic climate impacted adversly on the industrial growth and

therefore on the business pschye, making it less willing to be generous. Matters

were made worse by governments restrictive policies.

Economic Difficulties


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Distrust of Business:

Public image of the business as a whole begun to deteriorate in public eyes

soon after the World War II.

Widespread hoarding, black marketing and Price manipulations.

Unhealthy and undesirable trends in company formation and management

such as interlocking of funds, diversion of profits and defrauding of

shareholders.

State and Business: Emergence of Disharmony


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Governments industrial policy incorporated social goals such as

reduction of disparities in income and wealth; prevention of

monopolies and concentration of Economic

Power; reduction of regional disparities and improving living

conditions of the workers.

Holding of corporate sector and business houses was synonymous

with monopoly in a particular industry .

Obsession with Concentration ofEconomic Power


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Tax Policy

Heavy taxation by the state to finance planned

development and to make more equitable distribution of

income and wealth.

Compulsory distribution of dividend coupled with corporate

taxation made business to divert available funds into

working capital and development, rather than into

charity.


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The deceleration of industrial growth, controls on

industry, a high tax regime and changes in the

attitudes of new business class had several adverseconsequences for philanthropy:

Impact on Philanthropy


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The industrial and govt. policy sapped self-

confidence and self-esteem, lowered business

morale, and charity.

Paying heavy taxes, anti-poverty programmes.High tax rates, licence permit, political corruption,

Black money

G th i G t d F i F di f


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In 1953 and 1966 the Central Social Welfare Board

sancioned Rs 61.6 million by way of grants to

approximately 6000 Institutions for the Welfare of

Women, children, handicapped.

In 1960-61, 36% of a voluntary agencys came from

Central, state and local governments.

Growth in Govt. and Foreign Funding of voluntary Action


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When there was a large influx of foreign fund from

the 1960s onwards in response to the social and

economic troubles, the indigenous business

community felt further relieved of its earlier

obligation to society.

Social development hereafter become increasingly

funded by govt. and foreign donor agencies.

Cont..


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A seeming paradox

The finance Act of 1948 had extended to companies

the existing 50% tax exemption for charitable

contributions available to individuals. The companies Act of 1956 introduced Section 25 to

enable individuals and corporations to set up non-

profit companies for charitable purposes.

Growth of Philanthropy


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1970s : shift from pure charitable behaviour

measured in terms of money

Development of communities

Charity through trusts, establishing institutions

Global trends, mounting social problems, proactive

chambers and carrot and stick policy

Towards Social Responsibility


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Unethical practices

Vivian Bose Commission Dalmia Jain Co. 1963

Monopolies Inquiry Commission 1965

1957 Kanoria : the general impression we have made on themasses is that we are intoxicated with power and wealth, amassfortunes for ourselves regardless of national interest

TATA : Business man must become politically active, openly espouse the virtues of free enterprise, and ostracise anti-socialelements in the community

Fall from Grace


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Kasturbhai Lalbhai , JRD Tata , Arvind Mafatlal and

Ramakrishna Bajaj

believed in the trusteeship ideals of Mahatma Gandhi and insound business ethics.

Moral leadership and social responsibility.IMC 1963 : actively participate in every worthwhile movement directedtowards preserving for our country a sound social and economic structure.Industry and trade have to discharge many responsibilities to thecommunity. They should provide support moral, personal and financial

to institutions or causes which make their towns and villages better forliving and which are intimately connected with our spiritual heritage.

Advocating Responsibility


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Gramdan; bhoodan; sampattidan

Businessmen interest in humanitarian,

cultural,educational and other beneficial social

activities.

To adopt fair trading practices, and to consider their

business as a social mission.

Trusteeship theory

Vinoba and the Trusteeship Ideal


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Jai Prakash Narain: 1965 seminar in Delhi, Calcutta.

Build social audit as part of social responsibility

Justice and fair play in all dealings

Attempts at growth and development of owners and consumers,community, employees, shareholders, other businesses, and towards thestate.

Utilisation of surplus for social purpose : education, health, research etc.

Fair Trade Practices Association in Bombay in 1966.

Debating Responsibility


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Low ethical std tax evasion, black marketing, illegal foreign exchange etc

JRD : use of fin, hr, to provide task forces to provide relief and reconstruction measures . The

business community is an essential ingredient of our democratic society and it has a duty notonly to create wealth but also to promote the ethical and social goals of the community.

Mafatlal : beyond philanthropy self discipline, quality control of consumer goods, fair trade

practices, avoidance of vulgar display of wealth

Grass root issues : unemployment, social unrest, inadequate provision for social welfare.

Showing the way

l f l bl


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Factors Leading to Emphasis on Escalation of Social Problems:

Population Growth

Governments Socialist Policies

Growing Unemployment

Deprivation

Escalation Of Social Problems

G h Of V l S


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Factors Leading to Growth of Voluntary Sector

Number of Calamities

New Welfare Organizations

Growing Social Consciousness

Womens Issues

Growth Of Voluntary Sector

G t C t & Sti k P li


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Realization Of the Government

Nehrus Last Message

Tax Concessions

Governments Carrot & Stick Policy

L d hi


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JRD Tata Leads

Arvind Mafatlal follows

Leadership

P ti Ch b


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Chambers Of Commerce & Industry

Pre-Independence Emphasis

Post-Independence Emphasis

1.Population Growth

2.Rural Development

3.City Development

Proactive Chambers


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Cont


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Autonomous body called Tata Steel Rural Development

Society for community services in 32 villages.

Today the Society operates in 600 villages in eight districts of Bihar, Orissa and MP for undertaking construction of roads,water sources for drinking and irrigation, promotion of RuralSanitation and other welfare programmes.

The Company stood to gain in terms of Improved IndustrialRelations, rapport with Tribal Leaders, international Exposure

and an image as a good Corporate Citizen.

Cont

Cont


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Cont

TATA MOTORS

Initial thrust on Healthcare, education and building

roads to link remote villages and also FamilyPlanning and Watershed Management.

Made history when conducted the first Social Audit

in 1979.

Other Business Units


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BAJAJ

Systemized and expanded its Rural development work .

Kasturbhai Lalbhai Group

Set up the Narottam Lalbhai Rural Development Fund(NLRDF)

to undertake several programmes of development in family

planning, forestry, rural industries, sanitation and so on.

Other Business Units


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BIRLA

Mix of traditional and Modern philosophy.

Building several new temples and prestigious Institutions likeSangeet Kala Mandir & the Sanskrit Sagar.

In 1978 BM Birla established the Birla Rural DevelopmentAssociation with the objective of improving the life of thevillagers.

For improved agricultural practices, the Birla Agricultural Farmwas set up in Ropar inPunjab.

Multinationals


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Indian Tobacco Company (ITC)

First major contribution to society by establishing in

1977, the ITC Sangeet Research Academy in

Calcutta to preserve and rejuvenate the guru

shishya parampara.

Multinationals


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Hindustan Lever Limited (HLL)

Its involvement with rural communities included

educating farmers in improved dairy farming,provision of interest free loans, R &D for rural

problems, demonstration of improved practices in

oilseeds production and introduction of new incomegeneration activities such as poultry farming, etc.

CONCLUSION


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It began to be accepted that business had to share a

part of the social overhead cost of economicdevelopment if it wished to share in its fruits.

Shift in beneficiary and issue focus from Urban to Rural

areas, and from education to concerns like populationcontrol, agricultural improvement, employment skills forwomen and so on.

Moreover newer and smaller groups with no previoustradition of philanthropy joined established houses totake on this new responsibility.

CONCLUSION

References


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Fernando A C, Corporate Governance Principles, policies andpractices, , Dorling Kinder Sley (india) Pvt. Ltd, 2006

Banerjee R P, Ethics in Business and Management, HimalayaPublishing House, Mumbai, 2008

Sharma Subhash, New Mantras in Corporate Corridors, New AgeInternational Pvt. Ltd. , New Delhi, 2007

Jayashree S, Dastoor S Dhun, Sadri Sorab, The Theory andPractice of Managerial Ethics, Jaico Publishing House, Mumbai,1999

Maddux B Robert, Maddux Dorothy, Ethics in Business A guidefor Managers, Crisp Publications Inc., 2005


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OPEN HOUSE Unleash the Power within


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