IMPACT OF BLURRING OF DEMARCATION OF PROFIT/NOT-FOR-

PROFIT IDEOLOGY DUE TO CORPORATE SOCIAL RESPONSIBILITY (CSR) ON

MANAGEMENT EDUCATION IN INDIA

Loyola College,Loyola College, - Sundar A. Rodriguez - Sundar A. Rodriguez M.Com.,FCA.,DISA.,CFSA(USA).,M.Com.,FCA.,DISA.,CFSA(USA).,

ChennaiChennai Research Scholar, Commerce DepartmentResearch Scholar, Commerce Department

AUTHORS PROFILE AUTHORS PROFILE SUNDAR A. RODRIGUEZ SUNDAR A. RODRIGUEZ

M.COM.,FCA.,DISA.,CFSA(USA).,FAIA(UK).,CFA(CANADA).,CICA(USA)M.COM.,FCA.,DISA.,CFSA(USA).,FAIA(UK).,CFA(CANADA).,CICA(USA)

With about 32 years of practical experience in developmental sector, in various capacities including, but not With about 32 years of practical experience in developmental sector, in various capacities including, but not limited to auditing, consulting, program planning, implementation etc., I am a “people’s auditor” with limited to auditing, consulting, program planning, implementation etc., I am a “people’s auditor” with experience including working at United Nations as Auditor. My qualification includes:experience including working at United Nations as Auditor. My qualification includes:

Fellow Member of the Institute of Chartered Accountants of India.Fellow Member of the Institute of Chartered Accountants of India.

Post Qualification Diploma in Information Systems Audit, ICAI, IndiaPost Qualification Diploma in Information Systems Audit, ICAI, India

Certified Financial Services Auditor, The Institute of Internal Auditors, USACertified Financial Services Auditor, The Institute of Internal Auditors, USA

Fellow of the Association of International Accountants, UKFellow of the Association of International Accountants, UK

Certified Financial Accountant, CanadaCertified Financial Accountant, Canada

Certified Internal Controls Auditor, USACertified Internal Controls Auditor, USA

Master in CommerceMaster in Commerce

Presently – Research Scholar, Commerce Department, Loyola College, ChennaiPresently – Research Scholar, Commerce Department, Loyola College, Chennai

DOES THIS MAKES SENSE ?!DOES THIS MAKES SENSE ?!

CSR – DEFINITION IN COMPANIES ACT CSR – DEFINITION IN COMPANIES ACT 20132013

SECTION 135SECTION 135

1)1)Every company having a Every company having a net worth net worth of rupees five hundred crore or more of rupees five hundred crore or more (100 million $ (100 million $

or more), or more), or a or a turnoverturnover of rupees one thousand crore or more of rupees one thousand crore or more (200 million $ or more) (200 million $ or more) , ,

or or a net profit a net profit of rupees five crore or more of rupees five crore or more (1 million $ or more) (1 million $ or more) during any financial during any financial

year shall constitute a Corporate Social Responsibility Committee of the Board consisting of year shall constitute a Corporate Social Responsibility Committee of the Board consisting of

three or more directors, out of which at least one director shall be an independent three or more directors, out of which at least one director shall be an independent

director;director;

AMOUNT TO BE SPENT FOR CSRAMOUNT TO BE SPENT FOR CSR

Section 135 (5) Section 135 (5)

The Board of every company covered under CSR shall ensure for every The Board of every company covered under CSR shall ensure for every

financial year that:financial year that:

At least 2% of average At least 2% of average net profits net profits of the company made during 3 of the company made during 3

immediately preceding financial yearsimmediately preceding financial years is spent on CSR. is spent on CSR.

This spending to be made in pursuance of its laid CSR Policy.This spending to be made in pursuance of its laid CSR Policy.

MIND BOGGLING FIGURESMIND BOGGLING FIGURES

PRESENT SCENARIOPRESENT SCENARIOFor Profit organization For Not-For-Profit Organization

Management education – Different specialization offered.Tailor made for industry neededIndustry has a specific framework, with clearly drawn hierarchy, with specific goals.Management school of thought is live and kicking.Management thought policies are properly documentedQuantifiable expectationsOutputs

Education:Master of Social Work/M.A (Social Work) with different specialization.Specialization is more program focussed and not management focussedLack of clearly articulated management concepts Too many stakeholdersExpectation of the different stakeholders are different.Non quantitative expectationsOutcomes than output

OBJECTIVESOBJECTIVES

• To ascertain the gap between the need for the management skill set for the future managers of both for the for-profit and for not-for-profit organizations.

• To ascertain the methodology to integrate the requirements expected of from the management education by both the sectors – profit and not-for-profit organizations, due to the emerging conceptual amalgamations.

• To ascertain the ways and means to imbibe the ability to the management students to seamlessly transient from profit to not-profit organizations in their career whether in the same organization or due to switching to another organization.

METHODOLOGYMETHODOLOGY

This is based on the Conceptual Research concept, mainly because the impact of the CSR on realignment of management education to its requirement has not begun; and hence, this is done relying on the review of the literature including the appropriate statues and the theoretical framework for the management education.

KEY ISSUESKEY ISSUES

• Educational issuesEducational issues

• Psychological IssuesPsychological Issues

• Global Managers with “People’s Perspective”Global Managers with “People’s Perspective”

EDUCATIONAL ISSUESEDUCATIONAL ISSUES To start with how are we going to call the certificate, as the present Masters in Business

Management would be a misnomer, hence a suitable name imbibing both the concepts is to be derived.

It calls of unification of thought process in the academician belonging to the two school of thought, namely, for-profit and not-for-profit have to come together and figure out “Common Minimum Ground” in which their thought process and ideas can be better articulated to arrive at a consensus.  

Imbibing in the syllabus to tackle the “Cognitive Dissonance” and “Stockholm Syndrome” to make the seamless transition on a continuous basis easier.

Enlarging the understanding of toolsets like United Nations (UN) Global Compact, the UN Guiding Principles on Business and Human Rights, ILO’s tripartite declaration of principles on multinational enterprises and social policy, OECD guidelines on Multinational enterprises, Institute of Social and Ethical Accountability – Accountability’s AA100 series of standards, Social Accountability International SA 8000 standards, ISO 26000 Social Responsibility, OECD CSR Policy Tool, Global Compact Self-Assessment Tool, SROI Network (Framework), LBG Model, National Voluntary Guidelines on Social Environmental and Economic Responsibilities of Business, to name a few.

Bringing out the management concepts of two different ideologies on the common platform.

PSYCHOLOGICAL ISSUESPSYCHOLOGICAL ISSUES• Cognitive dissonance is a psychological phenomenon which refers to the discomfort felt at a

discrepancy between what you already know or believe, and new information or interpretation. It therefore occurs when there is a need to accommodate new ideas, and it may be necessary for it to develop so that we become open to them.

• This would arise amongst the managers from corporates who are ingrained with strong “for profit” orientation, to understand the nuances of not-for-profit philosophy and practice. The frequent switching over between these two types of organizations may lead to cognitive dissonance to them. This would be alleviated in the formative years, if the education that prepares such managers takes note of it and make such use of learning methodologies that would help them to combat in real life scenario.

• The other psychological issue that has to be addressed during the training of the managers is that of hangover of “Stockholm Syndrome”. In this case when a CSR manager, works very closely for a longer period of time with socially relevant projects through active interaction with peoples groups, community based organizations, activists, non-governmental organizations etc., the influence of their ideology would linger and would have an impact similar to “Stockholm Syndrome” and that would hamper his perception that is expected of him by the corporate sector, leading to discord.

• This could also happen in other way round, for example, if the manager is strongly grounded in the profit paradigm for long, his ability to adjust with the socially conscious not-for-profit environment would defeat the very purpose of giving impetus to such activities through active and effective participation by the corporates.

GLOBAL MANAGERS WITH “PEOPLE’S GLOBAL MANAGERS WITH “PEOPLE’S PERSPECTIVE”PERSPECTIVE”

• The CSR is not only confined to India, due to it becoming mandatory for corporates in accordance with Companies Act 2013, but it has been used in many other countries. Thus there is a need not only for CSR experts/managers in India, but also globally. The multinational companies having presence in India, would not only look for managers to implement CSR programs as required by the Companies Act, 2013, but also would like to have them involved in their other operations.

• To do this the management education should focus on International best practice and groom them in it. These toolsets includes, but not limited to; toolsets like United Nations (UN) Global Compact, the UN Guiding Principles on Business and Human Rights, ILO’s tripartite declaration of principles on multinational enterprises and social policy, OECD guidelines on Multinational enterprises, Institute of Social and Ethical Accountability – Accountability’s AA100 series of standards, Social Accountability International SA 8000 standards, ISO 26000 Social Responsibility, OECD CSR Policy Tool, Global Compact Self-Assessment Tool, SROI Network (Framework), LBG Model, National Voluntary Guidelines on Social Environmental and Economic Responsibilities of Business, to name a few.

MAJOR FINDINGSMAJOR FINDINGS• The need for development of a common platform of the academician dealing the two

divergent studies is to be worked out, together with the “Common Minimum” program arrangement, based on which the discussion of amalgamation of the two sets of management concepts could be worked out, with additional inputs from the corporate sector, and also from the diverse group like the activists, community based organization’s representatives, non-governmental-organizations etc., from the not-for profit sector.

• The seamless transition from one sector to another more frequently has to be properly addressed by training so that the psychological impact on such manoeuvre could be minimized.

• Presently there is no comprehensive “single window” training system for the additional skill set need for the management professionals who are at the different levels of management hierarchy.

• Need to move forward with the changes that are happening globally, though such changes had not been made mandatory in India, or there is no such practice in India as of now. This comprehensive course should have the Indian flavour with Global Outlook and prepare managers not only to carry out and manage the CSR programs in India, but also prepare them to face such challenges in the global level.

• This cross-disciplinary study would not only have focus on CSR activities, but also open up avenues for the students both in the “for-profit” as well as “not-for-profit” sector.

RECOMMENDATIONSRECOMMENDATIONS

• There is definitely a need for specialized course which imbibes both the concepts and practice of both profit and not-for-profit organizations.

• Due to the complexity arising out of the seamless transition required by the managers, it would not be advisable to go for some additional training after identifying the specific need of the individual, but to go for a comprehensive course in management.

POINT TO PONDERPOINT TO PONDER

“It is better to be roughly right than precisely wrong.”

John Maynard Keynes

QUESTIONSQUESTIONS

THANKSTHANKS

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