One challenge facing managers who are attempting to be socially responsive is to determine which specific social obligations are implied by their business situation. Managers in the tobacco industry, for example, are probably socially obligated to contribute to public health by pushing for the development of innovative tobacco products that do less harm to people’s health than present products do, but they are not socially obligated to help reclaim shorelines contaminated by oil spills.

Clearly, management has an obligation to be socially responsible toward its stakeholders. A stakeholder is any individual or group that is directly or indirectly affected by an organization’s decisions.²³ Managers of successful organizations typically have many different stakeholders to consider: stockholders, or owners of the organization; suppliers; lenders; government agencies; employees and unions; consumers; competitors; and local communities as well as society at large. Table 2.2 lists these stakeholders and gives a corresponding example of how a manager is socially obligated to each of them.

The socially responsive organization that is both effective and efficient meets its social responsibilities without wasting organizational resources in the process. Determining exactly which social responsibilities an organization should pursue and then deciding how to pursue them are the two most critical decisions for an organization to make in order to maintain a high level of social responsiveness within an organization.

Figure 2.1 is a flowchart that managers can use as a general guideline for making social responsibility decisions that enhance the social responsiveness of their organization. This figure implies that for managers to achieve and maintain a high level of social responsiveness within their organization, they must pursue only those responsibilities their organization possesses and has a right to undertake. Furthermore, once managers decide to meet a specific social responsibility, they must determine the best way to undertake activities related to meeting this obligation. That is, managers must decide whether their organization should undertake the activities on its own or acquire the help of outsiders with more expertise in the area.

Various managerial approaches to meeting social obligations are another determinant of an organization’s level of social responsiveness. A desirable and socially responsive approach to meeting social obligations does the following:²⁵

1. Incorporates social goals into the annual planning process.

2. Seeks comparative industry norms for social programs.

3. Presents reports to organization members, the board of directors, and stockholders on social responsibility progress.

4. Experiments with different approaches for measuring social performance.

5. Attempts to measure the cost of social programs as well as the return on social program investments.

   

Normally, different managers approach meeting social responsibilities differently. Some approach meeting such responsibilities as a requirement. These managers view their primary responsibility as making a profit and, as a result, do only what is required by law to meet social responsibilities. Next, some managers approach meeting social responsibilities by recognizing that they have both profit and social goals and pursue them in mostly an obligatory fashion. These managers, only occasionally, go beyond what is required by law to meet social obligations. Still other managers approach meeting social responsibilities by believing strongly that they have both profit and social goals and respond by working proactively and intently on reaching both. Going well beyond what the law requires to meet social obligations is commonplace for these managers.

Organizations characterized by managers who believe strongly that they have both profit and social goals and work intently and proactively at meeting them generally contribute more to society than do organizations characterized by managers who simply believe that they have both profit and social goals, or managers who use the law to determine how they’ll meet their social obligations. Also, organizations characterized by managers who simply believe that they have both profit and social goals and are committed to reaching them usually contribute more to society than organizations characterized by managers who simply follow the law to meet social obligations.

To this point, this chapter has discussed fundamentals of social responsibility and social responsiveness. This section covers social responsibility challenges faced by most modern managers in today’s society. These challenges include the following: (1) the social audit challenge, (2) the philanthropy challenge, and (3) the sustainable organization challenge.