Corporate Social Responsibility & Ethical Leadership
Corporate social responsibility has become something of a buzz word in business. So what does it mean for a company to be socially responsible in its day-to-day activities? Well, a culture of social responsibility and ethical leadership sets the tone for productivity and helps the business to engage with the real-life concerns of its employees, customers and other stakeholders.
Corporate social responsibility and ethical leadership go beyond merely managing the mundane tasks of the company. As a holistic concept, corporate governance is concerned with how the company ensures that all of its policies and processes are ethically sound. For example, many companies employ an external auditor to review their financials and to provide advice on communicating sensitive information to the public. Likewise, legal consultants provide companies with information on ethical HR practices and customer focus groups keep the business engaged with consumer wants and needs. Corporate governance is therefore about remaining responsible not only to the profit-generating motive of the company but also to its commitment to engage in fair practices, not exploiting people or the environment for unnecessary gains.
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A commitment to engaging directly with customers, employees, the community and other stakeholders is the hallmark of ethical business. Stakeholder groups value consistency and transparency, so organizations do well to put their best foot forward in communicating with those who matter most. This might take the form of an annual report for stockholders, an open-door policy for employees or a social media account where customers can leave feedback. Essentially, all levels of management should be on-board with the stakeholder engagement process, from the front-line customer service manager through to the business owner and CEO.
Distinguishing Leadership from Management
An important component of corporate social responsibility beyond stakeholder engagement is cultivating leaders within the organization. While all managers can be leaders, not all managers are leaders. Leadership involves a commitment beyond managing routine tasks. Leaders are accountable, respectful, consistent in their approach and open to communication. Coupling solid management skills with these leadership traits helps companies to maintain a climate of social responsibility and ethics by enacting a tacit organization-wide code of fairness and respect for others.
Ethical leaders look to the risk management aspects of corporate social responsibility as one of their main priorities. Managing risk is all about keeping the company's reputation and fiscal health in check. The old saying that it takes years to build a reputation and mere hours to destroy it is more-or-less an accurate way of thinking about risk management and CSR. Ethical practices such as responsible accounting, staving off negative media attention, keeping the company and its leaders out of legal trouble and honoring contracts help build a genuine culture of risk aversion and moreover promote a socially responsible organization.
This article was written by Jeremy C Bradley.