Social Responsibilities of Management
The term social responsibilities can be defined as the obligation of management towards the society
and others concerned.
Reason for Social Responsibilities: Business enterprises are creatures of society and should
respond to the demands of society. If the management does not react to changes in social demands,
the society will either force them to do so through laws or will not permit the enterprise to survive.
Therefore the longterm interests of business are best served when management assume social
responsibilities. The image of business organization liked with the quality of its products and
customer service and the extent to which it fulfills the expectations of owners, employees,
consumers, government and the community at large. For longterm success it matters a great deal if
the firm has a favourable image in the public mind. Every business enterprise is a organ of society
and its activities have impact on the social scene. Therefore, it is important for management to
consider whether their policies and actions are likely to promote the public good, advances the basic
values of society, and constitute to its stability, strength and harmony.
Increasing concern for the social responsibility of management, it is now recognized that besides
taking care of the financial interest of owners, managers of business firms must also take into
account the interest of various other groups such as employees, consumers, the government and
the community as a whole. These interested groups are directly or indirectly affected by the pursuit
of business activities and they are the stake-holders of the business enterprise.
Responsibility towards owners: The primary responsibilities of management is to assure a fair
and reasonable rate of return on capital and fair return on investment can be determined on the
basis of difference in the risks of business in different fields of activity. With the growth of business
the shareholders can also expect appreciation in the value of their capital.
Responsibility towards employees: Management responsibility towards employees relate to the
fair wages and salaries, satisfactory work environment, labour management relations and employee
welfare. Fair wages should be fixed in the light of labor productivity, the prevailing wage rates in the
same or neighbouring areas and relative importance of jobs. Managers salaries and allowances are
expected to be linked with their responsibility, initiative and skill. But the spread between minimum
wages and highest salaries should be reasonable. Employees are expected to build up and maintain
harmonious relationships between superior and subordinates. Another aspect of responsibility
towards employees is the provision of welfare amenities like safety and security of working
conditions, medical facilities, housing, canteen, leave and retirement benefits.
Responsibility towards consumers: In a competitive market, serving consumers is supposed to
be a prime concern of management. But in reality perfect competition does not prevail in all product
markets. In the event of shortage of supply there is no automatic correction. Besides consumers are
often victims of unfair trade practices and unethical conduct of business. Consumer interests are
thus protected to some extent with laws and pressure of organized consumer groups. Management
should anticipate these developments, satisfy consumer needs and protect consumer interests.
Goods must be of appropriate standard and quality and be available in adequate quantities at
reasonable prices. Management should avoid resorting to hoarding or creating artificial scarcity as
well as false and misleading advertisements.
Responsibility towards the Governments: As a part of their social responsibility, management
must conduct business affair in lawful manner, honestly pay all the taxes and dues, and should not
corrupt public officials for selfish ends. Business activities must also confirm to the economic and
social policies of the government.
Responsibility towards the community and society: The socially responsible role of
management in relation to the community are expected to be revealed by its policies with respect to
the employment of handicapped persons, and weaker sections of the community, environmental
protection, pollution control, setting up industries in backward areas, and providing relief to the
victims of natural calamities etc.
