Socially Responsible Corporation

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Does the Socially Responsible Corporation (SRC) Really Exist?

What Is a Socially Responsible Corporation?

Since the term was coined, the central problem with identifying a socially responsible corporation (SRC) is the strong disagreement around establishing one definition. Clichés, although often boring and tedious, sometimes still have a valid purpose, never more true than with an SRC.

Defining the SRC is much like answering the time-honored question, “How high is up?” Unanswerable? Probably. Without a definition of “up,” a valid answer to the clichéd question is impossible.

A similar circular reference exists with expressing opinions on an SRC. Executive management often maintains that their corporation is socially responsible because the company follows principles that management established. Some outside activist organizations, however, may express a totally different—and opposite—opinion.

What Are the Measurement Standards of an SRC?

Few C-level executives, experts, objective journalists, or evaluators would publicly proclaim that organizations would consciously adopt policies and procedures to exhibit socially irresponsible activities. However, there are many observers, typically with specific agendas, that freely extol opinions berating many corporations as sociopathic entities.

This exhibits the critical—and still unanswered—issue with SRCs. There exists no generally accepted measurement standard to identify a socially responsible corporation from an indifferent or irresponsible organization. Even the often valuable tool of benchmarking is of little use to those wishing to establish a measurable standard.

Unconvinced? Simply consider an evaluation of “green” oriented companies. Does “X” corporation follow written policies that promote recycling, reduced paper consumption, and minimized carbon footprints? Even non-experts could measure and make some conclusions about different companies based on factual data.

One of the more popular standards of an SRC requires that an organization operate within the “mores of society.” Yet, who accurately defines the current mores of society? A brief investigation of social mores over a forty or fifty year period displays that attitudes, beliefs, behaviors, and even acceptable language has changed dramatically over just a few decades. If one believes in the concept of the “dumbing down of America,” they should also understand how this perceived condition has affected the social norms of humanity.

Others ask, “Is the SRC possibly an oxymoron?” This is neither an idle nor an unintelligent question. As all C-level executives and shareholders are aware, the primary purpose of corporations is not social change but return on investment and profit. The major corporate goal of delivering products and services that customers want may be in direct conflict to esoteric social responsibility.

Unconvinced? Consider “adult” movies or websites, violent electronic games, or organizations making and selling weaponry to foreign nationals. Their focus is clearly not targeted to social responsibility. Yet, they may consistently evoke smiles from their stockholders. Corporations and creatures of the state have little obligation to society, either legally or functionally. There is no critical fault in their focus; it is simply a function of their creation.

Just as highly venomous snakes, prides of lions, or schools of piranhas should not be blamed for what they are or what they do, ethical corporations should not suffer extreme criticism for exhibiting the same creation behavior. Should they be held to a higher standard, there should be agreement on those measurements that evaluate their performance. No such standards exist today.

What Are the Benefits of Being Considered an SRC?

The wide divergence of standards used in grading SRC performance often represents two extreme definitions. As usual, reality probably falls somewhere in the middle. A commitment to social responsibility may influence executive management to create and offer solid jobs, embrace government and public policy, offer help to the disadvantaged, and adopt a philosophy of “doing well by doing good.”

Unfortunately, adopting these tenants while discarding other operational considerations can spell disaster for corporations and their executive management. C-level executives and board members must balance the benefits of being perceived as an SRC and the cost—monetarily with branding, perception, and receiving outside criticism—of following their legal mandate. Generating profit and positive return on investment (ROI), primary legal responsibilities of a corporation, should be balanced with some narrower definitions of SRCs.

Executive management often must depend on their collective professional character to achieve a goal of balanced operations. For example, an SRC should view job creation as a socially enhancing activity within the context of viable strategic decisions that also enhance sales, income, and profitability. They may be criticized by those with a total social or profit agenda, but senior management can achieve both goals. In this example, the benefits are usually worth the cost of this focus.

However, as with most life arenas, corporate or human, actions that create high cost and low benefits are seldom successful. Corporate responsibility is an excellent example of this reality. Since no person, organization, or government has attained the mantle of valid judge of an SRC, executive management must assume the responsibility. They must act within the boundaries of proven management practice while exhibiting high moral and social actions to achieve their goal.