Social Responsibility

What kind of responsibility, if any, does a company have to society at large in the current economic climate?  Does a company forced into bankruptcy proceedings have any responsibilities?  These are the kinds of questions I will explore in this blog.  I think that a company does have a responsibility to not only its employees, but also to the community where it is located and even to the environment.  Some of these are obvious, such as paying their employee’s wages, providing a clean, safe working environment, and having a positive impact on the surrounding communities.  However, beyond these responsibilities, it becomes less obvious, moving into a grey area that is more what is nice to do as opposed to what must be done.

In an article by Jack and Suzy Welch entitled “Corporate Social Responsibility in a Recession” these issues are explored.  The subtitle of the article, “Struggling companies have no choice but to recalibrate their philanthropy”, gives some clue as to the focus of the article.  Basically, a company, especially in rough economic times, has a responsibility to itself to make a profit.  That is the main reason they are in business in the first place.  In fact, the company cannot do anything else which may be considered socially responsible without first satisfying this requirement.  This may seem harsh, but the fact remains that a company not making a profit cannot in turn give money away.  A company that is showing a profit provides jobs, pays its taxes, and helps contribute to the economy at large.  This helps to satisfy at least some of the social responsibilities a company can be said to have, so just by staying profitable a company does contribute.  The article goes on to list some alternatives to continued social giving, such as reduced amounts for social programs or giving away to a smaller group of programs, all aimed at keeping a company in business and still satisfying its social goals.  (The full article can be read at: http://www.businessweek.com/magazine/content/09_22/b4133000801325.htm/)

What about businesses who are no longer profitable and are forced into bankruptcy proceedings?  Do they still have any kind of responsibility to society?  First, they have obligations to their creditors, then to their share holders, and finally to their employees.  These are legal issues and will be examined more closely later.  But what about to the rest of society?  I think they do.  If the company is forced to abandon its facilities, it should maintain it in some reasonable fashion, like making sure the grass and weeds are cut, the facility itself is not falling apart, and that it remains secure.  The abandoned facility should not be an eyesore in the community, and it should not present a safety hazard.  Doing these few things can prevent a community from suffering unduly from a company’s bankruptcy; the community is already going to suffer economic hardship due to loss of jobs and loss of taxes, so why should it also suffer further?

Businesses in these hard economic times, even those in the bankruptcy process, can still have a positive social impact.  It might not be as great as when times are better, but it can still be there.  Not only is this the right thing to do, but it helps to instill good will with the public and help to increase a company’s profits and ease of doing business.