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Learning outcomesAfter reading this chapter you should be able to:• distinguish between the concepts: corporate social
responsibility, corporate ethics programmes and corporate governance
• explain and discuss the shareholder and stakeholder models of corporate social responsibility and how the two models reflect different theories of the corporation
• identify the key components of an effective corporate ethics programme and explain how they impact upon the implementation of corporate social responsibility
• discuss recent global initiatives in corporate governance• discuss the implications of good corporate citizenship for the HR
Introduction• corporate social responsibility - proper balance between
obligations to shareholders and obligations to stakeholders
• corporate ethics programmes - programmes that enterprises institute to manage ethics, legal compliance and social responsibilities
• corporate governance - policies, practices and mechanisms that shareholders, executive managers and boards of directors use to manage themselves and fulfil their responsibilities to stakeholders, including investors
• corporate citizenship – requires both corporate ethics and corporate social responsibility (which are interdependent on each other)
Diverse stakeholders with whom companies may engage
– narrow classical view– socio-economic view – broad or maximal view of corporate social
responsibilityCorporate Social
Responsibility Viewpoints
Approaches Key references
Narrow classical economic (Shareholder model)
Maximisation of shareholder value, uphold the law and ethical custom, enlightened long-term value maximisation
Friedman, 1970
Corporate social responsibilityCorporate Social
Responsibility Viewpoints
Approaches Key references
Socio-economic (Stakeholder model)
Profitability and legal compliance Moral minimum of do no harm (negative duties) Moral minimum of prevent harm (affirmative duties) Uphold issues of justice and rights Respect for all stakeholders as ends in themselves Social contract
Simon, Powers & Gunnemann, 1972; Arrow, 1973; Stone, 1975; Evan & Freeman, 1988; Bowie and Duska, 1990; Goodpaster, 1991, 1996 in West 2006.
Corporate social responsibilityCorporate Social
Responsibility Viewpoints
Approaches Key references
Broad, maximal (Stakeholder model)
Profitability and legal compliance Moral minimum with affirmative duties Uphold justice and rights of all stakeholders Active role in social issues and contributing to the betterment of society through improving social conditions
• Corporate social responsibility and HR– requires corporations to operate in ways that not only avoid
harming people, but which positively impact on people’s health and safety, quality of life and personal growth
– human resource management practices associated with equal employment opportunities, diversity, job security, compensation, occupational health and safety, industrial relations, performance and remuneration and work-life balance
– in global operations, it involves managing human rights particularly those relating to child labour, wage exploitation, basic health and safety, empowerment and quality of life
5 key stakeholder groups and HR and other attendant issues
Corporate Governance and HR• superior governance is identified in terms of transparency,
accountability, responsibility and an independent overview of matters relating to corporate financial, ethical, social and environmental performance
• traditional HR activities of recruitment and selection, training and development, performance management and remuneration have a critical role to play in the development and maintenance of good corporate governance practices; not only in terms of boards of directors, but also in improving shareholder value through the development of intellectual capital and upholding a company’s responsibilities to stakeholders, in particular to its employees
• ‘balanced board’• board remuneration• monitoring and measurement of board performance