Many issues arise during a typical day at any company. Top managers at every company are continually forced to make decisions that affect not only the company’s finances but also the company’s stakeholders. Rarely does it seem that there is an easy and obvious solution that positively affects both of these interests. Therefore every decision a manager makes must be looked at from both perspectives while still following the mission statement of the company.
Decisions made based strictly by looking at the company’s financial position as its primary endpoint are usually easier to agree upon. General accounting practices have well written guidelines that help in making these decisions. There are many standard procedures that steer a company in a certain direction. There are even exercises that help forecast future outcomes base on present day information. But when it comes to issues that affect personnel, the community and the environment, the answers are not as easy. A rule put in place that may help one group of employees may adversely affect another group. A decision to offer a new product that would greatly improve the financials of the company may negatively impact the environment or surrounding community. When making decisions which may have both positive and negative outcomes, what guides the manager to the proper resolution? I feel it comes down to each company’s philosophy on how they want to run their business. What values are important to the company? How does each company want to be viewed in the public eye? And lastly, what kind of legacy does each company want to leave behind? The models we have learned in class will help categorize different companies into common groups with similar company goals.
The first model to look at and probably the most basic is the Economic Model of Corporate Social Responsibility. Companies that would fall under this model would all share the same goal. That company goal would state that their primary responsibility is to produce goods or services that will maximize the company’s profit under the law. They feel no obligation to contribute to social needs. The companies that conduct business under the Economic Model answer only to the stockholders. They are graded solely on the profit they produce.
The next model is the Philanthropic Model of CSR. The companies that fall under this model are similar to the companies that follow the economic model. The main purpose of these companies is to seek profit for their organization through the goods and services they provide while still obeying the law. However, the difference for these companies is that they may choose to contribute to social needs, typically after profits are achieved. They may choose to contribute, not as a matter of duty or social responsibility, but because they feel it is the right thing to do. They may also want the public praise they may receive for their actions. In my opinion, many of the companies of this era fall under this model. Profits answer most shareholders questions and invite new investors into the company. But in this technological era, with information reaching millions of people within minutes of an event occurring, public perception can make or break a business. Therefore philanthropy, used as a marketing tool, has become a norm in many businesses across the