>> MIM Speaks
COMPANIES HAVE A SOCIAL ROLE, TOO By
NOV 17, 1996 -
THE STAR
S. Hadi Abdullah
A SEMINAR on the promotion of economic development in the
northern states of Malaysia raised some interesting issues
about the need to balance economic growth with social
responsibility.
The term economic development has undergone some changes over
the years.Traditionally,it meant accelerated GNP (Gross
National Product) growth.
In the 80s,it meant growth with equity,where the element of
redistribution was taken into account.In the 90s,it means the
growth of GNP,equity and enhanced core values like freedom,
long healthy life,sustainable development, an increase in the
economic base of the country and so on.
Social responsibility in the broadest sense would mean giving
back to society what one takes from it.It would mean caring
for the environment,the community and the less privileged, and
going for harmony and balance while working hard to have a
fruitful life.
It means that individuals and alike alike should endeavour
make the country grow economic cally while cherishing its
heritage,values,environment and religions thus making Malaysia
a better place for future generations.
Businesses are part and parcel of society businesses cannot
succeed if the community around them is poor,deprived and
unhealthy.
Deputy Prime Minister Datuk Seri Anwar Ibrahim has this to say
about the role of companies "Companies should not only be
judged by profits but how they take care of their staff
training,welfare,housing and community service."
There is a tendency among people to view the stakeholders of a
business rather narrowly,confining it to shareholders only.
Writer Arthur Sharplin lists 22 different stakeholders of a
business,from shareholders to neigh bours and interest
groups.Broadly,they can be grouped into six: shareholders,
employees,customers,suppliers,neighbours society and the
Government.
Shareholders fund the business.Therefore,it is their right to
expect a fair financial return on their investment.It is the
duty of the board of directors and the management to keep
their shareholders informed.
In Europe and America,pension funds,which happen to be large
investors in businesses, are beginning to take a keen interest
in business.They are now involving themselves in greater
detail in the running of the company in matters such as the
CEO!s salary bonus and purchase of new ventures.
Some of Malaysia's big investors like PNB (Permodalan Nasional
Bhd),EPF (Employees Provident Fund),the various state amanah
saham and so on could take a cue from here.
Employees form one of the most important parts of an
organisation.Efforts must be made to recruit the right type of
people.
Companies should take advantage of the HRD (Human Resource
Development) Fund.The onus is on the companies to use this
facility.
Consumers also have a hand in the success of a company."The
purpose of business is to create a customer," says management
guru Peter Drucker.
Customer satisfaction is paramount.Product quality must be
excellent,after sales service immaculate.Some companies
provide average products and poor after sales service.Their
"small print" misleads customers.Quality of service seems to
deteriorate in some areas.
In our effort to move fast,we are making some quality
sacrifices.It is appropriate to quote Sam Walton of Wal Mart:
"There is only one boss the customer.And he can fire everybody
in the company, from the chairman down,simply by spending his
money somewhere else."
Suppliers are another group of key stakeholders of a business.
They should be considered an "extended part" of the business.
Their prompt delivery,of the quality specified and at the
appropriate place,would contribute in no small measure to the
success of a business.
We often hear of suppliers letting down a company on the other
hand, trustworthy ones should thanked.This would help cement
good partnership Companies should go for linkages that support
small and medium size industries (SMls).
The lack of social responsibility is starkly seen in how a
business treats its neighbuors and society a large.In
Malaysia,we have withnessed a good numbers of tragedies from
the Bright Sparklers incident to the Genting Highlands and
North South Highway landslides.It is common for us to see
hills levelled trees and plants cut,over loaded lorries with
poorly trained drivers,dumping of toxic waste and desludging
in the sea.
The damage to the environment and society is not done because
we have primitive technology but more as a matter of
convenience.
Another area which is often forgotten is what is called
distributive justice,such as having industries in less
developed parts of the country,building of enough low cost
houses and giving bank loans to businesses according to the
Bank Negara guideline.
When Hong Kong's Vitasoy International received complaints
that some of its tasted sour, it destroyed 43 million cartons
costing RM30 million.lt It is that the company's ratings went
up.This is the type of social responsibility our companies
must emulate.
Some people say that one cannot have growth and distributive
justice at the same time.There should be a compromise, even if
it means a slight slowdown in growth.
The Government is also a stakeholder in that,while providing
law and order,it should ensure that the greater good of
society is not sacrifieed a few.The Govermnent has passed
several laws to protect society,like the Occupational Safety
and Health Act,the Sale of Food and Drugs Ordinance,Trade
Descriptions Act,and Companies Act.
If companies find the laws too stringent,it is better for them
to go elsewhere,rather than maim and pollute the country.
The Government has been the architect of growth for
Malaysia.It now expects the private sector to be the engine of
growth,thus the various initiatives of privatisation,
deregulation,liberalisation,downsizing the civil service, and
so on.
Although much good work has been done,sometimes enforcement is
found lacking.
Some companies in Europe and America have embarked on what is
called "social accounting" to measure their social
performance.In one such programme,the objective of a social
activity is stated,mentioning desirable results. This is later
matched against what was done item by by item to measure the
success.
Another is the "goal accounting" approach ed into operational
bench marked and the achievement measured subsequently.
What our businesses need to do to create in awareness of
social responsibility in the company.
Top management be to play a key role by setting a good
example. This should by followed by social involvement where
companies actively participate in community activities,such as
food and beverage companies supporting activities,and Petronas
and Renong giving scholarships to the needy.
Practising "social reporting"in the annual reports would be
the next step,where a company's involvement and social
responsibility activities are reported to the public.
Malaysian companies just make a mention of such involvement in
the chairman's statement,although some 25 per cent of
companies in the West include environment in their annual
reports.
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