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|In the video, on YouTube, Alex Edmans asks “Why do businesses exist, to earn profit (shareholders) or to serve a purpose to society (customer, employee, and environment).” Address the following:Explain what answer he came to and why.|
Next, discuss the approach human resource management should take toward organizational social responsibility.
Finally, cite one real-life example of a company implementing social responsibility that IS NOT mentioned in the video or the course textbook. Be sure to be factual and to fully support your answer.
Support your response with at least one scholarly resource in addition to the text.
HRM and Organizational Social Responsibility
Social responsibility is a contentious topic in the modern corporate world. Alex Edmans concludes that businesses exist to serve a purpose (social responsibility to employees, customers, and the environment) and to earn profits in the long term (Edmans, 2015). He argues that when a business takes care of its employees, it hires top talents and retains employees for a long time, enjoying higher productivity in the long term. He gives an example of Costco, a company that seeks to provide the best employment conditions for its employees. Overall, Costco enjoys massive profits even after the cost of its social responsibility practices.
Human resource management should consider corporate social responsibility as a long-term strategy to remain competitive in the market. By taking care of employees through better wages, better environmental conditions, and compensation systems, an organization can enjoy greater productivity that could turn into a competitive advantage (Schuler & MacMillan, 1984). Managers should develop and implement incentive and appraisal systems that reflect sustainability and recruit personnel that personifies these values. HR should promote employee contribution, foster employee commitment, manage culture, and increase strategic fit and integration. Human resources can participate in social responsibility through employee engagement, community relationships, and diversity management.
Wells Fargo is an example of a company that invests heavily in corporate social responsibility. For instance, according to 2020 social impact and sustainability highlights published in 2021. For example, the company provided massive benefits to employees, from cash awards to 165,000 employees making less than $100,000 a year to enhanced telehealth benefits for employees and their families (Wells Fargo, 2021). It helped 3.6 million consumers and small businesses with payment assistance in 2020 and deployed more than $112 million to help over 22,000 maintain more than 63,000 jobs during the pandemic. According to a Wells Fargo report, between 2020, the company’s renewable energy and environmental finance team financed 13% of the utility-scale wind and solar investments in the U.S. since 2006.
Corporate social responsibility remains a crucial factor for business profitability and sustainability. Organizations planning to get more profitable in the future should invest in corporate social responsibility. Investing in employees makes it possible to hire top talents and increase employee retention. Wells Fargo is an example of a company that has invested heavily in the environment and taking care of its employees. As Edmans argues, taking care of employees, customers, and the environment, is as vital as generating profits.
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Edmans, A. (2015). The social responsibility of business | Alex Edmans | TEDxLondonBusinessSchool [YouTube Video]. In YouTube. https://www.youtube.com/watch?v=Z5KZhm19EO0
Schuler, R. S., & MacMillan, I. C. (1984). Gaining competitive advantage through human resource management practices. Human Resource Management, 23(3), 241–255. https://doi.org/10.1002/hrm.3930230304
Wells Fargo. (2021). 2020 Social Impact and Sustainability Highlights. https://www08.wellsfargomedia.com/assets/pdf/about/corporate-responsibility/social-impact-sustainability-highlights.pdf
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