After reading this article you will learn about the responsibility of managers towards different segments of the society.

Responsibility towards Shareholders or Owners:

In case of a company, the directors have the following responsibilities towards the shareholders:

1. Shareholders are a source of funds for the company. They expect a high rate of dividend on the money invested by them and also the maximisation of the value of their investment in the company.

2. It is the duty of management to see that financial position of the company is good and it is improving day by day.


3. It is the responsibility of the management to keep the shareholders well informed about the progress and financial position of the company.

4. The assets of the company are purchased with the funds provided by the shareholders. The management is responsible to safeguard these assets.

5. The management is the trustee of shareholders’ funds. Therefore, the assets of the company should be used for the business of the company only. The policies followed by the management should increase the welfare of the shareholders.

Responsibility towards Customers:

Customers’ satisfaction is the ultimate aim of all economic activities. This involves more than the offer of products at the lowest possible price.


Therefore, it is the duty of management to:

1. Produce goods which are more satisfying to the consumers and which meet the needs of the consumers of different classes, tastes and with different purchasing power.

2. Make goods of the right quality available to the right people at the right time, place and at reasonable prices.

3. Ensure that advertisements and other statements issued by the business are true and fair.


4. Provide prompt, adequate and courteous service to customers, and to handle their grievances carefully.

5. Distribute the goods and services properly so that the customers do not face any difficulty in purchasing them.

6. Follow fair trade practices. The management should not indulge in unfair and unethical practices such as black marketing, hoarding, adulteration, etc.

Responsibility towards Suppliers:

Management should deal with the suppliers judiciously. It should try for fair terms and conditions regarding price, quality, delivery of goods and payment. Their dealings with the suppliers should be based on integrity and courtesy in the absence of which the suppliers will not supply them the goods on credit.


In short, management must create healthy relations with the suppliers.

Responsibility towards Workers/Employees:

Workers are a source of labour. They should be treated as human beings.

The management should fulfill the following obligations towards the workers:

1. Every business should pay reasonable wages and salaries to its employees so that they may lead a good life and satisfy their needs.


2. Workers should be provided service benefits such as housing and medical facilities, insurance cover and retirement benefits. These will make their future secure.

3. Since workers spend about eight hours on a working day at their work­place, they must be provided with good working conditions. Good working conditions are necessary to maintain the health of the workers.

4. The management should recognise the workers’ rights to fair wages, to participate in decisions affecting their working life, to form trade unions, to collective bargaining and to go on strike.

5. It is the responsibility of the management to win the cooperation of the workers by creating the conditions in which workers are willing to put forward their best efforts towards the common goals of the business.


6. The workers should be helped by education and other means to improve their skills. Management should give the workers opportunities to develop their capabilities through training, education and the enjoyment of freedom to the greatest possible extent.

Responsibility towards Government:

Every business enterprise is governed by various laws. It is the duty of the management to manage its affairs according to the laws affecting it. Management’s policies should be laid down taking into consideration the provisions of various legislations and guidelines issued by the Government.

Management should follow fair trade practices. It should pay taxes and other Government dues honestly, fully and promptly. It should not encourage corruption, black-marketing and other social evils.

The specific responsibilities of business towards government may be enumerated as follows:


1. To abide by the laws of the nation.

2. To pay government taxes honestly and in time.

3. To avoid corrupting government employees.

4. To discourage the tendencies of concentration of economic power and monopoly.

5. To encourage fair trade practices.

Responsibility towards Society/Community:

The responsibilities of business towards the society are discussed below:


1. Management must be guided by the socio-economic objectives of the society. It should not indulge in any practice which is not fair from social point of view. Society expects that the management uses the factors of production effectively and efficiently for the satisfaction of the needs of the society. If the management fulfills these expectations, its goodwill and reputation will enhance.

2. Good management can contribute to the advancement of local amenities where the enterprise functions. It can develop the surrounding area for the well- being of the workers and other people.

Management has certainly great responsibility to keep the healthy environmental conditions where the production is being carried on. It should take preventive measures against water and air pollution, and should contribute to the community development activities.

If the management fails to discharge its responsibility, the Government will interfere to prevent the enterprise from spoiling the conditions of living.

3. It is the responsibility of management to help increase direct and indirect employment in the area where it is functioning.

4. The business should contribute towards the upliftment of the weaker sections of the society. It should cooperate in the welfare activities of the community.


5. The business should not indulge in anti-social and unfair trade practices such as adulteration, hoarding and black marketing.

6. The resources at the command of business belong to the society. Therefore, the management should make the best possible use of capital, raw materials, machines, technical knowledge and other resources for the well-being of the society.