After reading this article you will learn about the social responsiveness and social audit of an organization.
Elements of Social Responsiveness:
Five important elements of social responsiveness are:
1. Social goals should be planned and incorporated into the overall planning process.
2. Firms should examine the desires of society and assess how other companies are meeting the social desires.
3. Shareholders being owners of the firm must be informed about the social goals. Social goals should be disclosed in the annual reports.
4. As managers have knowledge, skill and competence to carry out the social programmes, they must try different approaches to solve the social problems and implement the best approach in terms of cost-benefit analysis.
5. Managers should compute the cost of social programmes in terms of financial investments to assess their viability.
Measurement of Social Responsiveness:
Since social programmes form part of the organisational overall planning process, managers measure the effectiveness of these programmes to ensure that they are consistent with planned goals. Though it is difficult to measure the effectiveness of social programmes, a specific management tool for measuring social responsiveness is social audit.
Social audit is “a systematic study and evaluation of the social, rather than the economic, performance of an organisation.” It is a formal and thorough analysis of effectiveness of the social performance. Social audit assesses the impact of organisational activities on society, identifies areas where social values are promoted and areas where organisations need to promote the social culture.
“Social audit is a way of measuring, understanding, reporting and ultimately improving an organization’s social and ethical performance.” It helps to reduce gaps between organization’s goals and reality, between efficiency and effectiveness. It is a technique to understand, measure, verify, report and improve social performance of the organization.
It is a process for evaluating, reporting and improving organizational performance and behaviour, and measures its effects on society. Social audit produces a measure of social responsibility of the organization.
It takes into account internal code of conduct as well as views of all the stakeholders and draws on best practice factors of total quality management and human resource development. Like internal auditing, social auditing requires an organization to identify what it seeks to achieve, who are its stakeholders, and how it wants to measure its performance.
Objectives of Social Audit:
1. It assesses the gaps between needs and resources available for local development.
2. It creates awareness amongst stakeholders about the company’s productive services.
3. It increases efficiency and effectiveness of the corporate development programmes.
4. It assesses corporate policy decisions, in the interest of its stakeholders.
5. It estimates the opportunity cost for stakeholders of not getting access to public services.
Steps involved in social audit:
A social audit involves the following steps:
(a) Framing the social programmes.
(b) Monitoring activities in carrying out these programmes.
(c) Measuring social performance.
(d) Evaluating the performance of socially responsive activities.
(e) Framing strategies to set future goals.
Merits of social audit:
Social audit has the following merits:
(a) Enterprises know the extent to which they have been able to achieve the social goals.
(b) Data on social costs and benefits helps to assess social performance of the enterprise. This helps in conducting cost-benefit analysis of the social programme.
(c) It helps in locating potential areas for carrying out the socially productive programmes.
Though social audit is expensive and time consuming, it is an important tool to measure social responsibility. It has become part of the companies’ annual reports.
Problems in social audit:
The problems in social audit can be studied under two heads:
I. Problems faced by the social auditor of his own making
II. Problems beyond the control of social auditor
I. Problems faced by the social auditor of his own making:
These problems may arise on account of the following factors:
1. Attitude of the social auditor:
Social welfare programmes are implemented to bring social changes. They are not mere measurement of inputs and outputs. The social auditor should have positive approach towards these programmes. He should consider the benefits and costs of the social change.
If he designs a social benefit programme for food and nutrition and rejects it because it does not conform to specifications of World Health Organization, he may not be able to justify non-achievement of targets of his programme. The auditor should look beyond the boundaries of the programme and deal with its implementation process.
II. Problems beyond the control of social auditor:
1. All social welfare programmes are not well designed and do not define the problem at the first level of symptom-cause relationship.
The causes and symptoms of social problems generally exist at three levels:
(i) Level I:
The symptom may be health problems and the cause may be lack of sanitary facilities.
(ii) Level II:
The cause at the first level becomes the symptom at the second level.
For example, lack of sanitary facilities may be the symptom the cause for which is low income of people.
(iii) Level III:
The cause at the second level becomes the symptom at the third level. The low income (cause) may be because of poor educational facilities in the area that is subject to scrutiny.
2. They may not target at a variety of related social issues. If social auditor targets at rural health, he should simultaneously aim to improve rural education, sanitation, drinking water, housing, nutrition, pollution, agriculture, trade, industry etc. and not just one aspect of rural upliftment.
3. Absence of adequate information for preparing a social welfare programme can create problems for social audit. If social audit is based on traditional information such as past accounts and reports, it may not achieve the intended purpose. A good social welfare programme has to be based upon internal evaluation machinery and latest statistical methodologies.
4. The impact of social programmes cannot be assessed immediately. For example, the effect of immunisation against a disease or education of rural population has a specific gestation period after which its impact can be assessed.