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Dhaka Tribune

Social responsibility in business: A crash course

Update : 28 Apr 2013, 03:31 AM

The phrase “social responsibility in business” is a yawner for most of us butch entrepreneurs.

It seems to be a concept that is currently in vogue among the chatterati who are invariably found solving all of the world’s problems in soigné enclaves of exorbitant five-star hotels. It’s a useless notion that has no relevance in the business world.

Or does it?

At its heart, social responsibility in business entails a somewhat common sense notion, viz: “Dead workers are bad for business.” This is especially true if workers die en masse by being roasted alive, crushed in a stampede, jumping out of windows, pulverised under the weight of a flimsily constructed 8-storey buildings, etc.

In management consultancy argot: “Precipitous extinction of a key factor of production has catastrophic implications for the longevity of business.”

Jests aside, essentially, social responsibility is not just an end by itself; it is also a means for securing a profitable existence for businesses in the long-run.

Crudely put, just as well-maintained machines are good for business, the same goes for keeping workers happy and healthy.

There are all too many examples in Bangladesh of social responsibility being trampled for the pursuit of short-term profits. While the owners may have escaped punishment for culpable homicide, look at what has happened to their businesses! The word “kaput” comes to mind.

Of course, the standard retort to the charge of unsafe working practices is that profit margins are just too low to improve working conditions. Yeah, right! Anybody with even a cursory understanding of financial accounting knows that argument to be complete hogwash.

Typically, buildings are depreciated over a 40-year period. So, for every extra Tk10m that is spent to make a building safe, the expense charge is only Tk250,000 per year. So, if a business generating several million dollars in revenue has trouble affording such low amounts for better construction materials, sufficient fire exits, then there is something fundamentally amiss with their business model.

But, says the astute entrepreneur who has just returned from a crash-course called “Finance for Non-Accountants,” from a foreign university, “It’s not the profits, we simply do not have enough cash to build a safe working environment.” Well, really! So, then business viability is achieved by exposing workers to life-threatening environments? Who made you God?

Finally, there is the “Blame it on Walmart” argument. Of course, buyers must carry out due diligence about their suppliers, but, that in no way absolves the supplier from criminal negligence and irresponsibility.

In the 1980s, when loan-default was ubiquitous, a similarly contorted argument, viz: “Blame it on the bank,” was used by the entrepreneurs.After all, if the bank approved a project proposal then it must be their fault if the new business tanked.

The workers of Bangladesh have made many of us entrepreneurs wealthy beyond our wildest imagination.

Their back-breaking efforts have earned the country enough foreign exchange to allow us to go on credit-card spending sprees abroad. They are not just a factor of production but the life-blood of industry.

So, if you find all these arguments unconvincing, just remember this: “Dead workers are bad for business.” 

Kaiser Kabir is CEO, Renata Limited.  

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