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August 25, 2019

Lack of CSR results in poor human resource

Business

August 25, 2019

LAHORE: Most of the businesses in Pakistan tend to ignore the impact of real corporate social responsibility at least towards their employees, which deprives them of competent and vibrant human resource. It hurts their operations more severely during recessions.

Manufacturers in many instances do give special incentives to their highly skilled workers, but the general treatment of workers is oppressive. Working climate under these conditions is not ideal.

Competent and highly skilled staff is unable to extract efficiency from the staff that is not properly taken care of by the management. Most of the talented and skilled workers though treated well by the management get frustrated when they are unable to exploit the potential of the workers.

Quality human resource in fact is the outcome of a stable, secure and clean environment provided by an enterprise. Social benefits like fair price shops and healthcare are available to all the workers.

Some factories even provide free lunch of the same quality to all their executives and workers under the same roof. Some provide food at highly subsidised rates.

Quality food alone is a great incentive for low grade workers who are unable to afford two square meals a day at their homes. Dissent in such factories is rare and workers efficiency is much higher than average.

A cursory look at the corporate profile of Pakistan’s industrial sector would reveal that all industries serving domestic markets that are socially and environmentally compliant, are operating smoothly even in recession. In case there is compression of demand, non-compliant industries lose most of the market, while the CSR companies suffer less or not at all. The companies that suffer during recession lament high cost of doing business as reason of their failure to retain their markets.

They ignore the fact that their abused human resource lacked the incentive and emotional affiliation to the company to put in sincere sales and production efforts. The sales of CSR compliant companies do not suffer because they have capable and dedicated staff who realises the gravity of the situation and doubles their efforts to ensure smooth and steady sales.

Also, these corporations are not threatened by imported substitutes.

Exporting industries that have closed down were mostly those that were not socially complaint. These industries did not have pleasant working environments.

These industries also lacked water treatment plants and there were no worker welfare initiatives.

Naturally they had a little inferior workforce than the complaint industries. This does not imply that the social responsibility ensures viability of commercial projects, but it certainly is one factor that enables the company to absorb pressure as the human resource in such companies is more faithful and responsible than in non-compliant companies.

The socially irresponsible companies invariably are also tax evaders, under-fillers and are a cause of heart burn among employees who consider their employers as exploiters and have no sympathy for them.

Most of our entrepreneurs are operating with a mentality that was prevalent in the 1960s among the entrepreneurs in the United States. At that time, most renowned American economists were against the concept of social responsibility of the company.

Milton Friedman in 1970 argued that corporate managers can either control pollution or maximise profits, but that the former can be accomplished only at the expense of the latter.

From the investor’s perspective, this in turn implies that he can either invest in a profitable company or a “good” company (which protects its environment and employees) but that no company is likely to be both.

This orthodox economic view has changed around the world including neighbouring India and in China where it was found that the long-term survival of any enterprise is linked to its level of corporate social responsibility.

Pakistan is also passing through a phase when corporate social responsibility has gained great significance in alleviating the miseries of the poor due to rising cost of living.

Even the value-added textile exporters of Bangladesh, where wages are very low have made huge provisions for discounted food for their workers to ensure that their workforce and their families get proper nutrition.

All creditable studies have proved that productivity is linked to quality of nutrition. Quality nutrition is not available to ordinary workers in Pakistan due to high food inflation.

Entrepreneurs would be ensuring long-term productivity growth if they look after this basic need of their workers now.

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