The Management’s Responsibilities towards Stockholders, Consumers, Government and Community



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The management is answerable to the following groups.

Stockholders:

The stockholders are the owners of the company who have invested capital in the organization. Their primary purpose in investing funds is to make a reasonable profit on their investment.

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Accordingly, management must direct its resources at its command in such a manner as to yield a satisfactory rate of return for its investors in the long run. The stockholders are not so much interested in quick profits as they are in the stability, growth and the image of the company.

The company must create an image of quality and service. In addition, it is the management’s duty to inform the shareholders about the company’s financial position from time to time and all other relevant matters regarding objectives, policies and procedures so that the stockholders can give some necessary input from time to time.

The stable growth of the company will help the stockholders in two ways. First, they will share a part of the total profits in the form of dividends and secondly, the value of their share will appreciate. Accordingly, management must base their decisions on long range planning and steady growth of the organization.

Employees:

The responsibilities of management towards employees, who invest their time, talent and efforts into achieving organizational goals and objectives, are manifold. It must be clearly understood that the employment is meant to be mutually beneficial for the employee as well as for the employer.

Accordingly, the emphasis should not only be on what the employee can do for the company but equally on what the company can do for the employee. The employee contribution must be fully recognized and appreciated. The employees must be assigned the right jobs as per their knowledge, expertise, attitudes and interests. Additionally, the employees must be made aware of company policies, procedures and objectives.

The employees spend the major part of their days in work environment. Accordingly, working conditions must be conducive to work. The working conditions refer to physical facilities in terms of space, cleanliness, light, heat, air-conditioning, safety, sanitation facilities and so on.

These must meet acceptable standards. Whenever, a job requires some extra degree of risk or difficulty, and then additional benefits and incentives must be offered. Some of the other provisions that can be made available to employees are: social and athletic activities, provision for suggestions that would be seriously considered by management, easy access to superiors, and flexibility in working hours if possible, provision for psychological counselling and so on. These provisions will assist in developing a positive attitude towards work and the organization which would greatly improve productivity.

The employees must be given reasonable assurances that their jobs are secure. Their sense of job security greatly improves the sense of dedication to the company.

A life time employment brings about a shared responsibility which helps in building loyalty to the organization.

The system of “tenure” in academic institutions after five or six years of continuous service is designed to give the teaching faculty a sense of economic security which should bring out dedication, sincerity and a sense of belonging to the academic institution.

In addition to job security, the remuneration and fringe benefits must be adequate and encouraging. Fringe benefits include life insurance, medical insurance, paid sick leave, maternity leave, stock options, profit sharing plans, pension plans, provident funds and other retirement benefits, paid vacation and so on.

All the benefits to the employee would be meaningless if the employee is not happy at his job. Accordingly, the conceptual environment in the organization should be such as to enhance the employee’s confidence and faith in the company.

The employees should be encouraged to participate in the company affairs as much as possible, especially in the formulation of procedures and policies affecting them. Other management policies that would enhance the employee’s sense of happiness and self-fulfillment include provisions for challenging opportunities, increased responsibility, participation in decision making process and so on.

Consumers:

The consumers expect a quality product at a reasonable price with guaranteed satisfaction. It is the responsibility of the management to see that the interests of the consumers are adequately met.

The quality of the product can be guaranteed by offering facilities for returning the defective product either for a refund of the purchase price or exchange for a new unit. The product should be simple to operate and be made easily available through proper distribution channels.

Also, by providing free repair or corrective service for the product for a specified period of time, the customer’s confidence in the quality of the product can be strengthened. The customer satisfaction should be the first rule of sales. “The customer is always right” has proved to be a good policy for initiating sales and keeping the customer.

Government:

The management must operate within the legal system, adhering to all laws which may be local, state or federal. They must pay proper taxes on time. They must respect laws pertaining to social environment such as in the areas of air pollution, water pollution, dumping of chemical waste and so on. There are laws which prohibit discriminatory hiring on the basis of sex, age, religion, provincialism or ethnic origin. The management is further responsible to obey such legal directives as truth in advertising, truth in lending, meaning that the banks must disclose all costs accurately when making loans.

There are some anti-trust laws which must be respected. These laws prohibit a few major companies that may dominate the market for a particular product from conspiring to fix prices or create artificial shortages by hoarding and holding back supply of the product deliberately.

Community:

Some of the social community interests that the management is expected to serve and promote includes:

i. Providing jobs within the community.

ii. Hiring the handicapped.

iii. Assisting in religious and educational activities.

iv. Organizing sports tournaments and other cultural functions for the community.

v. Raising funds for public activities such as opening of medical clinics, hospitals or other charitable activities.

vi. Taking active interest in all community affairs.

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