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What is Productivity

In this post were going to take a deep look into the concept of productivity.

Heres my personal definition of productivity:

Productivity = Value / Time(productivity equals value divided by time)

By this definition there are two primary ways of increasing productivity:

1) Increase the value created

2) Decrease the time required to create that value

You can complicate this definition by including other factors like energy and resources,

but I prefer the simplicity of time because in most cases factors like energy and resources

are reducible to time anyway. Time also makes it very easy to compare different levels ofproductivity, such as output per hour or per day.

Apparently you can make some significant gains on the time side. There are many

personal productivity optimizations which, especially if you introduce them in your

youth, will produce a massive net savings of time over the course of your life. Consideryour typing speed, for instance. If you invest the time to get your speed up to 90 words

per minute or faster, it will be well worth the initial time investment if you happen to do a

lot of typing over your lifetime, compared to allowing your speed to linger at 50 wpm or

slower year after year. The extra hours of practice will be nothing compared to the timeyou save typing emails, letters, or blog entries over the next few decades. Other time-

based optimizations include improving your sleeping habits, minimizing commute time,

or dropping time-wasting habits like smoking.

The main limit of time-based optimizations is that the optimization process requires an

input of time itself. It takes time to save time. So the more time you invest in optimizing

time usage, the greater your initial time investment, and the greater your need for a long-

term payoff to justify that investment. This limit creates an upper bound for any time-based optimizations you attempt, in accordance with the law of diminishing returns. The

more time you invest in any optimization attempt, the lower your net return, all else being

equal.

This law of diminishing returns points us back to the value side. While we might be stuckwith diminshing returns by trying to optimize the time side alone, we may notice that

working to optimize the value side is less limiting and more open-ended.

What is the value in our productivity equation?

Value is a quality you must define for yourself. Hence, any definition of productity isrelative to the definition of value. In circles where people can agree on a common

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definition of value, they can also agree on a common definition of productivity. However,

in terms of your own personal productivity, you arent obligated to define value the same

way anyone else would. You are free to adopt your own definition, such that your pursuitof greater productivity becomes a personal quest that produces the value that matters

most to you.

Too often we adopt a socially conditioned definition of value, which tends to be very

limiting. Perhaps we define value in terms of work output within our career, number oftasks completed, number and quality of important projects finished, etc. You may not be

able to verbalize it clearly, but perhaps you have a working definition of value that feels

comfortable to you. You can tell when youve had a productive day and when you haventbased on how much value you created, in accordance with your own sense of what value

means.

But how much conscious thought did you put into your personal definition of value? Im

going to challenge you to put a bit more thought into your definition, which will

consequently redefine your sense of productivity.

Impact

First, according to your definition of value, to what extent is the value provided? Who

receives the value? Yourself, your boss, your coworkers, your friends, your family, yourcompany, your customers, your team, certain investors, your community, your country,

the world, your family, God, all conscious beings, etc? What degree of value is ultimately

received by each person or group? Are you providing value to one person, 10 people, 100people, 1000 people, millions of people, the whole planet? How much do you feel the

value you provide ripples outward beyond those you provide it to directly? How quickly

do those ripples dissipate? Whats your sense of the basic level of impact of your value?Is it limited or expansive?

For example, if youre the CEO of a Fortune 500 corporation or the leader of a country,

youll have a far greater ability to provide value to large numbers of people vs. if you

work as a janitor. The more people you can influence, the greater your potential value.Greater leverage means greater potential impact.

Endurance

Secondly, how long does the value you create endure? An hour, a day, a week, a month, a

year, a decade, a lifetime, 100 years, 1000 years, 10,000 years, until the end of time? Towhat extent does your value carry forward in time? Is it quickly consumed and forgotten?

Or does it continue to regenerate itself year after year? Does your value create ripples

through time?

The Mona Lisa is still providing value hundreds of years after its creation. But otherworks of art do not provide any enduring value beyond the lifetime of the artist. They are

quickly abandoned and eventually replaced.

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Essence

Thirdly, what is the essence of the value you produce? Do you help people survive?

Entertain them? Enlighten them? How much do others value what you produce? Whatprice would they be willing to pay for it? Do they consider your value essential, optional,

or undesirable? How unique is your value? Are you the only one who can provide it, orare there plenty of equivalent choices?

The essence of value provided by a janitor is low because it is easy to find people to dosuch work for little pay. The essence of value of a physicist is potentially enormous

because a new theoretical concept could yield a more accurate understanding of the

universe.

Volume

Lastly, what is the volume of value you create? How much of it are you putting out in a

given period of time? What is the quantity in which you produce that value?

For example, Picasso was a prolific artist who created hundreds of different works over

his lifetime. Other artists had a far lower volume of output.

So now we have this little formula:

Value = Impact x Endurance x Essence x Volume

And therefore:

Productivity = Impact x Endurance x Essence x Volume / Time

Now whats interesting here is that most of the productivity literature Ive read focuses

almost exclusively on volume and time. But those are the most limiting parts of thisequation. However, theyre also the easiest to write about.

I think the most important long-term factors to consider when optimizing productivity

(whether that of an individual, corporation, country, or other entity) are impact,endurance, and essence. And the most important of these three is essence.

For example, lets consider the productivity of a blogger.

The impactof a bloggers value would be related to the blogs traffic levels and overall

influence among its readers. How many people are reading the blog, and how much do

they value what the blogger writes? To improve impact a blogger could increase traffic tothe blog or improve his/her writing skills in order to have a deeper effect on the readers.

Impact can also be increased if the readers then go out and tell others about what theyve

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read. Furthermore, the blogger could use the blog as a means for self-exploration, thereby

increasing the impact of the blog on the bloggers own life.

The endurance of a bloggers value would be the long-term effect on the blogs readers,if any. Is the blog changing the long-term thinking and behavior patterns of its readers?

Do the readers quickly forget what they read on the blog, or does the information staywith them? Are the readers permanently haunted by what theyve read?

The essence of a bloggers value depends on the topics the blogger writes about. Is theblogger writing throw-away posts to get a laugh or generate traffic, or is there a serious

commitment to providing deep value? What is the nature of the bloggers value delivery?

Is it financial advice that could help a person become wealthy? Does it provide solutions

to important problems? Or is it mostly fluff?

And of course the volume of a bloggers value would be the quantity of words and posts

the blogger delivers.

Now extend this line of thinking to your life as a whole, well beyond the boundaries of

your career.

What is the ultimate impactof your life? How many lives are you touching? Are you aperson of influence? Or do you exist in relative obscurity?

What will be the endurance of your lifes value? Will your lifetime contributions turn out

to be largely insignificant? Or will your contributions ripple on for centuries? What ofyour value will survive your own death? What of your value will you have the potential

to retain after you die (assuming there is an afterlife of sorts)?

And finally, what will be the essence of your lifes value? What is the heart of your

contribution? Are you here to play follow the follower? Are you in pursuit of aworthwhile destiny? When you consciously consider the value youre providing, do you

feel empty and fearful or peaceful and fulfilled? What is the meaning behind your deeds?

Was that meaning consciously chosen?

You cannot optimize your productivity without consciously and deliberately optimizingthese factors. True productivity is far more than volume / time. If you neglect the

importance of impact, endurance, and essence, you doom yourself to the pursuit of

spinning your wheels faster and faster and missing the whole point of life. And the worst

part is that as you live, you will know this to be true. You will sense the hollowness andemptiness in all that you do. When you consider your output in light of the boundlessness

of time and space, it becomes nothing.

Essence is the single most important factor. Until you discover the true essence of yourlife, you can never really be productive. You can take for granted that any task you

perform will have a nonzero impact, endurance, and volume. Those factors may be very

small if the task is trivial, but theyll be greater than zero. However, if the core essence of

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any task amounts to zero, then your total productivity is zero. If you miss the point of

your life, your ultimate productivity is zero, no matter how hard you work and how well

you attempt to optimize all the other factors. If you gain the whole world and lose yoursoul, your ultimate payoff is zero.

That essence is your purpose.

This is why its so important to discover your lifes purpose. It doesnt matter how long it

takes. In fact, the only truly productive task you can perform before you know yourpurpose is to work to discover what that purpose is. The pursuit of essence is essential if

you wish to have a nonzero productivity.

Once you discover your essence, youll find that all those other factors begin to optimize

themselves very easily. Embracing essence creates passion, and passion increases impact,endurance, and volume. Passion also makes time seem to pass more slowly. Passion

provides the energy and attracts the resources to manage time more efficiently. Passion

allows you to see the present moment as inherently complete and perfect instead ofperceiving life as incomplete and imperfect. The discovery of essence automatically

optimizes productivity as a whole.

Find a person who knows and embraces their lifes purpose, and youll find a truly

productive person. But in the absence of purpose, youll find busy-ness, but neverproductivity the volume of output created might as well be tossed on the trash heap. It

will have no power to endure.

Purpose is rooted in the permanent, the timeless, the unbounded. It is the essence of what

is real. Purpose is conscious and alive. Outside of purpose you can work only with the

temporary, the timebound, the limited the ghost projections of reality but not realityitself.

Be productive. Spend your time discovering your essence, and then devote the rest of

your life to working from your essence. Then you will live and work with a sense ofboundless productivity because essence itself is boundless.

Productivity Improvement

What is productivity?

A simple way of looking at productivity in a business organization is to think of it in

terms of the productivity model below.

Essentially, productivity is a ratio to measure how well an organization (or individual,

industry, country) converts input resources (labor, materials, machines etc.) into goodsand services.

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This is usually expressed in ratios of inputs to outputs. That is (input) cost per (output)

good / service. It is not on its own a measure of how efficientthe conversion process is.

TheProductivity Conceptual Modelbelow, takes the form of a 'productivity tree'. Theroots denote the inputs to the system, the trunk the conversion process and the foliage and

fruits the systems outputs.

The successful management of this process, is ultimately the key to survival of any

organization. It should be the concern of and a development goal for all organizational

members, irrespective of their position.

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Productivity

From Wikipedia, the free encyclopedia

Jump to: navigation,searchFor productivity in linguistics, see Productivity (linguistics).

For biological productivity, see Primary production.

Comparison of average total productivity levels between theOECDmember states.Productivity is measured as GDPper hour worked. Blue bars = higher than OECD-

average productivity. Yellow bars = lower than average.

Productivity is a measure of output from a production process, per unit of input. Forexample, labor productivity is typically measured as a ratio of output per labor-hour, an

input. Productivity may be conceived of as a metric of the technical or engineeringefficiency of production. As such, the emphasis is on quantitative metrics of input, and

sometimes output. Productivity is distinct from metrics ofallocative efficiency, whichtake into account both the monetary value (price) of what is produced and the cost of

inputs used, and also distinct from metrics ofprofitability, which address the difference

between the revenues obtained from output and the expense associated with consumptionof inputs. (Courbois & Temple 1975, Gollop 1979, Kurosawa 1975, Pineda 1990, Saari

2006)

Contents

1 Economic growth and productivity

2 Main processes of a company

3 Surplus value as a measure of production profitability

4 Productivity model

5 Illustration of the real and income distribution processes

6 Depicting the development by time series

7 Measuring and interpreting partial productivity

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8 National productivity

o 8.1 Labour productivity and multi-factor productivity

o 8.2 Importance of national productivity growth

o 8.3 Sources of productivity growth

9 Aspects of productivity

o 9.1 Productivity studieso 9.2 Increases in productivity

9.2.1 Labor productivity

o 9.3 Marx on productivity

o 9.4 Productivity paradox

10 See also

11 Footnotes

12 References

13 External links

Economic growth and productivity

Components of economic growth (Saari 2006)

Activity can be identified with production and consumption. Production is a process ofcombining various immaterial and material inputs of production so as to produce tools for

consumption. The methods of combining the inputs of production in the process of

making output are called technology. Technology can be depicted mathematically by theproduction function which describes the function between input and output. The

production function depicts production performance and productivity is the metric for it.Measures may be applied with, for example, different technology to improve productivityand to raise production output.

With the help of the production function, it is possible to describe simply the mechanism

of economic growth. Economic growth is a production increase achieved by an economic

entity or nation. It is usually expressed as an annual growth percentage depicting (real)growth of the company output (per entity) or the national product (per nation). Economic

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growth is created by two factors so that it is appropriate to talk about the components of

growth. These components are an increase in production input and an increase in

productivity.(Genesca & Grifell 1992, Saari 2006)

The figure presents an economic growth process. By way of illustration, the proportions

shown in the figure are exaggerated. Reviewing the process in subsequent years(periods), one and two, it becomes evident that production has increased from Value T1

to Value T2. Both years can be described by a graph of production functions, eachfunction being named after the respective number of the year, i.e., one and two. Two

components are distinguishable in the output increase: the growth caused by an increase

in production input and the growth caused by an increase in productivity. Characteristicof the growth effected by an input increase is that the relation between output and input

remains unchanged. The output growth corresponding to a shift of the production

function is generated by the increase in productivity.

Accordingly, an increase in productivity is characterised by a shift of the production

function and a consequent change to the output/input relation. The formula of totalproductivity is normally written as follows:

Total productivity = Output quantity / Input quantity

According to this formula, changes in input and output have to be measured inclusive ofboth quantitative and qualitative changes. (Jorgenson andGriliches 1967). In practice,

quantitative and qualitative changes take place when relative quantities and relative

prices of different input and output factors alter. In order to accentuate qualitativechanges in output and input, the formula of total productivity shall be written as follows:

Total productivity = Output quality and quantity / Input quality and quantity

Main processes of a company

Main processes of a company (Saari 2006)

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A company can be divided into sub-processes in different ways; yet, the following five

are identified as main processes, each with a logic, objectives, theory and key figures of

its own. It is important to examine each of them individually, yet, as a part of the whole,in order to be able to measure and understand them. The main processes of a company are

as follows:

real process

income distribution process

production process

monetary process

market value process

Productivity is created in the real process, productivity gains are distributed in the incomedistribution process and these two processes constitute the production process. The

production process and its sub-processes, the real process and income distribution process

occur simultaneously, and only the production process is identifiable and measurable by

the traditional accounting practices. The real process and income distribution process canbe identified and measured by extra calculation, and this is why they need to be analysed

separately in order to understand the logic of production performance.

Real process generates the production output from input, and it can be described by

means of the production function. It refers to a series of events in production in whichproduction inputs of different quality and quantity are combined into products of different

quality and quantity. Products can be physical goods, immaterial services and most often

combinations of both. The characteristics created into the product by the manufacturerimply surplus value to the consumer, and on the basis of the price this value is shared by

the consumer and the producer in the marketplace. This is the mechanism through which

surplus value originates to the consumer and the producer likewise. Surplus value to theproducer is a result of the real process, and measured proportionally it means

productivity.

Income distribution process of the production refers to a series of events in which the unit

prices of constant-quality products and inputs alter causing a change in incomedistribution among those participating in the exchange. The magnitude of the change in

income distribution is directly proportionate to the change in prices of the output and

inputs and to their quantities. Productivity gains are distributed, for example, tocustomers as lower product sales prices or to staff as higher income pay. Davis has

deliberated (Davis 1955) the phenomenon of productivity, measurement of productivity,

distribution of productivity gains, and how to measure such gains. He refers to an article(1947, Journal of Accountancy, Feb. p. 94) suggesting that the measurement ofproductivity shall be developed so that it will indicate increases or decreases in the

productivity of the company and also the distribution of the fruits of production among

all parties at interest. According to Davis, the price system is a mechanism throughwhich productivity gains are distributed, and besides the business enterprise, receiving

parties may consist of its customers, staff and the suppliers of production inputs. In this

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article, the concept of distribution of the fruits of production by Davis is simply

referred to as production income distribution or shorter still as distribution.

The production process consists of the real process and the income distribution process. Aresult and a criterion of success of the production process is profitability. The profitability

of production is the share of the real process result the producer has been able to keep tohimself in the income distribution process. Factors describing the production process are

the components of profitability, i.e., returns and costs. They differ from the factors of thereal process in that the components of profitability are given at nominal prices whereas in

the real process the factors are at periodically fixed prices.

Monetary process refers to events related to financing the business. Market value process

refers to a series of events in which investors determine the market value of the companyin the investment markets.

Surplus value as a measure of production profitability

Profitability of production measured by surplus value (Saari 2006)

The scale of success run by a going concern is manifold, and there are no criteria thatmight be universally applicable to success. Nevertheless, there is one criterion by which

we can generalise the rate of success in production. This criterion is the ability to produce

surplus value. As a criterion of profitability, surplus value refers to the difference between

returns and costs, taking into consideration the costs of equity in addition to the costsincluded in the profit and loss statement as usual. Surplus value indicates that the output

has more value than the sacrifice made for it, in other words, the output value is higher

than the value (production costs) of the used inputs. If the surplus value is positive, the

owners profit expectation has been surpassed.

The table presents a surplus value calculation. This basic example is a simplified

profitability calculation used for illustration and modelling. Even as reduced, it comprises

all phenomena of a real measuring situation and most importantly the change in theoutput-input mix between two periods. Hence, the basic example works as an illustrative

scale model of production without any features of a real measuring situation being lost.

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In practice, there may be hundreds of products and inputs but the logic of measuring does

not differ from that presented in the basic example.

Both the absolute and relative surplus value have been calculated in the example.Absolute value is the difference of the output and input values and the relative value is

their relation, respectively. The surplus value calculation in the example is at a nominalprice, calculated at the market price of each period.

Productivity model

Productivity model (Saari 2006)

The next step is to describe aproductivity model (Courbois & Temple 1975, Gollop1979, Kurosawa 1975, Saari 1976, 2006) by help of which it is possible to calculate theresults of the real process, income distribution process and production process. The

starting point is a profitability calculation using surplus value as a criterion of

profitability. The surplus value calculation is the only valid measure for understanding theconnection between profitability and productivity or understanding the connection

between real process and production process. A valid measurement of total productivity

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necessitates considering all production inputs, and the surplus value calculation is the

only calculation to conform to the requirement.

The process of calculating is best understood by applying the clause of Ceteris paribus,i.e. "all other things being the same," stating that at a time only the impact of one

changing factor be introduced to the phenomenon being examined. Therefore, thecalculation can be presented as a process advancing step by step. First, the impacts of the

income distribution process are calculated, and then, the impacts of the real process onthe profitability of the production .

The first step of the calculation is to separate the impacts of the real process and the

income distribution process, respectively, from the change in profitability (285.12

266.00 = 19.12). This takes place by simply creating one auxiliary column (4) in which asurplus value calculation is compiled using the quantities of Period 1 and the prices of

Period 2. In the resulting profitability calculation, Columns 3 and 4 depict the impact of a

change in income distribution process on the profitability and in Columns 4 and 7 the

impact of a change in real process on the profitability.

Illustration of the real and income distribution

processes

Variables of production performance (Saari 2006)

Measurement results can be illustrated by models and graphic presentations. The

following figure illustrates the connections between the processes by means of indexes

describing the change. A presentation by means of an index is illustrative because themagnitudes of the changes are commensurate. Figures are from the above calculation

example of the production model. (Loggerenberg van et al. 1982. Saari 2006).

The nine most central key figures depicting changes in production performance can be

presented as shown in Figure. Vertical lines depict the key figures of the real process,production process and income distribution process. Key figures in the production

process are a result of the real process and the income distribution process. Horizontal

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lines show the changes in input and output processes and their impact on profitability.

The logic behind the figure is simple. Squares in the corners refer to initial calculation

data. Profitability figures are obtained by dividing the output figures by the input figuresin each process. After this, the production process figures are obtained by multiplying the

figures of the real and income distribution processes.

Depicting the development by time series

Productivity and income distribution development (Saari 2006)

Development in the real process, income distribution process and production process canbe illustrated by means of time series. (Kendrick 1984, Saari 2006) The principle of a

time series is to describe, for example, the profitability of production annually by means

of a relative surplus value and also to explain how profitability was produced as a

consequence of productivity development and income distribution. A time series can becomposed using the chain indexes as seen in the following.

Now the intention is to draw up the time series for the ten periods in order to express the

annual profitability of production by help of productivity and income distributiondevelopment. With the time series it is possible to prove that productivity of the real

process is the distributable result of production, and profitability is the share remaining in

the company after income distribution between the company and interested parties

participating in the exchange.

The graph shows how profitability depends on the development of productivity and

income distribution. Productivity figures are fictional but in practice they are perfectlyfeasible indicating an annual growth of 1.5 per cent on average. Growth potentials inproductivity vary greatly by industry, and as a whole, they are directly proportionate to

the technical development in the branch. Fast-developing industries attain stronger

growth in productivity. This is a traditional way of thinking. Today we understand that

human and social capitals together with competition have a significant impact onproductivity growth. In any case, productivity grows in small steps. By the accurate

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measurement of productivity, it is possible to appreciate these small changes and create

an organisation culture where continuous improvement is a common value.

Measuring and interpreting partial productivity

Measurement of partial productivity refers to the measurement solutions which do notmeet the requirements of total productivity measurement, yet, being practicable as

indicators of total productivity. In practice, measurement in production means measures

of partial productivity. In that case, the objects of measurement are components of totalproductivity, and interpreted correctly, these components are indicative of productivity

development. The term of partial productivity illustrates well the fact that total

productivity is only measured partially or approximately. In a way, measurements aredefective but, by understanding the logic of total productivity, it is possible to interpret

correctly the results of partial productivity and to benefit from them in practical

situations.

Comparison of basic measure types (Saari 2006)

Typical solutions of partial productivity are:

1. Single-factor productivity2. Value-added productivity3. Unit cost accounting

4. Efficiency ratios

5. Managerial control ratio system

Single-factor productivity refers to the measurement of productivity that is a ratio of

output and one input factor. A most well-known measure of single-factor productivity is

the measure of output per work input, describing work productivity. Sometimes it is

practical to employ the value added as output. Productivity measured in this way is calledValue-added productivity. Also, productivity can be examined in cost accounting using

Unit costs. Then it is mostly a question of exploiting data from standard cost accountingfor productivity measurements. Efficiency ratios, which tell something about the ratiobetween the value produced and the sacrifices made for it, are available in large numbers.

Managerial control ratio systems are composed of single measures which are interpreted

in parallel with other measures related to the subject. Ratios may be related to anysuccess factor of the area of responsibility, such as profitability, quality, position on the

market, etc. Ratios may be combined to form one whole using simple rules, hence,

creating a key figure system.

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The measures of partial productivity are physical measures, nominal price value measures

and fixed price value measures. These measures differ from one another by the variables

they measure and by the variables excluded from measurements. By excluding variablesfrom measurement makes it possible to better focus the measurement on a given variable,

yet, this means a more narrow approach. The table below was compiled to compare the

basic types of measurement. The first column presents the measure types, the second thevariables being measured, and the third column gives the variables excluded from

measurement.

National productivity

Productivity measures are often used to indicate the capacity of a nation to harness itshuman and physical resources to generate economic growth. Productivity measures are

key indicators of economic performance and there is strong interest in comparing them

internationally. The OECD publishes an annual Compendium of Productivity Indicatorsthat includes both labour and multi-factor measures of productivity.

Labour productivity and multi-factor productivity

Labour productivity is the ratio of (the real value of) output to the input of labour. Where

possible, hours worked, rather than the numbers of employees, is used as the measure of

labour input. With an increase in part-time employment, hours worked provides the more

accurate measure of labour input. Labour productivity should be interpreted verycarefully if used as a measure of efficiency. In particular, it reflects more than just the

efficiency or productivity of workers. Labour productivity is the ratio of output to labour

input; and output is influenced by many factors that are outside of workers' influence,including the nature and amount of capital equipment that is available, the introduction of

new technologies, and management practices.

Multifactor productivity is the ratio of the real value of output to the combined input of

labour and capital. Sometimes this measure is referred to as total factor productivity. Inprinciple, multifactor productivity is a better indicator of efficiency. It measures how

efficiently and effectively the main factors of production - labour and capital - combine to

generate output. However, in some circumstances, robust measures of capital input can behard to find.

Labour productivity and multifactor productivity both increase over the long term.

Usually, the growth in labour productivity exceeds the growth in multifactor productivity,

reflecting the influence of relatively rapid growth of capital on labour productivity.

Importance of national productivity growth

Productivity growth is a crucial source of growth in living standards. Productivity growth

means more value is added in production and this means more income is available to bedistributed.

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At a firm or industry level, the benefits of productivity growth can be distributed in a

number of different ways:

to the workforce through better wages and conditions;

to shareholders and superannuation funds through increased profits and dividend

distributions; to customers through lower prices; to the environment through more stringent environmental protection; and

to governments through increases in tax payments (which can be used to fund

social and environmental programs).

Productivity growth is important to the firm because it means that it can meet its (perhaps

growing) obligations to workers, shareholders, and governments (taxes and regulation),

and still remain competitive or even improve its competitiveness in the market place.

There are essentially two ways to promote growth in output:

bring additional inputs into production; or increase productivity.

Adding more inputs will not increase the income earned per unit of input (unless there are

increasing returns to scale). In fact, it is likely to mean lower average wages and lower

rates of profit.

But, when there is productivity growth, even the existing commitment of resourcesgenerates more output and income. Income generated per unit of input increases.

Additional resources are also attracted into production and can be profitably employed.

At the national level, productivity growth raises living standards because more realincome improves people's ability to purchase goods and services (whether they arenecessities or luxuries), enjoy leisure, improve housing and education and contribute to

social and environmental programs.

Productivity isn't everything, but in the long run it is almost everything. A country'sability to improve its standard of living over time depends almost entirely on its ability to

raise its output per worker. World War II veterans came home to an economy that doubled

its productivity over the next 25 years; as a result, they found themselves achieving living

standards their parents had never imagined. Vietnam veterans came home to an economythat raised its productivity less than 10 percent in 15 years; as a result, they found

themselves living no better - and in many cases worse - than their parents (Krugman,1992). Paul Krugman 1992, The Age of Diminished Expectations: US Economic Policyin the 1980s, MIT Press, Cambridge, p. 9.

Over long periods of time, small differences in rates of productivity growth compound,

like interest in a bank account, and can make an enormous difference to a society's

prosperity. Nothing contributes more to reduction of poverty, to increases in leisure, andto the country's ability to finance education, public health, environment and the arts

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(Blinder and Baumol, 1993). Alan Blinder and William Baumol 1993, Economics:

Principles and Policy, Harcourt Brace Jovanovich, San Diego, p. 778.

Sources of productivity growth

In the most immediate sense, productivity is determined by:

the available technology or know-how for converting resources into outputs

desired in an economy; and

the way in which resources are organised in firms and industries to produce goods

and services.

Average productivity can improve as firms move toward the best available technology;

plants and firms with poor productivity performance cease operation; and as newtechnologies become available. Firms can change organisational structures (eg core

functions and supplier relationships), management systems and work arrangements to

take the best advantage of new technologies and changing market opportunities. Anation's average productivity level can also be affected by the movement of resources

from low-productivity to high-productivity industries and activities.

National productivity growth stems from a complex interaction of factors. As just

outlined, some of the most important immediate factors include technological change,organisational change, industry restructuring and resource reallocation, as well as

economies of scale and scope. Over time, other factors such as research and development

and innovative effort, the development of human capital through education, andincentives from stronger competition promote the search for productivity improvements

and the ability to achieve them. Ultimately, many policy, institutional and cultural factors

determine a nation's success in improving productivity.

Aspects of productivity

Productivity studies

Productivity studies analyze technical processes and engineering relationships such ashow much of an output can be produced in a specified period of time (see also

Taylorism). It is related to the concept ofefficiency. While productivity is the amount of

output produced relative to the amount of resources (time and money) that go into the

production, efficiency is the value of output relative to the cost of inputs used.Productivity improves when the quantity of output increases relative to the quantity of

input. Efficiency improves, when the cost of inputs used is reduced relative the value of

output. A change in the price of inputs might lead a firm to change the mix of inputs used,in order to reduce the cost of inputs used, and improve efficiency, without actually

increasing the quantity of output relative the quantity of inputs. A change in technology,

however, might allow a firm to increase output with a given quantity of inputs; such anincrease in productivity would be more technically efficient, but might not reflect any

change in allocative efficiency.

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Increases in productivity

Companies can increase productivity in a variety of ways. The most obvious methods

involve automation and computerization which minimize the tasks that must be

performed by employees. Recently, less obvious techniques are being employed that

involve ergonomic design and worker comfort. A comfortable employee, the theorymaintains, can produce more than a counterpart who struggles through the day. In fact,

some studies claim that measures such as raising workplace temperature can have a

drastic effect on office productivity. Experiments done by the Japanese Shiseidocorporation also suggested that productivity could be increased by means of perfuming or

deodorising the air conditioning system of workplaces. Increases in productivity also can

influence society more broadly, by improving living standards, and creating income.They are central to the process generatingeconomic growthandcapital accumulation. A

new theory suggests that the increased contribution that productivity has on economic

growth is largely due to the relatively high price of technology and its exportation viatrade, as well as domestic use due to high demand, rather than attributing it to micro

economic efficiency theories which tend to downsize economic growth and reduce laborproductivity for the most part. Many economists see the economic expansion of the later1990s in the United States as being allowed by the massive increase in worker

productivity that occurred during that period. The growth inaggregate supply allowed

increases in aggregate demand and decreases inunemployment at the same time that

inflation remained stable. Others emphasize drastic changes in patterns of socialbehaviour resulting from new communication technologies and changed male-female

relationships.

Labor productivity

Main article: Labour productivity

Labour productivity is generally speaking held to be the same as the "average product oflabor" (average output per worker or per worker-hour, an output which could be

measured in physical terms or in price terms). It is not the same as themarginal product

of labor, which refers to the increase in output that results from a corresponding increasein labor input. The qualitative aspects of labor productivity such as creativity, innovation,

teamwork, improved quality of work and the effects on other areas in a company are

more difficult to measure.

Marx on productivity

Main article: labor theory of value

In Karl Marx's labor theory of value, the concept of capital productivity is rejected as an

instance ofreification, and replaced with the concepts of the organic composition ofcapital and the value product of labor. A sharp distinction is drawn by Marx for the

productivity oflaborin terms ofphysicaloutputs produced, and the value orprice of

those outputs. A small physical output might create a large value, while a large physical

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output might create only a small value - with obvious consequences for the way the labor

producing it would be rewarded in the marketplace. Moreover if a large output value was

created by people, this did not necessarily have anything to do with theirphysical

productivity; it could be just due to the favorable valuation of that output when traded in

markets. Therefore, merely focusing on an output value realised, to assess productivity,

might lead to mistaken conclusions. In general, Marx rejected the possibility of a conceptof productivity that would be completely neutral and unbiased by the interests or norms

of different social classes. At best, one could say that objectively, some practices in a

society weregenerally regardedas more or less productive, or as improving productivity- irrespective of whether this was really true. In other words, productivity was always

interpreted from some definite point of view. Typically, Marx suggested in his critique of

political economy, only the benefits of raising productivity were focused on, rather than

the human (or environmental) costs involved. Thus, Marx could even find somesympathy for the Luddites, and he introduced the critical concept of the rate of

exploitationof human labour powerto balance the obvious economic progress resulting

from an increase in theproductive forces of labor.

Productivity paradox

Main article: Productivity paradox

Despite the proliferation of computers, there has not been any observable increases inproductivity as a result.[1] One hypothesis to explain this is that computers are productive,

yet their productive gains are realized only after a lag period, during which

complementary capital investments must be developed to allow for the use of computersto their full potential. Another hypothesis states that computers are simply not very

productivity enhancing because they require time, a scarce complementary human input.

This theory holds that although computers perform a variety of tasks, these tasks are notdone in any particularly new or efficient manner, but rather they are only done faster. It

has also been argued that computer automation just facilitates ever more complex

bureaucracies and regulation, and therefore produces a net reduction in realproductivity. [2] Another explanation is that knowledge work productivity and IT

productivity are linked, and that without improving knowledge work productivity, IT

productivity does not have a governing mechanism.[clarification needed]

SOCIAL, IMPLICATIONS OF WASTE MANAGEMENT

Introduction

Waste Management (WM) is a dynamically emerging field with vaste scope. The

growing urbanization and industrialization is making WM a complex problem with

serious sociological, ecological and economic implications. A sustained effort is neededto restore the socio-ecological balance of nature in order to optimally harness the

available resources.

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This paper emphasizes to deal with the problem of waste in totality considering its

technical as well as social aspects and highlighting the social implications of effective

WM. A sort of social cost-benefit analysis should be done prior to the implementation ofany W M programme. It has been emphasized that in the socio-economic resource

structure of India, Management of waste plays an important role.

Waste Management: An Overview

From system's view point, waste has been visualized as any unnecessary input to or anyundesirable output from any system encompassing all types of resources, viz., manpower,

material energy, space, time, capital, utilities and services, data and information etc. The

resource-based classification of waste is shown in Figure 1. Waste Management (WM) is

conceptualized as a multidisciplinary activity to minimize the overall wastivity of thesystem under consideration (1, 2, and 5). A systematic approach to WM encompassing

the waste of all kinds of resources at all stages should be adopted. However, as the

material constitutes a major faction of the total product cost, material wastes are of

critical importance.

Complementarity of Waste Management and Resource Management

A system basically takes some input, process it and gives the desired output, as shown in

Figure 2 i.e., some input is essential, in whatever form, for the functioning of a system.An ideal system is conceptualized to transform the total input into useful or desirable

output. In view of the known physical laws of nature the existence of an ideal system is

not possible, i.e. 100 per cent utilization of resources is not practically possible for any

system. To paraphrase, some waste is inevitable in the functioning of any system.

The main objective of WM is to minimize the waste this aiming at the ideal system, whilethe resource management aims to maximize the utilization of the resources. The goal of

waste and resource management is same, i.e., optimal utilization of the availableresources for higher efficiency and growth of the system, but the approaches are different.

The relationship of waste and resource management is shown in Figure 3. It can be said

that waste and resource management are complementary to each other. If one is primal

formulation of a problem, the other is dual.

Concept of Wastivity

An ideal or perfect system will be one that consumes just the right amount of resources,

leaving no idle, unutilized (nonrecoverable) or lost resource, or any undesirable output.The concept of "wastivity" which is yet in the rudimentary stages may prove to be a goodmeasure of performance, both at macro and micro levels, and will be helpful in the sound

planning and monitoring of various systems at different levels of hierarchy.

"Wastivity of any system is defined as the ratio of the waste to the input"?

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Depending upon the level of waste under consideration the wastivity may be categorized

as gross wastivity and net wastivity. The wastivity for each type of input indirectlyassesses the productivity of each type of input. Both productivity and wastivity are

complementary to each other, which bears in it the inherent cause-effect phenomenon.

The cause, i.e. wastivity is checked, the effect, i.e. productivity, will automatically beimproved.

The Functional Elements of Waste Management

The problems associated with the management of waste in today's society are complex

and diverse in nature. For an effective and orderly management of wastes the

fundamental aspects and relationships must be identified and clearly understood. The

efficient WM comprises the guide identification of waste generated/caused, economicreduction, efficient collection and handling, optimal sense and recycling, and effective

disposal of waste leaving no environmental problems. WM can thus be functionallyclassified into five basic elements, viz., generation, reduction collection, recycling and

disposal. However, Waste Management (WM) should be viewed in totality considering

the inter-relationship of basic functional elements/ systems as shown in Figure 4. One ofthe objectives of WM is to optimise these basic functional systems to provide the most

efficient and economic solution, commensurate with the constraints imposed.

By considering each element separately it is possible to:

(i) Identify the fundamental aspects and relationships involved in each element:(ii) Develop, wherever possible, quantifiable relationships for the purpose of makingengineering comparisons, analysis and evaluation.

Socio-economic Benefits of Waste Management Programmes

Some of the social and economic benefits of effective WM programmes and systems are

as follows:

i. Cheaper products due to increased productivity. Reduced scarcity of materials by wayof material conservations.

ii. Economic gains by salvaging waste materials.iii. Introduction of newer products by recycling/reusing wastes.iv. Relief from energy crisis.

v. More hygienic, safe and pollution free environment.

vi. Lesser public nuisance due to reduction in diseases.vii. Neat, clean and comfortable living conditions and higher standard of living.

viii. Reduced uncertainty, better prediction and control of natural calamities by nature

conservation.

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ix. Preservation of heritage, fauna and flora.

x. Control over unemployment and the development of a healthier society, and.

xi. Speedier and sustained national development and self-reliance.

Development of Economic System

Many a time growth and development of the economic system are treated as

synonymous. The consumption of resources is considered a growth measure. Moreconsumption does not necessarily mean more development. The development of the

economic system is dependent upon the effectiveness of utilization of the inputs, which is

very much related to the management of waste in the economy. It is advocated here that

the waste parameters deserve explicit consideration in view of their important role invarious systems. The need to incorporate waste as a parameter in socio-economic

planning can hardly be overemphasized by taking into consideration the crisis of vita fly

needed resources, balanced economic growth of the nation, and the awareness for a

cleaner and hygienic ****

The techno-economic structure has conventionally been concentrating on intermediate

means and intermediate ends. The ultimate means and ultimate ends in the spectrum, as

shown in Figure 5, (4) have most of the time been ignored. This has led to serious socialas well as ecological problems at both the ends. In order to minimize such socio-

ecological problems the base has to be widened to incorporate the ultimate means as well

as the ultimate end. WM can provide answer to interlink various stages from the ultimatemeans to the ultimate ends in an effective manner.

he low entropy resources are being consumed exorbitantly and in the process high

entropy wastes are generated. This is leading to a continuous increase of the entropy ofthe whole socio-economic system. This rate of growth of entropy has to be checked if thehuman race wants to survive for tong and at a higher level of development. The entropy

can be brought under control by managing the waste in the economic system effectively.

The technology and WM can be taken as a substitute of negentropy, (3) as thetechnological progress enables the economic extraction of lower grade natural resources

and improved technology and WM result in lower wastivity of the economy.

Socio-Technical System

From socio-technical system's viewpoint every organization is an integrated system

having interacting technical and social sub-systems as shown in Figure 6. Theorganization taken both the technical and social inputs, gives the output of technical as

well as social nature, and generates both the technical and the social system waste. The

relationship of technical and social system waste is shown in Figure 7. The technicalsystem's waste increase the social system's waste and vice versa. Waste, whether

technical or social, affects the social system within the system and the environment

through the links of quality, productivity and environmental pollution.

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In this regard selection of technology is an important managerial consideration. A wrong

choice of technology will lead to consequent waste of resources as well as cause social

problems. For example; if a capital intensive technology is selected, for a country likeIndia with vast amount of manpower available, in a sector where it is not needed, it will

result in the waste of capital, manpower and energy. Managers can play a vital role in the

selection of appropriate technology.

Social Responsibilities and Interfacing Problems

It is the social responsibility of every scientist, technologist and manager to design and

manage systems which are leading to minimum level of wastivity as shown in Figure 8.

There are two sub-systems in the technology cycle. One is technology development

system and the other is technology management system. Scientists, technologists andmanagers have their social responsibilities with respect to both the systems. However, the

scientists and technologists have higher responsibilities for the technology development

system, whereas the managers are more responsible for the technology management

system.Scientists and technologists fulfil their social responsibilities by designing anddeveloping technologies that minimize the wastivity, and there, meet the social needs of

the system and the environment in the best possible manner.

Manager's social responsibilities are also very wide, and by managing the system's wastethey contribute towards better performance of social system by obviating some

interfacing socio-economic problems such as resource crisis, environmental pollution,

psychological and social stresses.

Conclusion

The need and importance of WM in the socio-economic system has been emphasized andthe social implications of effective WM are highlighted. It is concluded that in order to

create awareness in this regard the engineering curricula should incorporate some topicson systems approach to WM and its socio-economic implications. It is hoped that, if the

professionals come out of the narrow conventional approach to WM and adopt a broader

systems approach to WM, it will help in the development of a better socio-economic

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Paper presented in the curriculum Development Workshop, New Delhi on Social

Responsibilities of Scientists, Technologists. Co-ordinator Prof Anuradha Sharam & Prof

Raka Sharan.

Many industries in India have also developed various technologies for disposal of waste,for e.g. Solid wastes and Fly ash etc has been discussed in this paper.

* Click here to have an idea about such technologies in one of the companies.

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Further Waste Management analysis

We have discussed the issues related to waste management in our earlier modules. Thesealso constitute future challenges for us. In response to government and public pressures,

the health care industry has in the past few years directed a significant effort toward the

proper and safe management of medical waste streams. Medical waste is classified as abio hazardous waste which may result in human infection and transfers of disease. This

also includes injury and infection with many viruses and the Humans Immunodeficiency

Virus to laundry workers, nurses, emergency personnel, and refuse workers who maycome into contact with medical waste.

In a recent survey conducted in the United States and Japan and reported by the world

health organization (WHO) (1994), it was found that injuries by sharps constitute about

1-2 % per annum for nurses and maintenance workers and 18 % per annum for outsidewaste management workers. In Japan, the survey indicated that injuries by sharps

constitute about 67% for in hospital waste handlers and 44% for outside waste

management workers.

In order to reduce the risks associated with medical waste, proper managementmechanism should be adopted by health care facilities to protect the health of the staff

within the medical facility, waste collection workers and the public once the waste has

left the facility for final disposal. These mechanisms include.

- Waste identification

- Segregation

- Storage and

- Treatment

However, as a first-step in the implementation of a waste management system, the

management of a medical facility should conduct an audit of the generated waste streams.

The purpose of this audit is to specify the locations of the waste generation points andtypes and amounts of generated waste. An accurate estimate of the medical waste

amounts provides the management of a health care facility the tools for.

1. Predicting the cost of operating its medical waste management system in relation to the

fees for waste transport, treatment and disposal.

2. Improving environmental performance by monitoring the amounts of generated waste

from each medical activity, and undertaking proper measures to enforce waste quantity

minimization.

WHO/ UNEP (1997), the World Health Organization has adopted the followingdefinitions.

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Medical activities: - any practices related to the diagnosis, monitoring, treatment or

prevention of disease or alleviation of handicap in human or animals. These include

emergency services, nursing, dental, veterinary, pharmaceutical or similar practices,investigation, teaching and research, or the collection of blood for transfusion.

Medical waste: the total waste streams arising form medical activities which consistwholly or partly human or animal tissue, blood or other bodily fluids, excretions, drugs or

other pharmaceutical products, swabs or dressings, or syringes, needles or other sharpinstruments, being waste which unless rendered safe, may prove hazardous or infectious

to any person coming into contact with it.

Healthcare or medical facilities: the sites carrying out all kinds of medical activities as

defined above. These include, but not limited to, hospitals, healthcare centres, medicaland dental clinics, laboratories, blood banks, pharmacies etc.

The WHO regional guidelines (1994) presents some examples of heath care wasteclassification systems in the western pacific countries. Accordingly a sound approach for

classifying wastes for the purposes of determining their quantities is to adopt

classification system which corresponds to the locally implemented methods for waste

collection, treatment and disposal.

Waste management and sustainable development:

Kofi A Anan (2002) observed Sustainable development rests on three pillars: economic

growth, social progress and protection of our environment and natural resources. When

the idea first burst onto the scene in 1987 with the publication of our common future, it

was meant to go beyond the ecosystem approaches of the past, which put environmentalissues on the political map but did not take fully into account these other key concerns.

Despite this advance, and despite considerable efforts and significant achievements sincethe "Earth summit "the latest readings reveal a planet still in need of intensive care.

Poverty, pollution and population growth; rural poverty and rapid urbanization; wasteful

consumption habits and growing demands for water, land and energy continue to place

intense pressures on the planet's life support systems, threatening our ability to achievesustainable development.

There is little chance of protecting the environment without a greater sense of mutual

responsibility, especially in an age of interdependence, and especially since theenvironmental "footprint" left by some societies is so much larger than that left by others.

Leadership qualities coupled with technical competence are a potent prescription for

engineers and managers shouldering the heavy responsibility of socio-economicdevelopment of the country. Corporations are driven by vast engine of consumer

satisfaction; many are also responsible for environmental destruction. Corporations and

businesses also generate pollution, contributing to what has been called the "trash crisis".

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They have not only been accused of generating trust, but also environmental racism, a

charge that turns our attention to where that trash is going and has gone. According to

Benjaarn F-Charis Jr. "a deliberate getting people of color communities for toxic wastefacilities" and an "official sanctioning of the life- threatening presence of poisons and

pollutants in our communities". Minorities bear a greater burden form lead poisoning

airborne toxins and contaminated drinking water. Says Deeohn Ferris an attorney for theNational Wildlife Federation.

The condition is called as "environmental racism" an environmental researcher hope

Taylor says "small dirty industries have a tendency to locate in minority communities for

two reasons; one is cheap labor and two relative lack of knowledge about environmentalconcerns ".

Environmental Racism analyzes the pattern of placing hazardous facilities in

communities in many countries and also makes a connection between this phenomenon

and dumping hazardous wastes in third - world countries often a discussion of ethics in

business or corporate social responsibility is reduced to a stank conflict between makingprofits for shareholders vs. assuming social responsibilities to the entire community

(Grossman, 1971)

Milton Friedman (1970) a Nobel Prize economist raises the question whether businesshas social responsibilities? Some business people have expressed the view that they ought

to not merely be concerned with maximizing profits but also concerned about

"discrimination" and "Avoiding pollution". According to Friedman corporations have"artificial responsibilities "but not "but as a whole". He argues that they are employees of

stakeholders and that their duty is to make as much money as possible comparable with

the "basic rules of the society "those embodied in law and those embodies in ethical

custom. The executive is thus just an agent of those who own the corporation and hisprimary responsibility is to them. He must not make corporate decisions in manners that

does not promote " the best interests of his employers" and if he does he is spending

someone else's money to promote a "social objective and this in Friedman's viewamounts to fixation a function reserved in our political system to the government. If an

executive so acts, he is taxing people without being represented. Fried man thinks this is

typical or socialism. He claims that executives may lack expertise to make suchdecisions, for e.g., how to might inflation or to ascertain how much stakeholders advocate

pursuit of social objectives.

There is a counter argument to Friedman's view's that has been given by a legal theorist

Christopher Stone. He says that "the managers of the corporation are to be steered almostwholly by profit, rather than what they think proper for society on the whole". Stone

takes the position that it may be better to leave the running of corporations to the market

and the law rather than "to have corporate managers implementing their own vague andvarious notions of what is best. However, this view applies only if the law and the market

can keep corporations within "desirable bounds" of social responsibilities.

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One example of these circumstances is the displacing of third-world farmers by huge

agribusiness companies in order to grow crops for export to other countries. Stakeholder

is a relatively new term invented to contrast with "Shareholder". This suggests thatmany individuals and groups beside shareholder are interest groups, retirees, host

communities and customers to name a few.

Thus, aims of CRS areas are as follows:

Companies now perform in non-financial arenas such as human rights, business

ethics, environmental policies, corporate contributions, community development,

corporate governance, and workplace issues.

Social and environmental performances are considered side by side with financialperformance. From local economic development concerns to international human rights

policies, companies are being held accountable for their actions and their impact.

Companies are also more transparent in disclosing and communicating their policiesand practices as these impact employees, communities, and the environment.

In the new global economy, companies that are responsive to the demands of all of their

stakeholders are arguably better positioned to achieve long-term financial success. It is no

longer optional for a company to communicate its environmental and social impacts; suchinformation is pertinent in an information-driven economy, and improved communication

has become critical for sustainable business growth.

CSR has become the password to not only overcome competition but to ensuresustainable growth. It has been supported not only by the shareholders but stakeholdersby and large encompassing the whole community. Corporate Virtue Is In is the slogan

as it offers so many advantages including a hike in profits.

CSR is the point of convergence of various initiatives aimed at ensuring socio-economic

development of the community which would be livelihood oriented as a whole in acredible & sustainable manner.

The above discussion suggests that there is Benefits of CSR too. Some of these are

presented below:

o Improved financial performance

o Reduced costs

o Enhanced brand image and reputation

o Increased sales and customer loyalty

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o Customer satisfaction

o Increased productivity and quality

o Increased ability to attract and retain employees

o Reduced regulatory oversight

o Brand Visibility, recognition and awareness

o Increased market share

o Favourable positioning

o Competitive mileage

o More engaged investors

o Environmental sustainability

o Forging of partnerships

According to Wikipedia encyclopedia, corporate social responsibility (CSR) is anexpression used to describe what some see as a company's obligation to be sensitive to

the needs of all of its stakeholders in its business operations. The principle is closely

linked with the imperative of ensuring that these operations are "sustainable" i.e. that it is

recognized that it is necessary to take account not only of the financial/economic

dimension in decision making also the social and environmental consequences"_Sustainable Development"_.

A company's stakeholders are all those who are influenced by and/or can influence a

company's decisions and actions, both locally and globally. These include (but are not

limited to): employees, customers, suppliers, community organizations, subsidiaries andaffiliates, joint venture partners, local neighborhoods, investors, and shareholders (or a

sole owner).

Today's heightened interest in the proper role of businesses in society has been promoted

by increased sensitivity to environmental and ethical issues. Issues like environmental

damage, improper treatment of workers, and faulty production leading to customersinconvenience or danger, are highlighted in the media. In some countries Governmentregulation regarding environmental and social issues has increased, and standards and

laws are also often set at a supranational level. Some investors and investment fund

managers have begun to take account of a corporation's CSR policy in making investmentdecisions. Some consumers have become increasingly sensitive to the CSR performance

of the companies from which they buy their goods and services. These trends have

contributed to the pressure on companies to operate in an economically, socially and

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environmentally sustainable way... Corporations have often, in the past, spent money on

community projects, the endowment of scholarships, and the establishment of

Foundations. They have also often encouraged their employees to volunteer to take partin community work thereby create goodwill in the community which will directly

enhance the reputation of the company and strengthen its brand. CSR goes beyond

charity and requires that a responsible company will take into full account the impact onall stakeholders and on the environment when making decisions. This requires them to

balance the needs of all stakeholders with their need to make a profit and reward their

shareholders adequately. This holistic approach to business regards organizations as beingfull partners in their communities.

The benefits of CSR to businesses vary depending on the nature of the enterprise, and are

typically very difficult to quantify. It should be noted that the definition of CSR usedwithin business can vary from the strict 'stakeholder impacts' definition and will often

include charitable efforts and volunteering.

The Environment issues for CSR are likely rest on one or more of these arguments these

are:-

- Human resources- Risk management

- Brand differentiation

- License to operate

- Diverting attention

Corporate Social Responsibility can be an important aid to recruitment and retention,

particularly within the competitive graduate market in the environment.

Managing risk is a central part of many corporate strategies. Reputations that take

decades to build up can be ruined in hours through incidents such as corruption scandalsor environmental accidents. These events can also draw unwanted attention from

regulators, courts, governments and media. Building a genuine culture of 'doing the right

thing' within a corporation can offset these risks.

In crowded marketplaces companies strive for environmental factors, which can separate

them from the competition in the minds of consumers.

By taking substantive voluntary steps corporations can persuade governments and the

wider public that they are taking current issues like health, safety, diversity or the

environment seriously and so avoid intervention.

Major corporations which have existing reputation problems due to their core business

activities may engage in high-profile CSR programs to draw attention away from theirperceived negative impacts. Thus, as part in health initiatives corporations have installed

very visible wind-turbines on the roofs of some petrol stations in some countries.

Though CSR is a widely talked about concept, there are still many criticisms against it.

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Some critics of CSR, such as the economist Milton Friedman, argue that a corporation's

principal purpose is to maximize returns to its shareholders, whilst obeying the laws of

the countries within which it works. Others argue that the only reason corporations put inplace social projects is utilitarian; that they see a commercial benefit in raising their

reputation with the public or with government. Proponents of CSR, however, would

suggest a number of reasons why self-interested corporations, seeking to solely tomaximize profits are unable to advance the interests of society as a whole.

Key challenges to the idea of CSR include: - the rule of corporate law that a corporation'sdirectors are prohibited from any activity that would reduce profits - other mechanisms

established to manage the principal-agent problem, such as accounting oversight, stock

options, performance evaluations, deferred compensation and other mechanisms to

increase accountability to shareholders.

There are various views regarding CSR.

Some would argue that it is self-evidently "good" that businesses should seek to minimizeany negative social and environmental impact resulting from their economic activity. It

can also be beneficial for a company's reputation to publicize (for example) anyenvironmentally beneficial business activities. A company which develops new engine

technology to reduce fuel consumption will be able to promote its CSR credentials as

well as increase profits.

Some commentators are cynical about corporations' commitment to CSR and Sustainable

Development and say that the idea of an "Ethical company" is an oxymoron.

But as with any process based on the collective activities of communities of human

beings (as companies are) there is no "one size fits all". In different countries, there will

be different priorities, and values that will shape how business act.

There is a growing global role the pressure on business to play a role in social issues will

continue to grow. Over the last ten years, those institutions which have grown in powerand influence have been those which can operate effectively within a global sphere of

operations. These are effectively the corporate and the NGOs. Those institutions which

are predominantly tied to the nation state have been finding themselves increasingly

frustrated at their lack of ability to shape and manage events. These include nationalgovernments, police, judiciary and others.

There is a growing interest, therefore, in businesses taking a lead in addressing thoseissues in which they have an interest where national government have failed to come up

with a solution. The focus Unilever has on supporting a sustainable fisheries approach is

one example. Using the power of their supply chain, such companies are placed to have areal influence. National governments negotiating with each other have come up with no

solutions at all, and ever-depleting fish stocks. That is not to say businesses will

necessarily provide the answers - but awareness is growing that they are occasionally

better placed to do so than any other actors taking an interest.

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There are various arguments against Corporate Social Responsibility; some of the

arguments have been discussed below. These are as follows:

(Mallen Baker, April 2001)

Argument - I

Businesses are owned by their shareholders - any money they spend on so-called social

responsibility is effectively theft from those shareholders who can, after all, decid