Scorecards and Corporate Responsibility

I am speaking today at the CSR and the Sustainability Scorecard 2010 conference in San Francisco. My views on the topic of scorecards and measurement are contrarian to the mainstream although hopefully not too much.  Most of these views have been shared on my blog addressing  various issues of measurement and corporate responsibility here, here, here and here.

In our field of CR, we use scorecards for rankings, ROI, KPIs, targeting employees, measuring project impact, labeling products and assessing vendors. But is it effective?  I believe that measuring and scoring raises a dilemma for CR professionals—one that can be summarized in three phases:

  • “You cannot manage what you cannot measure”
  • “Not everything that counts can be counted and not everything that can be counted counts”
  • “Lies, damn lies and statistics”

As I pulled together my thoughts for the presentation they coalesced in the following way.

  1. Measurement is critical to managing business. Numbers are the language of business, but they can also blind us to broader issues which may impact the way we approach and interpret measures. It is part of the role of CR practitioners to help the business world keep a broader and longer term perspective than is reflected by numbers alone.
  2. To break out of the mindset that CR is only philanthropy and ‘giving back to the community’ and instead have it become part of mainstream business, CR practitioners need to speak the same language as the rest of the business world and prove the value of their initiatives in quantifiable terms, integrated with the overall plans of the business (it is not lost on me that this is in tension with idea #1!)
  3. Sustainability, as a component of CR, lends itself to measurement; resource utilization can be measured and controlled within the framework of not consuming more now than is commensurate with the needs of future generations. These are quantifiable issues.
  4. But, if not used thoughtfully and represented accurately, measures can intentionally or unintentionally mislead and in so doing misdirect action. Corporate responsibility practitioners should take very seriously the responsibility of using data and statistics accurately.
  5. The broader issues of corporate responsibility, especially those concerned with ethical dilemmas, do not lend themselves to resolution by quantification. We should not allow the tempting attraction of challenges that can be measured in neat packages distract us from giving the necessary attention to those which cannot easily be measured.
  6. A strong focus on materiality is the key to avoiding the pitfalls.

I am interested in your views on measurement.  Please share your thoughts with me below.

  1. Comments 5

  2. Peter Hansen 3:55 am on October 29, 2010

    Your blog touches on something very interesting inside the world of CSR. Most companies see CSR as some sort of tick-box exercise. They know that they need to have a CSR policy, the know that it makes them look good, so they ask themselves what they need to do to achieve this goal and sits down to draw up an action plan. This action plan will involve various things that the company needs to do in order to achieve this. This could be something like: Getting involved with a local community project Have various fund-raising programs for charity Allowing staff a day per year to work for charity And so the list can go on. All very good and well intentioned projects, no doubt about that. A group of staff gets chosen to sit down to work on it and proceeds to do so successfully. Where it becomes interesting is here. The company I work for in the UK, is very unique. We donate set amounts of money to charity on the products we supply, amounts that are the equivalent of about 5% of our turnover. We are very successful in the SME world and have grown rapidly through a combination of our ethical profile, competitive pricing and a high service level. But we have very, very limited success with larger companies. Why? Well, the 5% "handicap" we have from our charitable donations means that we are inevitably more expensive than our competitors. The same companies who will make a big issue in their annual reports about their CSR policy will refuse to accept to pay a higher price for their products, despite knowing and understanding why the price is higher. Which all echoes the second (and to me most important) point that you are making. That businesses seem to often have a CSR policy because it is the "right thing to do", rather than because it is something they truly believe in.

  3. KevinMoss 9:02 am on October 29, 2010

    Thanks for taking the time to comment. Its very valuable to have such a well defined example. I do think large companies are trying to find the right balance between CR because it reflects the wider role of a company in society and CR because it has an ROI. I think your example reflects something different though, and that is the necessary divisions of responsibly that have to occur in the organization of a large company. Philanthropy, how much a company is willing to spend on it, and where they want the money to go, are a set of decisions made in one place. Cost, quality and sustainability of a product from a vendor/supplier is a set of decisions made somewhere else. It is very challenging for a large company to integrate those two sets of business decisions and separate budgets, to make a determination such as you need them to make. I suspect than an SME (and especially one that is owner managed) can combine those decisions and make that call more readily.

  4. Monica Nakielski 12:09 pm on December 14, 2010

    I do not believe your perspective is contrarian, but that of sound management practices. Additionally, I wanted to add to the discussion by highlighting that of all the five posts you missed the opportunity to highlight that this is a change management process. As you integrate ‘sustainability’ principles to your operations and everyday activities you consequently create a shift in behavior. During my time as a consultant for the K/N Balanced Scorecard Collaborative I had the opportunity to work with many organizations; Fortune 500, Government and not-for-profits designing and developing their sustainability strategy and scorecards. From my experience most of the value is derived from the design process and using the strategy map and scorecard as a communication tool for sharing progress and performance. The scorecard does help with metrics, but a measure selection process itself becomes an entirely different yet related effort. My advice to practitioners is to please remember the scorecard itself is nothing more than a tool for successful sustainability strategy execution. A hammer is also a tool and if it’s your only instrument you begin to treat everything like a nail. Just my .02. I look forward to your comments and questions. Cheers! Monica

  5. KevinMoss 9:13 am on December 17, 2010

    Thanks Monica, point well made.

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