New Community Metrics for Corporate “Value”

The current protests against Wall Street executives have made me
think about how we look at corporations, and perhaps how that might soon
expand. From the protests on television, you would think some people
want corporations to disappear from the face of the earth.  And at the
same time, people are protesting the lack of jobs. To me, this paradox
presents a big opportunity to shift our perspective.

Right now, corporations have a bad name because they are viewed as
large, impersonal, and even predatory. The Goldman Sachs hearings
emphasized the predatory nature, while all the rounds of layoff we’ve
been through as a country since 2008 have emphasized their
impersonality.

Most corporations, though, are small – probably as many as 95% of
them. They are the backbone of our capitalist system. And corporations
make important contributions to our lives. Obviously they create jobs,
and they can even create communities. Some corporations now have “fans”
that are more than just mouse clicks on a Facebook page –they can be
rabid supporters (think Apple). Facebook itself is a corporation, as is
Twitter.

Could our mixed feelings about corporations be due to the way they
are currently valued? The main metric has always been about how
profitable they are, and that’s an important metric, because without
profitability they wouldn’t stay around very long. But should it be the
sole metric we use in determining the worth of an enterprise?

There are
probably at least two other metrics we could use to evaluate the true
“value” of a corporation, and ones which may be inevitable as
corporations venture into the social networking space. After
profitability, the next important metric should be whether corporations
are making a
product or service that contributes meaningfully to the community or
society: Are they curing disease or creating it as a by-product? 
Are they making things better or just cheaper? Are they making life more
convenient or simply using up today’s resources at tomorrow’s expense?

Most corporations are anxious to assure us that their products and
services contribute to society somehow, although clearly some contribute
more than others. Increasing our focus on corporate contribution can
start to have a trim-tab effect on how management of companies, large
and small, prioritize the elements that go into their decision-making.
It can guide wise management regarding what and how a corporation
contributes to their communities of customers, consumers and even
shareholders.

The third metric for ascertaining true corporate value is about how 
corporations are behaving. This one is currently talked about the least,
if at all. What does a company’s aggregate behavior look like? What are
they modeling for other corporations and what message are they sending
to their communities at large? When a company that doesn’t even pay its
fair share of taxes takes Federal tax-rebate money and moves its
headquarters offshore to avoid any possible taxation, what example does
that set for others and what does it say about the very nature of
capitalism? To me personally, that’s bad behavior, and it doesn’t really
deserve a place within a definition of capitalism as an ideal.

Good behavior, on the other hand, might consist of paying your
employees a sustainable wage in proportion to the value they create for
the company (even it it reduces profits somewhat), and providing more
than just adequate working conditions. In an economic environment like
the one we are now in, should the principle of supply and demand dictate
that you offer an employee the lowest pay possible, just because you
can get away with it?  Or is there a preferable behavior: hire fewer
people, pay each a living wage, tie increased compensation to
contribution, and create a community of employees in your company that
knows they are appreciated and that will increase their productivity
accordingly, on their own.

You probably already know where my bias lies, because our company’s
product is designed to create and empower community
itself, in both corporations and in any organization that wants to
thrive. To me, one of the most exciting aspects of the explosion of
online social networking is that it is finally catching on beyond just
social life. Corporations are seeing the potential to increase their
bottom line by fostering communities both within their customer base and
also within their internal organizations. But with that financial
opportunity comes the flip side of the coin – thriving corporate-related
communities will tend to be much more aware of the other aspects of
what it means to be a community, beginning with an awareness of company
“contribution” and “behavior,” which is suddenly up for (often very
public) discussion. As these other values begin to take the social
networking spotlight, our corporations, large and small, will need to
step up to the plate and show us what they are made of. That’s a good
thing, and not a minute too soon.

This is a cross-post from the Wisdom of We blog at www.WisdomOfWe.com