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  • 08.06.09

The role of Metrics and ROI in Corporate Responsibility

“Metrics, metrics and more metrics. In many ways metrics drive the success of business. Multiple variables can be condensed to the common denominator of dollars and cents, pounds and pence. Many business failures could have been avoided for want of a business case.

“Metrics,
metrics and more metrics. In many ways metrics drive the success of
business. Multiple variables can be condensed to the common denominator
of dollars and cents, pounds and pence. Many business failures could
have been avoided for want of a business case.

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But,
the specificity of metrics also allow us to persuade ourselves that
there is more science and more certainty than there may really be and
that we fully understand the complex interactions of the real world.
There are solid business cases behind some of the most spectacular
business failures – perhaps those where metrics were allowed to lead
decisions rather than inform them.

This dilemma is magnified when viewed through the lens of corporate responsibility.”

This post is an external perspective I was invited to write on the topic of ROI and metrics, for GE’s just published 2008 Citizenship Report “Resetting Responsibilities.”

The rest of the piece follows:

“If
we allow them to, metrics can divorce us from the human impact of our
decisions. Corporate responsibility addresses exactly those issues that
are the biggest challenge for metrics. Corporate responsibility
involves taking account of human well being, of impact on communities
outside of the normal expertise of the business, of complex
interactions, of shared responsibility and of long-term cumulative
effects.

But
corporate responsibility will be relegated to the fringes if it does
not add value to the core business. The biggest impact of most
companies on society and on the environment is through the products and
services they put into the market. To engage here, we need to be able
to articulate compelling and sound rationales of the benefit for the
business as well as for the good achieved in the community. And to
remain relevant we need to be able to demonstrate this value using the
same tools of quantification as the mainstream business, including
return on investment.

Perhaps
this is amplified most when the return on investment for the business
and the benefit for the community are in conflict. Responsible
businesses must have the courage to identify, articulate and quantify
both sides of that conflict. In these situations though, to implement
corporate responsibility fully is to embrace that our decision-making
will not be conveniently packaged in a return on investment calculation
captured in a spreadsheet and some metrics. As with business as a
whole, metrics must not lead our decisions, they must inform them.”

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