Build CSR Metrics into Your Balanced Scorecard
To successfully monitor CSR activity and ensure its connection to organizational strategy, managers should build CSR metrics into their existing organizational dashboards.
Researchers François Meyssonnier, of the Université de Nantes, and Fana Rasolofo-Distler, of the Université Paul Verlaine, studied the implementation of the Balanced ScoreCard dashboard in a leading social housing company. They found that using the dashboard supported the integration of social and environmental aspects in companies.
The Balanced Scorecard
Management dashboards enable companies to track organizational activities and compare them against company goals. The Balanced Scorecard (BSC) is one of the most popular dashboards. BSC captures four dimensions of a given organization:
internal processes & innovation.For each of the four dimensions, companies must establish their own targets and pick the indicators that will reveal whether or not they have met their targets.
As a management tool, the Balanced Scorecard’s strength lies in its ability to balance a company’s financial metrics with information about its customers, internal processes and human capital. This multidimensional aspect of BSC makes it a more effective tool for sustainable development concerns than dashboards focused exclusively on financials.
Two Ways to Integrate CSR into Your Balanced Scorecard
There are two ways companies can integrate sustainable development indicators into the scorecard:
Build CSR metrics into each of the four categories.
Create a fifth category dedicated specifically to CSR.
The researchers discovered that sustainability activities described explicitly in the company’s strategic, annual dashboard were absent from the operational, monthly dashboard. The strategic dashboards are important for formalizing a shared vision and reference framework. The operational dashboards, on the other hand, present a vehicle for piloting sustainability-related activities. The operational dashboard has the effect of stimulating the organization to meet targets, aligning behaviour, assess the players and measure the performance of initiatives.
The researchers expressed their concern about leaving CSR information out of the operational dashboard: “[If] the pure CSR indicators are dissociated from economic performance and absent from operational piloting, CSR practices … are difficult to control and may prove ineffective.” Their advice to managers?
5 Steps to Integrate CSR and Financial Performance
Pick a management dashboard. Consider using the Balanced Scorecard as a piloting tool while building your sustainable development strategy.
Build a strategic dashboard. This captures your company’s high-level vision and provides an over-arching framework.
Build an operational dashboard to track specific programs or activities and reveal the concrete actions you need to take.
Pick meaningful indicators for the operational dashboard. Collaborate with departmental or division managers on picking the metrics to ensure the activities they’re being measured on align with organizational goals.
Integrate CSR indicators into the model’s existing four indicators. Rather than create a fifth dimensions dedicated to sustainability, the researchers suggest building CSR metrics directly into the financial, customer, learning and internal process categories. They will be more strategically aligned with organizational goals and directly connected to the the company’s economic performance.
Note for Researchers
Future research could investigate the implementation of the BSC dashboard into other types of organizations, whose central purpose is not tied to societal issues. Since the mission of the organization in this study was providing social housing, it already had a social focus, making it easier to integrate social indicators into their dashboard. Empirical studies could also be conducted to compare dashboards to other management tools for assisting companies with their sustainable development strategy.
Meyssonnier, F., & Rasolofo-Distler, F. (2011). Balanced scorecard et pilotage de la responsabilité sociale de l’entreprise: Retour d’expérience. Revue Française De Gestion, 37(211), 81-92,12-13.
This Research Insight is based on an academic article published in a French management journal. Identified and summarized by NBS’s French office in Montreal, this RI presents the unique perspective of French-speaking sustainability researchers and provides business insights otherwise unavailable to English speakers.