Home » Perfection, Faith, Happiness…& Corporate Responsibility

There are some things in life that are pretty tough to measure. Perfection. Faith. Happiness. The same is true in business. Businesses struggle all the time to quantitatively understand brand value, human capital, corporate responsibility (CR) and more. Just as we have our own ways of assessing (or agonizing about) how perfect, faithful or happy we are, businesses haven’t stopped trying to quantify the seemingly unquantifiable. If you’re reading this blog post, it’s probably safe to assume that you’re either one of my friends being charitable or you’re engaged in the discussion about the need to measure the results of CR.

But can we give ourselves a break for a minute? Instead of looking for big answers to big questions, can we start small and apply the same approach we’d take with life’s immeasurables? If my pitch isn’t perfect, I might spend some more time on the mound. If I’m lacking faith, I might ponder what is making me doubt. If I am unhappy, I might try to exercise or laugh more. What if I can’t seem to identify the causal link between my CR initiative and increased profits?

While CR is rapidly becoming more prevalent and companies are investing in it more than ever, CROA’s 2010 Research on Corporate Responsibility Practices found that 70% of firms are not able to measure the impact of CR on the bottom line. It certainly seems like the net effect is good, but we don’t really know why. Having spent some time with corporations talking about CR and with NGOs implementing programs, here are three of my suspicions about why proving the business case for CR is so difficult:

1.     We’re Stuck in Big-Number-Land. I recently read The Numbers Game by Michael Blastland and Andrew Dilnot. The book deals with how the media and public process numbers. Chapter 2, “Size: It’s Personal,” looks at the deer-in-headlights reaction the public has to giant numbers and the way in which we tend to freeze rather than breathe, analyze and contextualize. It also gives several vivid examples of how, unfortunately, politicians and policy-makers take advantage of this tendency.

If you read the book, which I highly recommend if you haven’t done already, Blastland and Dilnot will continually ask you: is that a big number? While you might assume that six is a small number and 1,000,000,000 a big number, The Numbers Game will quickly turn that assumption on its head. It’s all about context.

I can’t tell you how many times I’ve seen corporations use the shock effect. On the first page of a CR report you’ll find a claim like: “$15 million spent for education and healthcare initiatives in 2011″ or “$150 million spent in [insert region] since 2006,” and so on.

If those figures (and reports for that matter) are to mean anything we have to ask: are those big numbers?

2.     External Variables are a Pain. Companies measure profit and NGOs measure impact. Profit goes up and down but impact isn’t so easy to follow. If an external variable, say, the price of oil, makes a company’s profits go down, the relationship between the two can be analyzed. The relationship between external variables and social initiatives can, however, be more complicated. For example, the price of oil might seemingly decrease the standard of living in a given country, but the standard of living might have actually been even worse without a social initiative in place. But how much worse?

To make matters more difficult, external variables of all kinds (global economic shifts, natural disasters, political instability) tend to affect the developing world more severely, potentially skewing the impact of projects. Unfortunately, most NGOs do not have the quantitative processes in place to untangle the two. This quantitative conundrum makes it difficult for companies as they try to trace the impact of their CR investments in, say, infrastructure, education or health, back to the bottom line.

3.     It’s so Far-Flung! There’s a reason why if you are interested in going into CR, most professional development resources will tell you that you have to be a “change-maker” and an “influencer.” While CR/sustainability is now often its own department or division, CR professionals are charged with persuading key personnel from all the far corners of the company and bringing them on board with sustainability. CR generates results for marketing, PR, HR, operations, finance…and the list goes on. Pulling all of these threads together in an easily quantifiable way is a challenge.

Here’s the good news: we don’t have to figure it out today. But let’s get the conversation going. In order to get at the big, elegant answer – that pesky causal connection – let’s talk more about what is wrong on a smaller, individual level first.  We may never be 100% perfect, faithful, or happy, but we can get closer.

Agree with me? Disagree with me? Want to talk about why you’re having trouble measuring? Comment here and attend the Commit!Forum 2011 where we’ll engage with professionals and business leaders on how to measure the return on responsibility.