As 2018 comes to a close, it’s a good time to take a look back and measure your successes over the past year.
For many businesses, a big part of that is looking back at financial results, and while that’s important, companies should take a holistic approach when it comes to measuring success.
“It’s become very apparent over the last several decades that firm performance in the eyes of stakeholders is more than just financial,” says Jill Brown, associate professor of management at Bentley University in Waltham, Mass. and co-author of "Business & Society: Ethics, Sustainability & Stakeholder Management" (Cengage; $249).
Importance is also placed on social performance indicators such as how they treat employees, how they add value to customers, and how they give back to their communities, she says.
This all falls under the umbrella of corporate social responsibility (CSR), which has four core elements: economic (i.e. is the business generating enough to support itself?); legal (is it abiding by the law?); ethical (is it abiding by ethical standards?); and philanthropic (is it giving back?), Brown says.
When measuring success, businesses should look at all four with a “stakeholder lens,” she says.
Lon T. Dolber, CEO of Holbrook-based American Portfolios Financial Services Inc., a full-service independent broker/dealer servicing financial advisors nationwide, says CSR is a core part of the company’s mission.
“The company gives me an opportunity to do good work in our community,” he says, noting the firm takes on various socially responsible initiatives annually.
For example, during 2018 he helped to raise $1.5 million in gifts and commitments for Harris, New York-based The Center for Discovery, a provider of health care and education services for children and adults with complex conditions, medical frailties, and autism spectrum disorders.
This year, American Portfolios also formed the AP Foundation as a formal way to manage the charitable contributions and socially responsible initiatives it’s been supporting for more than a decade.
Each year Dolber assesses the firm’s charitable efforts to see what it can expand upon. Most recently, the AP Foundation pledged $500,000 over five years to fund the American Portfolios Assistive Technology Lab housed in TCFD’s Technology Hub and Incubator.
Similarly, Debra Scala Giokas, director of marketing at Certilman Balin Adler & Hyman LLP in East Meadow, says the law firm also makes CSR a core part of its mission, taking on various firmwide activities annually.
“Everybody gets involved,” she says. “It’s part of our culture.”
Among its efforts, the firm is involved in a mentoring program with 15 students from a local Uniondale elementary school who are deemed at-risk.
Charitable outreach is just one key performance indicator used to measure success.
Identify which indicators to focus on based on industry standards and then tailor them based on management's direction, says Jeff Stern, principal at Eagle Business Solutions in Port Jefferson Station, a strategic management consulting firm.
Firms should select the indicators that make sense to them and those where the data are available so they can be measured, he says. For example, a good indicator for a sales team is leads-to-close ratio (i.e, what percent of leads given to a sales person are closed), Stern says.
Other nonfinancial indicators include those related to quality, customer satisfaction, inventory management and employee engagement, he says.
The smaller the company, the fewer the indicators that are manageable to measure, due to data constraints and time management issues, Stern says.
When assessing indicators, gather feedback from various stakeholders, such as customers, employees, etc., says Jeff Levy, president of Janusian Insights, a Plainview-based leadership and strategy consulting firm.
To get a broader picture, he suggests putting indicators into four quadrants each with its own measurable goals: one quadrant deals with people (i.e. employee retention, engagement); another with the organization’s internal processes (i.e. ability to deliver on time; quality, etc); another with innovation and new initiatives (new products, territories, etc.); and the fourth with specific business goals (i.e. revenue, profitability, etc.), Levy says.
Often companies just focus on the fourth quadrant, he says, noting, “they don't pay attention to the other three, which are the drivers of the financial results.”
Percentage of Americans who believe companies must do more than just make money; they must positively impact society as well
Source: 2018 Cone/Porter Novelli Purpose Study