« OLAP - Hotter Than Ever | Main | Google Style Access to Hyperion »
September 11, 2006
Corporate Social Responsibility
I have been doing interesting research to understand the impact of the multiple stakeholder approach on performance management. The topic of corporate social responsibility is prominent in this discussion. CSR is a highly debated subject, and generally not very well understood.
The worlds most influential thinkers do disagree on how to position CSR. Milton Friedmans opinion is that the social responsibility of corporations is to maximize profits. Managers are legal agents of stockholders, their sole duty is to maximize the financial return to them. CSR is essentially stealing from the stockholders. Kaplan and Norton state the same: private-sector organizations can use a homogeneous financial perspective, increase shareholder value.
Peter Drucker offers a slightly more nuanced view. He starts by saying that an organization is not entitled to put itself in the place of government, or to use its economic power to impose its values on the community. But he introduces one exception, when contributing to a social problem creates an opportunity for performance and results. This is when the management has or should have the competence and authority. Michael Porter comes to the same conclusion. Corporate success depend on the local environment, an appropriate infrastructure, the right education for employees, co-operation with suppliers, local legislation, etc. He adds todays companies ought to invest in corporate social responsibility as part of their business strategy to become more competitive”.
Lastly, there are the proponents of corporate social responsibility, as a goal by itself. John Elkington is famous for the concept of the Triple Bottom Line”: People, Planet, Profit. In contrast to Friedman, Drucker and partly Porter, Elkington starts with the premise of the social responsibility corporations have, as being part of society. And as every stakeholder in society has responsibilities for the society, so do corporations. This school of thought defines CSR as a necessity, where profitability but also social justice and ecological balance are equally crucial for survival. Organizations cannot be managed on financial results alone, as employees and customers are citizens as well. Perhaps the most influential organization representing the Triple Bottom Line school of thought is GRI (Global Reporting Initiative; part of the United Nations Environmental Programme), that has developed an elaborate framework for sustainability reporting for organizations to download and implement within their own organizations.
Whatever school of thought you represent, there is certainly a role for the social dimension of performance management, even if it is only avoiding the risk of being accused of violating labor laws or polluting the environment. We know that measurement drives behaviour. What gets measured gets done.
A clear call to action to study the templates you can download from GRIs website, www.globalreporting.org, even if your name is Friedman.
Posted by Frank Buytenkijk at September 11, 2006 1:18 AM
