Redesigning the Balanced Scorecard with CSR in Mind

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The visibility of the multinational corporation on the international scene dictates that it will be on the front line of consumer assessment of corporate behaviour. In fact, the triple bottom line concept has moved into the mainstream of corporate planning and shifted the balance of focus irreversibly from a myopic perspective on profit or environment alone, to a fully formed triangle between people, profit and planet - what I call the New Corporate Social Responsibility (New CSR).

The Redesigned Balanced Scorecard with CSR in Mind

While society has long been in need of a comprehensive theory of CSR, a theory is insufficient for implementing policy in a corporation. Implementation of such a model in practice requires a solid framework that integrates the theory into an operating business model, especially for the multinational firm. The balanced scorecard approach (BSC), a business practice designed to align corporate strategy and operating processes that is well-known to firms around the world, provides a solid and familiar foundation upon which to overlay an integrated model of CSR. The basic formula of identifying drivers and measures relating to the four traditional perspectives of growth and learning, customer, and financial are outlined in nine stages. My combination (illustrated above) succeeds in keeping the issues of society and environment front of mind for everyone in the organization.

The first major departure from the traditional model of BSC is the insertion of the sustainable environment perspective after the growth and learning perspective. This ensures that training and promotion policies set to promote the long term existence of the organization flow directly to maintaining the sustainable planet dimension. The second difference is the expansion of the customer perspective to incorporate all relevant stakeholders (i.e. more than just customers). Additionally, this perspective and the internal perspective have been transposed to ensure that policies and measures developed based on mission and vision goals, growth and learning initiatives, and sustainable environment elements support and are linked to the people dimension of the model. Logically, then, internal policies will develop in congruence with all preceding criteria. Finally, the financial rewards that accrue to the firm, the profit dimension, will undoubtedly derive from policies and procedures aligned with CSR initiatives and with the overall vision of the organization. Any individual in the firm will not fail to recognize and internalize the importance of sustainable behaviour as essential to the survival of the firm.

My recombined BSC framework provides managers with a transferable tool across international boundaries because it forces the user to integrate the entirety of the organization’s context into the framework, including external forces arising from differing cultural contexts inherent in international business. The real difficulties arise from determining timing and measurement criteria for each perspective, as is common even with the traditional BSC framework. It is widely accepted that implementing a BSC approach in any organization is no easy task. Any sustainability initiative must align with corporate goals and values, and must be led by the strategic apex of the organization, which, in turn, must recognize the strategic value of such policies. Additionally, as with any organizational change, it is incumbent upon the strategic apex of the firm to assess organizational readiness and develop a detailed plan for the change.
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Listening to CSR logic: the reconstruction of the global corporation

The argument is getting old. If you still think that CSR is about throwing money away, giving it to charity, or saving the planet despite the bottom line, you have not been listening properly. In reality, succumbing to the CSR movement is tantamount to accepting a changing socio-economic paradigm in the global business arena. The rules of the game have simply changed. CSR is not about trends; it is about globalization.

It is in part due to globalization and the rapid rise of the Internet that the century-old idea of Corporate Social Responsibility has received so much airtime of late. The fact is that today international and multinational corporations are subject to deep scrutiny since they involve and impact the world on a large scale. Our lives and our futures are wrapped up in the actions of these corporations.

There is no universally accepted definition of CSR today. Moreover, it goes by many other names: corporate sustainability, corporate sustainable development, corporate responsibility, corporate accountability, corporate stewardship, and corporate citizenship, to name a few. What began as an argument for philanthropy, and then changed to an argument for environmental protection, has evolved. As with most ideologies, it is dynamic and organic, changing with the addition of lessons learned. Proponents of the new paradigm talk about integrating and balancing profit, the environment, and society. The pay-off is the sustainability of the corporation itself – corporate optimization.

The fact is, we want our companies to make money this quarter to satisfy the wolves on Wall Street, but we also want our companies to be around fifty or one hundred years from now. In most cases, these desires involve incompatible stakeholders and, therefore, incompatible outcomes. That is, unless your executive team embraces the ideology promulgated by the new CSR movement, and integrates the vision throughout the organization.

CSR is about doing well while doing good. And western capitalist societies are the likeliest places for such a movement to take hold, for they are centres of excellence for constructive criticism, social challenges, freedom of speech, and “show me the money” mavericks. We are, after all, at the centre of the knowledge-based economy. If CSR can make it here, it can make it anywhere!

Innovation is the bailiwick of the knowledge-based economies, and globalization fuels this thirst for breakthroughs. CSR is helping to fuel this fire. It forces us to manage risks beyond the next quarter, and to leverage opportunities for corporate strategic planning. In fact, the triple bottom line concept has moved into the mainstream of corporate planning and shifted the balance of focus irreversibly from a myopic perspective on profit or environment alone, to a fully formed triangle between people, profit, and planet.

CSR is the new currency for corporate credibility. In a world where we are increasingly exposed to Enrons, credibility is a key factor for success. The fact that multinational firms have a global impact heightens the importance of promulgating a coherent, strategically aligned, and integrated global CSR policy.

The most certain thing about lasting change is that it is gradual and seamless – so that we only recognize the destination, not the journey. We are nearing the destination with regard to CSR. We all share in the finite resources of the planet, and we share them with generations yet unborn. To ignore or resist the paradigm shift is to jeopardize the very existence of our companies.

If you have not been listening properly, start listening now. Make a stakeholder list – an inclusive one; identify the impact on each stakeholder group; learn reporting and certification principles; design an integrated global CSR policy and create a CSR report; make someone accountable in your organization for keeping up-to-date on these topics; and communicate regularly with stakeholder groups, even when the news is bad. Corporate optimization means finding an approach to business that keeps your employees happy and
optimally productive, harmonizes environment and technology, gives your customers and your shareholders what they want, and secures the position of the company for the long run.

This is the new CSR. It is not a trend; it is the enlightened reconstruction of the modern global corporation.
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Welcome to my CSR blog experiment

This space is an experiment, so forgive my faux pas. I am a work in progress, as are my thoughts on CSR.

The title of the blogspot comes from the combination of my desire to publish a book after my PhD and my expected PhD completion date.