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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